Source: Dissertation Abstracts International, Volume: 61-05, Section: A, page: 1956.

Director: T. N. Srinivasan.

This dissertation describes the methodology and findings of a comparative study designed to evaluate the performance effects of worker ownership. The credibility of the study's results is believed to be unusually high, due to the use of carefully selected data and advanced econometric techniques. The main sample consists of six years of observations on nine conventional and five worker-owned firms from a single six-digit economic industrial classification all of which conducted their operations within the same cultural context and economic policy regime. Four of the worker-owned firms in the sample were cooperatives from the Basque Mondragon group while the fifth was a non-cooperative that was majority owned by its workers.

The measure used for the comparisons was Farrell's technical efficiency indicator. In the first stage of a two-stage procedure, single-observation efficiency estimates were defined relative to a stochastic frontier. Those estimates were then regressed against dummy variables to develop averages by ownership type. The six-year averages produced in this way constitute the core results of the study. The more interesting results, however, were produced by using the single-observation estimates to compare the evolution of efficiencies by ownership type over the six years of the data series. Since that period coincided with a pronounced slump in Spanish machine-tool sales, the use of single-observation estimates made it possible both to assess differences in the abilities of the two types of firms to adjust to exogenous demand shocks and to evaluate the principal determinants of those abilities.

The performance of the worker-owned and conventional groups were found to be essentially indistinguishable when labor inputs were expressed in terms of total hours worked. However, when a cost-weighted version of the labor variable was used, the worker-owned firms were found to outperform their conventional counterparts, largely because of their greater labor cost flexibility during the slump. For the cooperatives, that flexibility was achieved primarily through steep staff reductions, which is an outcome not anticipated in traditional theory.