Jawn Lam

Cooperative organization

Organizational StructuresForms from other traditions13 min read

The members, whether workers, consumers, or producers, own the organization and govern it one member, one vote, through a general assembly that elects a governing council, which appoints and oversees management.

What it is

The members own a cooperative and govern it one member, one vote; they may be its workers, customers, or suppliers. A general assembly elects a governing council, which appoints and oversees the management that runs the operating line. Mondragon's worker cooperatives add a social council that represents members as workers (Whyte and Whyte 1988).

The cooperative's members elect the council that appoints management

Select a unit or a letter to read it; the key above the drawing names the lines and letters used.

Reports toDDirect supervisionNStandardization of norms

ElectsAppoints and overseesMembersGoverningcouncilManagementOperating lineGeneralassemblyGoverningcouncilManagementFunctionalunitProduct unitBy function or by productDN
ElectsAppoints and overseesMembersGoverning councilManagementOperating lineAssemblyCouncilManagersFunctionProductBy function or by productDN
Select a unit or a letter to read it. D, direct supervision: One person takes responsibility for the work of others, giving instructions and monitoring their actions. N, standardization of norms: Shared beliefs and values, usually across the whole organization, guide the work.General assembly. Layer: Members. Reports to no one. The members, whether workers, customers, or suppliers, own the cooperative and hold final authority one member, one vote. Mondragon's worker cooperatives add a social council that represents members as workers (Whyte and Whyte 1988).Governing council. Layer: Governing council. Reports to General assembly. Elected by the general assembly; it appoints and oversees management. At Fagor the governing bodies were limited in supervising management on difficult strategic decisions (Basterretxea and colleagues 2022).Management. Layer: Management. Reports to Governing council. Runs the operating line as a management hierarchy (Cheney 1999); how much power the members delegate to it is contested, since four growing cooperatives developed new management structures (Cornforth 1995).Functional unit. Layer: Operating line. Reports to Management. By function or by product. The form sets no grouping basis of its own and lays its governance over whatever operating structure it has (our judgment). In a worker cooperative the members who own it also do its work.Product unit. Layer: Operating line. Reports to Management. By function or by product. The other basis a single-line hierarchy may use (our judgment); as four cooperatives grew they developed a more specialized division of labor (Cornforth 1995).D, direct supervision. One person takes responsibility for the work of others, giving instructions and monitoring their actions.N, standardization of norms. Shared beliefs and values, usually across the whole organization, guide the work.
The structure in words
  1. Members
    • General assembly, reports to no one. The members, whether workers, customers, or suppliers, own the cooperative and hold final authority one member, one vote. Mondragon's worker cooperatives add a social council that represents members as workers (Whyte and Whyte 1988).
  2. Governing council
    • Governing council, reports to General assembly. Elected by the general assembly; it appoints and oversees management. At Fagor the governing bodies were limited in supervising management on difficult strategic decisions (Basterretxea and colleagues 2022).
  3. Management
    • Management, reports to Governing council, coordinated by direct supervision. Runs the operating line as a management hierarchy (Cheney 1999); how much power the members delegate to it is contested, since four growing cooperatives developed new management structures (Cornforth 1995).
  4. Operating line
    • Functional unit, reports to Management, grouped by function or by product. The form sets no grouping basis of its own and lays its governance over whatever operating structure it has (our judgment). In a worker cooperative the members who own it also do its work.
    • Product unit, reports to Management, grouped by function or by product. The other basis a single-line hierarchy may use (our judgment); as four cooperatives grew they developed a more specialized division of labor (Cornforth 1995).
  • Across the whole organization: standardization of norms.

The members own the cooperative and govern it one member, one vote through a general assembly, which elects a governing council that appoints and oversees management. Management runs the operating line under the members' formal authority, and shared norms hold across the whole.

Source: Hansmann 1996; Whyte and Whyte 1988; Cheney 1999; Basterretxea and colleagues 2022, one case study; Cornforth 1995, four case studies.

Every level of the profile is our judgment. Grouping spans function or process and product or purpose, since the form sets no grouping basis of its own. Specialization and formalization are medium. Centralization is mixed: members hold final authority, but at Fagor (one case study) oversight of management was limited. Layers are moderate.

Decision rights are contested: either vertical and horizontal decentralization, the nearest of the five types in Mintzberg's (1980) synthesis, though it fits consumer cooperatives less, or, on the same case and Cornforth's (1995) four case studies, limited vertical to selective vertical and horizontal decentralization, with much power delegated to management. Coordination spans direct supervision and standardization of norms; lateral mechanisms sit at task forces and teams, the standing councils; differentiation is moderate. The mode of exchange is contested too: bureaucracy to clan, members' rules and shared values (Hansmann 2013; Cheney 1999), or market, for kibbutzim that tied salaries to the market value of work (Russell, Hanneman, and Getz 2013, a whole-population study). Boundaries are selective.

Where the cooperative organization sits on the eleven dimensions

The filled segments are the form's levels; select a row for its reason and sources.

