Social and Relational Variables in Worker Cooperatives: Implications for the Objective Function

Abstract

Traditional economic theory is focussed on a particular type of firm profit maximisation in which labour is a production factor and its social characteristics are not considered. However, in interpersonal relationships, even those in the workplace, identity and sociality play a role in workforce productivity and can change the objective function of a firm. This is especially the case in cooperatives, which are owned by the workers. This paper demonstrates that the social variables in worker cooperatives can influence the constraints of the maximising function and that a firm’s objective can be the maximisation of income per worker or the stabilisation of employment levels. Thus, worker cooperatives have a greater resilience in economic crises than traditional investorowned firms. In the current period of expected recession related to the COVID-19 emergency and the consequent lockdowns, a reflection on the effects of smart working on social variables and the implications for the flexibility of firms’ objectives is fundamental to understanding the possible resilience of worker cooperatives in a pandemic.

Keywords: Relational goods, Subjective well-being, Worker-owned enterprises, Objective function

JEL Classification: A13, D21, J54, L21