Is degeneration present in the cooperative realm? Evidence from Portugal
Cooperatives may endure degeneration. Degeneration occurs when a cooperative is transformed into a capitalistic firm or behaves like one. In Portugal, only behavioral degeneration is possible, since the transformation of cooperatives into capitalistic firms is forbidden by law. Behaviorally, cooperative degeneration implies the replacement of former cooperative members by non-member employees. In this paper we investigate if Portuguese cooperatives face a degenerative environment by studying the evolution of the proportion of non-member employees in a cooperative. Using fractional response models and data for Portuguese cooperatives for the period 2010-2019, we cannot reject the hypothesis that degeneration may be present in Portuguese cooperatives. We find that higher membership fees and, to a certain extent, a larger firm size potentiate degeneration, while experience mitigates the degenerative process. When we restrict the analysis to cooperatives that have non-member workers, higher wages and a higher proportion of female workers are also found to potentiate degeneration, while schooling lowers the degenerative process. On the other hand, we could not find evidence that the cooperative’s promotion policy affects the degenerative process and that cooperative degeneration is more common in labor-intensive industries.
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