Select a dimension to read why the form sits there, and on what basis.Basis of grouping: Function or process and product or purpose. Basis: Judgment. The form sets no grouping basis of its own and lays its defining layer over whatever structure it finds; the two bases of a single-line hierarchy are recorded as judgment so a reader's profile can still match. Sources: Hansmann 1996; Whyte and Whyte 1988.Specialization: Medium. Basis: Judgment. As four cooperatives grew they developed a more specialized division of labor; judgment for the band. Sources: Cornforth 1995.Standardization and formalization: Medium. Basis: Judgment. A general assembly, a governing council, and a management hierarchy work to written rules of membership; judgment for the band. Sources: Basterretxea and colleagues 2022; Whyte and Whyte 1988.Centralization: Mixed. Basis: Judgment. Members hold final authority one member, one vote, but at one cooperative group the assembly and councils were limited in supervising management on difficult strategic decisions; judgment for the band. Sources: Basterretxea and colleagues 2022; Hansmann 1996.Layers and span of control: Moderate. Basis: Judgment. An assembly elects a council that appoints and oversees management, over the operating line; judgment. Sources: Whyte and Whyte 1988; Hansmann 1996.Decision rights and the locus of authority: Vertical and horizontal decentralization. Basis: Judgment. Final formal authority rests with the members, who in worker cooperatives do the work; Type E is the nearest shape, though the power is held collectively through an assembly, and it fits consumer cooperatives less; judgment. Sources: Hansmann 1996; Mintzberg 1980; Basterretxea and colleagues 2022; Cornforth 1995. View 2: Limited vertical decentralization to selective vertical and horizontal decentralization. At one cooperative group the assembly and councils were limited in supervising management on difficult strategic decisions, and four growing cooperatives developed new management structures and a more specialized division of labor, so much power is delegated to a management line under the members' formal authority, a reading that is judgment. Sources: Basterretxea and colleagues 2022; Cornforth 1995.Prime coordinating mechanism: Direct supervision and standardization of norms. Basis: Judgment. Democratic member governance over a management hierarchy, and shared norms; judgment for the prime mechanism. Sources: Cheney 1999; Whyte and Whyte 1988.Lateral mechanisms: Task forces and teams. Basis: Judgment. Standing councils of members, such as Mondragon's social council; judgment for the band. Sources: Whyte and Whyte 1988.Differentiation against integration: Moderate differentiation, some integrating roles. Basis: Judgment. Members as owners and as workers are joined through councils and assembly; judgment. Sources: Whyte and Whyte 1988; Lawrence and Lorsch 1967a.Mode of exchange and control: Bureaucracy and clan. Basis: Judgment. Members' rules and shared values, with collective decisions growing costly as owners' interests diverge; judgment. Sources: Hansmann 2013; Cheney 1999; Russell and colleagues 2013. View 2: Market. In the kibbutz variant, from 1995 kibbutzim began paying salaries tied to the market value of members' work, and by 2010 three quarters of the 248 nonreligious kibbutzim were renewed, a market element, with the reform spreading by imitation. Sources: Russell and colleagues 2013.Boundary permeability: Selective. Basis: Judgment. Cooperative groups share support bodies across member cooperatives while membership stays bounded; judgment. Sources: Whyte and Whyte 1988.

Every level is judgment, and two are contested. Decision rights sit at vertical and horizontal decentralization, final authority with the members, or, on one cooperative group's case and Cornforth's (1995) four case studies, at limited vertical to selective vertical and horizontal decentralization, with much power delegated to management. The mode of exchange spans bureaucracy and clan, or sits at market for kibbutzim that tied salaries to the market value of work (Russell, Hanneman, and Getz 2013).

Source: Hansmann 1996; Whyte and Whyte 1988; Cornforth 1995, four case studies; Basterretxea and colleagues 2022, one case study; Mintzberg 1980, a synthesis of earlier research, offering propositions without a new test; Cheney 1999; Lawrence and Lorsch 1967a, a multi-firm comparative field study; Hansmann 2013; Russell and colleagues 2013, a study of a whole population of communities over two decades.

Where it came from

The form takes its name from the cooperative movement of consumer, agricultural, credit, and worker cooperatives, and it also grew up in the Basque Mondragon group, Israel's kibbutzim, and Yugoslavia's self-managed enterprises.

The schools of organization design and the forms' origins, 1900 to now

Each row is a school's era; each square under them is a form at its first year. Select a row or a square to read it; on a form's page, its own square and span are marked, with the schools that treat it.

1900192019401960198020002020Bureaucracy and its criticsClassical administrationHuman relations and System 4Transaction cost economicsCarnegie schoolSocio-technical systemsLabor-managed firmModularity and mirroringStrategy and structureContingency theoryFrench bureaucratic schoolJapanese-firm literatureScandinavian and DutchConfiguration theoryInformation processingLabor processStrategic choiceGerman codeterminationOrganizational economicsInstitutional theoryPopulation ecologyResource dependenceBusiness groupsScandinavian institutionalSocietal effectNetwork perspectiveComputational designNew-forms debateAlgorithmic managementForms by first yearCooperative organization, 1958 to 1999Now

The forms by first year

1900192019401960198020002020Cooperative organization, 1958 to 1999Now

Schools that treat this form: the economics of the labor-managed firm and of enterprise ownership; the German codetermination literature; and Population ecology.

