This paper examines the financial and operating concerns that are key to explaining the managerial performance differences between labour-owned (LOFs) and participatory capitalist (PCFs) firms. At the core of the discrepancies lies the difference in capital-ownership structure that characterize the objective function of each type of firm and that, in turn, impact upon the existing asymmetry between capital and labour factors as production inputs. In this paper, we test the main hypothesis of the traditional economic theory that performance differences between LOFs and PCFs are mostly due to their distinct objective function and to their corresponding different way of handling the labour and the capital functions (Dow, 2001). In turn, such differences have important implications upon the performance, efficiency and competitiveness of the LOFs (Morales, et al., 2003) that set them apart from those of the PCFs (Chaves and Monzón, 2008). More specifically, these hypotheses fall into four main categories, namely managerial performance, growth, efficiency and productivity.
The data needed to carry out the analysis include the PCFs and LOFs operating in the autonomous community of Navarre, Spain from 1994 to 2003. Our database arises from two major sources. The information on the PCFs was obtained from the SABI database (http://www.bvdep.com/SABI.html), which contains the financial statements filed at the Register of Companies. Data on LOFs were directly compiled by the authors of this paper at the Register of Companies of Navarre. All the enterprises whose data have been analysed in this paper belong to the Industrial or to the Services sectors. The main results point out that (i) there exists a substantial gap between the positive economic performance exhibited by the LOFs in Navarre and the main postulates from traditional economic theory; (ii) the empirical results identify return on assets, earnings before interest, taxes, depreciation and amortization, weighted by total assets, liquidity and risk factors as the more appropriate indicators to study the managerial performance of LOFs; (iii) despite the lack of statistical evidence on the existence of differences in managerial performance and in growth by capital ownership configuration, LOFs would still benefit substantially by higher levels of efficiency and productivity.
Chaves, R. and Monzón, J.L. (2008). Panorama de la investigación en la Economía Social. Estudios de Economía Aplicada, 26(1), 29-56.
Dow, G. (2001). ‘Allocating control over firms: stock markets versus membership markets’. Review of Industrial Organization, 18, 201-218.
Morales, A.C., Monzón, J.L. And Chaves R. (2003). Análisis económico de la empresa autogestionada. CIRIEC-España, Valencia.