Industrial Democracy at Scale: Policy Recommendations for Worker Cooperative Development

Abstract

In corporate America, industrial democracy may seem like a paradox: the tenets of top-down management, viewed as critical to survival in a competitive market, are fundamentally incompatible with democratic governance. This conventional view of shareholder capitalism holds profit maximization as the gold standard, creating an inevitable tension between the managers and the managed. Worker cooperatives, which are owned and managed by their workers, present an alternative firm type. Cooperators envision a better business world, characterized by democratic rather than authoritarian governance in the workplace. Cooperative decision making, however, is not an easy task — especially among larger groups. How, then, do worker cooperatives grow efficiently in competitive retail markets while maintaining their democratic ethos and institutions? What challenges have they faced throughout expansion and how have they overcome them? This thesis employs a mixed methods approach to these questions. I first trace the history of the John Lewis Partnership and the Edinburgh Bicycle Cooperative, two retail worker cooperatives to successfully scale in the United Kingdom, the birthplace of the modern cooperative movement. I find that though direct democracy in the workplace may prove less feasible as organizations grow, formal democratic structures and informal democratic attitudes toward governance can preserve the cooperative ethos. Still, the case studies reveal several barriers to democratic maintenance — including worker turnover, lack of worker engagement, and increasingly tight markets stemming from online retail competition. I probe the issue of worker turnover with a logistic regression analysis of worker cooperators in the United States. Results imply that strengthening feelings of ownership and increasing workers’ involvement and influence in decision making can help reduce turnover intention. I offer policy recommendations in the US context for firms and governments to support cooperative development.