The Behavior of Worker Cooperatives: The Plywood Companies of the Pacific Northwest

TLDR

The study examines worker-owned firms in U.S. manufacturing, focusing on the riskiness of cooperative memberships. The authors investigate whether cooperatives respond differently to economic changes than conventional firms and assess the profitability of cooperative membership. Cooperatives tend to adjust pay rather than employment, and share prices indicate that membership has been highly profitable, with shares underpriced.

Abstract

Using data collected by the authors on the largest and most durable of worker-owned firms in U.S. manufacturing, this paper is addressed to two questions. First, are the responses of cooperatives to changes in their economic environment different from those of conventional firms? It appears that cooperatives are more inclined to adjust pay than employment. Second, how profitable has membership in the cooperatives been? Using information on share prices, the authors find membership to have been extremely profitable and, in this sense, the prices of co-ops' shares have been underpriced. The riskiness of cooperative memberships is discussed. Copyright 1992 by American Economic Association.