New Directions for Research on Cooperative Type Work Organizations
"Theoretical investigation of worker managed firms is a rap? idly expanding field of study. The English-language bibliogra? phy has swelled to several hundred items and there are many more references in other languages. There is, however, some? thing disturbing about this literature." Branko Horvat, 1986.1 The place of "labor managed firms" in mainstream economics has been established for some decades now. According to the vision pre? sented by Ward [1958] with his Illyrian model, later expanded by Vanek and many others, the labor managed firm maximizes value added per worker instead of total economic profits. Changing the maximand in this way has many interesting implications, but it is curious that only those implications relating to the labor managed firm have been stud? ied. For example, we could as well apply some of the Illyrian results as hypothetical explanations about why certain labor unions have sup? ported automation, why closely held firms remain small, or even to zoning laws; but these possibilities do not receive much attention com? pared to the possibility of the labor managed firm. In the specific realm of the labor managed firm or the cooperative, however, where the Illyrian model is supposed to apply, empirical studies and the case study literature fail to confirm some of the major hypothesis of the Illyrian model. For example, producer cooperatives in Western economies and labor managed enterprises of the Yugoslav type appear to respond normally to changes in product demand contrary to what the Illyrian model predicts.2 In dialogue with the work of Ward and Vanek, some economists such