The Behavior of Worker Cooperatives: The Plywood Companies

• Published in: The American economic review Vol. 82; no. 5; p. 1083
• Main Authors: Craig, Ben, Pencavel, John
• Format: Journal Article
• Language: English
• Published: Nashville American Economic Association 01.12.1992
• Subjects: Cooperatives; Economic theory; Lumber industry; Manufacturing; Organizational behavior; Plywood; Production cooperatives; Profitability; Stock prices; Studies; Wages & salaries; Wood products; United States > US; Pacific Northwest
• ISSN: 0002-8282; 1944-7981

The behavior of worker cooperatives is examined within the largest and most durable worker-owned sector in the US manufacturing industry - the plywood firms of the Pacific Northwest. Using data collected over several years, a sample of cooperatives and conventional firms is constructed, and 2 questions are addressed. The first question considers whether the responses of cooperatives to changes in their economic environment differ from those of conventional firms. It is found that a cooperative is more likely to adjust earnings and less likely to adjust employment to changes in output and input prices than is a conventional firm. The 2nd question considers how profitable membership in the cooperatives has been. Using information on share prices, membership is found to have been extremely profitable, and in this sense, the prices of cooperatives' shares have been underpriced. It is suggested that this apparent undervaluation of the cooperatives' shares is endemic to this form of organization in which a worker is required to subject his labor income to the same risk as his capital.