Annals of Public and Cooperative Economics 84:4 2013 pp. 383–397 COOPERATIVE FIRMS AND THE CRISIS: EVIDENCE FROM SOME ITALIAN MIXED OLIGOPOLIES by Flavio DELBONO* University of Bologna, Italy and Carlo REGGIANI University of Manchester, UK ABSTRACT: We investigate how cooperative firms reacted to the current crisis. This allows us to compare the behaviour of cooperative and conventional firms facing exogenous shifts in demand. After a short survey of a stream of theoretical literature, we analyze a large group of Italian production cooperatives in the periods 2003–2010 and 1994–2011 and we contrast co-ops behaviour with the overall trend in the in- dustries in which they operate. Our sample’s evidence suggests that the cooperative’s behaviour has a stabilizing effect on employment with respect to shocks in output de- mand. Unlike profit-maximizers, cooperative firms seem to be adjusting pay more than employment when facing shocks. Production co-ops look better equipped than their profit-maximizing counterparts in tackling the long recession also because they have been very cautious in their profit policies over time. Unlike conventional firms, they have significantly increased their own equity during ‘good’ years instead of distributing large dividends to their members. Genossenschaftliche Unternehmen und die Krise: Evidenz von einigen italienischen Oligopolen aus genossenschaftlichen und konventionellen Unternehmen Wir untersuchen, wie genossenschaftliche Unternehmen auf die gegenw¨artige Krise reagiert haben. Dies versetzt uns in die Lage, das Verhalten genossenschaftlicher und konventioneller Unternehmen angesichts exogener Nachfrageverschiebungen zu analysieren. Im Anschluss an einen kurzen Uberblick¨ uber ¨ die Flut theoretischer Literatur analysieren wir eine große Gruppe italienischer ∗ We are grateful to Patrizia Battilani, Gianni De Fraja, Luca Lambertini, Gianpaolo Rossini, Stefano Zamagni, Vera Zamagni, an anonymous reviewer of the International Conference on ‘Business Experiences and Social Responsibilities: Between Global Challenges and EU Economic Policies’ (Monash University, Prato, Italy, 24–25 September 2012), the editor and three anony- mous referees of this journal for helpful suggestions. Francesca Zarri of the Centro Studi Legacoop of Bologna provided invaluable support in collecting the dataset. The usual caveat applies. Corre- spondence: Flavio Delbono, E-mail: fl[email protected] © 2013 The Authors Annals of Public and Cooperative Economics © 2013 CIRIEC. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA 384 FLAVIO DELBONO AND CARLO REGGIANI Produktionsgenossenschaften in den Perioden 2003-2010 und 1994-2011, und wir stellen einen Vergleich an zwischen dem Verhalten der Genossenschaften und dem allgemeinen Trend in den Wirtschaftszweigen, in denen sie operieren. Das Ergebnis unserer Stichprobe l¨asst darauf schließen, dass das Verhalten der Genossenschaften gegenuber ¨ Nachfrageschocks einen stabil- isierenden Effekt auf die Besch¨aftigung ausubt. ¨ Anders als Gewinnmaximierer scheinen genossen- schaftliche Unternehmen angesichts solcher Schocks eher die Entlohnung anzupassen als die Besch¨aftigung. Produktionsgenossenschaften sehen besser gewappnet fur ¨ die Uberwindung¨ der lang anhaltenden Rezession aus als ihre gewinnmaximierenden Konkurrenten, weil sieuber ¨ die Zeit eine sehr vorsichtige Gewinnpolitik betrieben hatten. Anders als andere Unternehmen hatten sie ihre Eigenmittel w¨ahrend der ,,guten“ Jahre erh¨oht, statt hohe Dividenden an ihre Mitglieder auszuschutten. ¨ Las empresas cooperativas y la crisis: el ejemplo de algunos oligopolios mixtos en Italia Los autores examinan c´omo las cooperativas han reaccionado ante la crisis actual. Comparan el comportamiento de las cooperativas y de las empresas tradicionales ante las variaciones ex´ogenas de la demanda. Tras una breve revisi´on de la literatura te´orica, analizan un gran grupo de cooperativas de producci´on italianas en los per´ıodos 2003-2010 y 1994-2011, comparando el com- portamiento de las cooperativas con la tendencia general en los sectores de actividad en los que operan. Los resultados de la muestra ponen de manifiesto que el comportamiento de las cooperati- vas tiene un efecto estabilizador sobre el empleo cuando existen shocks en la demanda de output. Contrariamente a las empresas que maximizan el beneficio, las cooperativas parecen ajustar antes los salarios que el empleo ante los shocks. Las cooperativas de producci´on parecen estar mejor preparadas, igualmente, que las empresas que maximizan el beneficio para afrontar una larga recesi´on, principalmente porque suelen ser muy prudentes en sus pol´ıticas de reparto de benefi- cios en el transcurso del tiempo. Contrariamente a las empresas tradicionales, han aumentado