Voting in Firms: The Role of Agenda Control, Size and Voter

Voting is a common feature of economic organizations. A study explores the costs that collective decision making impose on firms and examines how the institutional characteristics of surviving firms are shaped by these costs. The analysis focuses on the specific case of employee-owned firms. It is s...

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Bibliographic Details
Published inEconomic inquiry Vol. 29; no. 4; p. 706
Main Authors Benham, Lee, Keefer, Philip
Format Journal Article
LanguageEnglish
Published Huntington Beach Western Economic Association 01.10.1991
Subjects
Business ownership
Cooperatives
Corporate culture
Decision making
Economic theory
Employee ownership
Employees
Restrictions
Roles
Social research
Studies
Voting
United States > US
Spain
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Summary:Voting is a common feature of economic organizations. A study explores the costs that collective decision making impose on firms and examines how the institutional characteristics of surviving firms are shaped by these costs. The analysis focuses on the specific case of employee-owned firms. It is shown that unrestricted voting can lead to unstable decision making and that firms make trade-offs among collective decision making, production scale, firm structure, and voter characteristics that are consistent with efforts to economize on the costs of voting. Firm responses include: 1. agenda control, 2. restrictions to obtain a homogeneous voting population, and 3. limits on firm size. In examining 3 long-surviving producer cooperatives representing extreme cases of collective decision making, it is found that their organization is sensitive to the costs of voting and to the employment of mechanisms to constrain those costs.
ISSN:0095-2583
1465-7295