Social capital is widely regarded as a collective resource with positive effects on the economic performance of cooperatives. This conclusion is based on the implicit assumption that social interactions between cooperative members would inexorably lead to the development of networks, norms and trust. This paper challenges the validity of this assumption. Conceptualizing social capital as a resource of the individual, it is argued that the interactions between cooperative members may lead to the establishment of a variety of complex social ties, some of which can negatively affect the economic performance of the organization. To illustrate this argument, the paper presents an exploratory case study of a small, manufacturing worker cooperative. Drawing on ethnographic techniques, the study identifies four organizational dynamics which are presumably affected by social capital: (1) the rule of surplus distribution; (2) the style of leadership; (3) the mechanisms of control; and (4) the criteria for recruiting and evaluating new members.
In the aftermath of the 1974 democratic revolution, Portugal witnessed a massive wave of worker occupations and factory takeovers. Following this period of exponential growth, industrial self‐management entered a phase of stagnation, eventually slipping into an unstoppable path of decay. Drawing on historical institutional theory, this paper explores the causes of this evolutionary trend. The climate of political and economic uncertainty that followed the military coup is conceptualized as a critical juncture. For a relatively short period of time, long‐established institutional constraints on worker entrepreneurship relaxed, opening a window of opportunity for the development of a hitherto neglected form of organizing industrial production. At such a crucial moment, however, the Portuguese workers failed to form a political coalition with the power to bring about essential legal and policy reforms. In a rather hostile institutional environment, some factories were returned to their former owners, while others struggled to become economically self‐sufficient and eventually disappeared.
Portugal was a pioneer in state-led cooperative development. In 1867, the parliament passed legislation encouraging workers to organize their own collective businesses. In the view of the ruling elite, this would prevent the emergence of a class cleavage between labor and capital, contributing to the stability of the liberal economic and political order. Combining the historical method with John Kingdon’s multiple-streams approach to policy formulation, this article examines the complex array of domestic and external factors that shaped this policy intervention. Additionally, the study explores the impact of the policy on the involved stakeholders. Far from fulfilling the expectations of its promoters, the law on cooperatives seems to have only marginally stimulated the growth of the sector. Moreover, the government’s support to cooperatives seems to have undermined the legitimacy of the model in the eyes of a labor movement that was starting to see its interests as opposed to those of the ruling class.
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