significativamente sus fondos propios en el curso de los anos ˜ de “bonanza”, en vez de distribuir grandes dividendos a sus miembros. Les entreprises cooperatives´ et la crise : l’exemple de quelques oligopoles mixtes en Italie Les auteurs examinent comment les coop´eratives ont r´eagia ` la crise actuelle. Ils comparent le comportement de coop´eratives et d’entreprises traditionnelles facea ` des variations exog`enes de la demande. Apr`es un bref survol d’un courant de la litt´erature th´eorique, ils analysent un grand groupe de coop´eratives de production italiennes au cours des p´eriodes 2003-2010 et 1994-2011 et ils comparent le comportement des coop´eratives avec la tendance g´en´erale dans les secteurs d’activit´eo`u elles op`erent. Les r´esultats de l’´echantillon sugg`erent que le comportement de la coop´erative a un ef- fet stabilisateur sur l’emploi lors de chocs dans la demande d’output. Contrairement aux entreprises maximisant le profit, les coop´eratives semblent ajuster davantage le salaire que l’emploi lors de chocs. Les coop´eratives de production semblentegalement ´ mieux arm´ees que les entreprises max- imisant le profit pour appr´ehender la longue r´ecession, notamment parce qu’elles se sont montr´ees tr`es prudentes dans leurs politiques en mati`ere de profit au cours du temps. Contrairement aux entreprises traditionnelles, elles ont significativement augment´e leurs fonds propres au cours des “bonnes” ann´ees au lieu de distribuer d’importants dividendesa ` leurs membres. © 2013 The Authors Annals of Public and Cooperative Economics © 2013 CIRIEC COOPERATIVE FIRMS AND THE CRISIS: SOME ITALIAN MIXED OLIGOPOLIES 385 1Introduction One of the worse economic crises of all times has still to end. Since the dramatic fall in 2009, several economies are far from making up for the reduction in GDP and sub- sequent recession. Employment is suffering from the poor macroeconomic performance associated with the meager trend in aggregate demand. The unfolding of the deepest economic slump since the Great Depression raises many questions about factors acting countercyclically, especially as far as employment is concerned. Among these factors, one may reasonably include the characteristics of the employers. For instance, it is worth testing how firms of different ilk react to downturns like the ones still hitting many economies during this lasting recession. Among firms that are supposed to care about goals other than profits, we shall con- sider the cooperative firms (sometimes defined as labour-managed or workers’ firms). Their presence is important in many countries and their performance is still under scrutiny by many scholars and practitioners.1 In many European countries we are actually observing a resurgence of interest in cooperative firms because they seem to perform better than conventional firms in responding to the long slump. For example, in France the creation of new co-ops in the building industry achieved a faster pace in the last years. The top 100 French co-ops increased their sales by 4% and the number of employees from 674,000 to 750,000 (+ 11.2%).2 In Spain, one of the countries more deeply hit by the crisis, in the period 2008– 2012, employment fell by 9.6% ‘only’ in the co-ops, while the reduction was more than double in the rest of the economy (- 19.5%). Moreover, in the last five years Spanish cooperatives experienced a twenty percent increase in the number of their members.3 According to Cecop, the largest European association of national co-ops associa- tions, the above trends seem to be observed also in other European countries, confirming that co-ops are affording the crisis better than conventional firms, especially as far as employment is concerned. Furthermore, no CECOP affiliated co-op has stopped its ac- tivity in the last years.4 In this paper we would like to detect and explain the reaction of co-ops’ employment to positive and negative shocks in aggregate demand. To start with, we notice that cooperative firms operate and cohabit with conven- tional firms in many markets. Hence, in the next section we briefly survey the theoretical insights of the literature on mixed oligopolies, i.e. industries in which pure5 coopera- tive firms (assumed to maximize net surplus per worker/member) and profit-making 1 See Perotin (2012) and Zamagni and Zamagni (2010) for recent overviews. 2 http://economiesocialequebec.ca/?module=document&uid=1623 http://www.lefigaro.fr/social/2012/01/12/09010-20120112ARTFIG00506-les-cooperatives-ont- resiste-a-la-crise.php 3 http://blogs.elpais.com/la-larga-marcha-de-la-ue/2012/06/las-cooperativas-resisten-mejor -la-crisis.html http://www.eleconomista.es/espana/noticias/4028943/06/12/Los-socios-de-las- cooperativas-crecen-un-20-impulsados-por-la-crisis.html