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Technology, Effort and the Efficiency of Production: Labor-managed versus Capitalist Firms

Author

Listed:
  • Josef C. Brada

    (Arizona State University)

  • Jose A. Mendez

    (Arizona State University)

Abstract

We explore how the modeling of effort as a factor in production affects the relative productivity of labor-managed and capitalist firms. Using simple models of privately-owned and labor-managed firms, we show that the more important the role of effort in production, the greater the differences in the efficiency of the two types of firms even if monitoring remains fixed. The results show that even minor differences in the extraction of effort can cause large changes in output and efficiency. We draw implications from our results for the viability of labor-managed firms and cooperatives.

Suggested Citation

  • Josef C. Brada & Jose A. Mendez, 2009. "Technology, Effort and the Efficiency of Production: Labor-managed versus Capitalist Firms," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 7(1), pages 35-53.
    • Handle: RePEc:seb:journl:v:7:y:2009:i:1:p:35-53
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    References listed on IDEAS

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    More about this item

    Keywords

    Labor Managed Firms; Cooperatives; Effort; Incentives; Competition; Efficiency of Firms;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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