Are cooperatives more productive than investor-owned firms? Cross-industry evidence from Portugal

Abstract

We analyse empirically whether cooperatives and investor-owned firms differ in terms of productive efficiency. Using rich Portuguese panel data covering a wide range of industries, we apply two diferent empirical approaches to estimate potential dfferences in total factor productivity between the two groups of firms. The results from our benchmark random-effects model show that cooperatives are significantly less productive, on average, than investor-owned firms. This conclusion is to a large extent confirmed by the results from System-GMM estimations. The lower productivity of cooperatives applies to a wide spectrum of industries. In six out of thirteen industries, cooperatives are outperformed by investor-owned firms in all empirical specifications considered, while there is no industry in which cooperatives are consistently found to be the more productive type of firm.