Research on viability of Worker Co-ops by Erik Olsen


The purpose of this paper is to demonstrate that the conjecture that WCs suffer a competitive disadvantage relative to CFs is not supported by existing research. Since the size of any population depends on how frequently new members are added, how frequently they drop out, and how long-lived the members of that population are, the question of why WCs are so rare involves their formation, failure, and survival. There is a growing literature on the survival of WCs, which indicates that while a significant percentage of them fail—especially during their early years—they do not fail at a rate that exceeds that of CFs. Instead, once created the expected survival of WCs meets or exceeds that of CFs. This finding complements decades of research on the productivity of WCs that finds they do not suffer a productivity disadvantage relative to CFs (Fakhfakh et al. 2012; Pencavel 2012; Doucouliagos 1995).

Taken together these results indicate that the answer to the question of why WCs are rare relative to CFs involves obstacles to their creation, not their survival, but it also indicates that when the rate of failure is considered, the creation of WCs is a more complicated issue than has previously been recognized.

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