Select a school's row or a form's square to read it.Select a form's square to read it; open a school below.Bureaucracy and its critics1900s to 1950s, revived from the 1990sWhat it claimsWeber held that rational-legal authority exercised through an office hierarchy, written rules, trained officials, and promotion by qualification is technically superior in precision, speed, and reliability. Critics studied its unintended consequences, Michels's iron law sharpest.What it has shownMerton (1940) argued, with no test, that rules can turn from means into ends; case studies followed. The Aston group concluded that the type's dimensions vary independently, and Wagner's meta-analysis (2021) found that many of their interrelationships have weakened.Who disputes itHuman relations and System 4 sets the costs of impersonal rules to motivation and cooperation against the technical superiority Weber stresses.Bureaucracy and its critics in The Schools of Organization DesignClassical administration1910s to 1940s, and in German to the 1970sWhat it claimsThere are general principles of administration, among them division of work, unity of command, a scalar chain of authority, and a limited span of control, and a structure built to them will be efficient in most settings. Taylor added that planners should set work methods.What it has shownThe school offered reasoning and experience, not tests. Woodward (1965) found that the spans and levels of the more successful firms in her sample differed by production system, and Simon (1946) showed that the principles come in pairs that point in opposite directions.Who disputes itStructural contingency theory found that the structure of successful firms varies with technology and environment, where classical writers treat their principles as general.Classical administration in The Schools of Organization DesignHuman relations and System 41920s to 1960sWhat it claimsOutput depends on the social relations of work, the norms of informal groups, and the style of supervision as much as on formal design. Likert's System 4, overlapping work groups joined by linking-pin managers under participative management, outperforms authoritative systems.What it has shownThe founding evidence is the Hawthorne studies, which later reanalyses dispute (Carey 1967; Levitt and List 2011). Likert's support came largely from his own institute's surveys. Wagner (1994) found participation's effects on performance and satisfaction significant but small.Who disputes itLabor process and critical theory reads human relations as a technique of managerial control rather than a change in the distribution of power.Human relations and System 4 in The Schools of Organization DesignTransaction cost economics and the M-form hypothesis1937, then the 1970s to the presentWhat it claimsFirms exist, and are organized as they are, to economize on transaction costs. Hierarchy replaces the market when assets are specific, uncertainty is high, and exchange is frequent, and the multidivisional form should outperform the functional form in large, diversified firms.What it has shownArmour and Teece (1978) found, in United States petroleum firms from 1955 to 1973, a positive relationship between the multidivisional form and profitability while the form was spreading, but not once an equilibrium in organizational form was reached.Who disputes itThe network perspective on organizations: Granovetter argued that the theory undersocializes economic action, which is embedded in networks of personal relations that also produce trust and order.Transaction cost economics and the M-form hypothesis in The Schools of Organization DesignThe Carnegie school and the attention-based view1940s to the presentWhat it claimsPeople in organizations are boundedly rational, so structure matters because it sets the premises of their decisions and channels their attention: who sees which problems, which goals they pursue, and which routines they follow. Ocasio makes structure distribute attention.What it has shownMarch and Simon (1958) drew propositions from the existing literature, and Cyert and March (1963) added process models and simulations. Two studies show hierarchy shaping what is sent up as well as what is chosen (Reitzig and Maciejovsky 2015; Keum and See 2017).Who disputes itOrganizational economics: decision rights, authority, and complementarities models a principal and agents with defined objectives; the Carnegie school, firms as coalitions with unresolved goal conflict.The Carnegie school and the attention-based view in The Schools of Organization DesignSocio-technical systems1950s to 1980sWhat it claimsAn organization is a social system and a technical system that must be designed together. The same technology admits more than one way of organizing work, and groups that own a whole task and control its variances at the source perform better and are more satisfied.What it has shownTrist and Bamforth (1951) found that longwall mechanization broke up self-regulating work groups. A review of 134 experiments found them extremely successful overall, and Stewart (2006) linked team autonomy to performance; studies of socialist brigades and Volkswagen qualify it.Who disputes itLabor process and critical theory: Kelly argued that labor intensification, not joint optimization, accounts for what socio-technical redesign achieved, and that the part of pay incentives was seriously underestimated.Socio-technical systems in The Schools of Organization DesignThe economics of the labor-managed firm and of enterprise ownership1958 to the presentWhat it claimsA firm run by its workers behaves differently from one run for investors: Ward modeled the Yugoslav-style firm as maximizing income per worker. Hansmann argued that an ownership form's success depends on the balance between the costs of market contracting and of ownership.What it has shownBurdín (2014) found a 29 percent lower hazard of dissolution for Uruguayan worker-managed firms than for conventional ones, and Fakhfakh, Pérotin, and Gago (2012) found French labor-managed firms as productive or more so in every industry studied.Who disputes itOrganizational economics (Jensen and Meckling) contrasts the labor-managed firm, in which tradable residual claims are legally prohibited, with cooperatives and partnerships that arise out of voluntary contracting.The economics of the labor-managed firm and of enterprise ownership in The Schools of Organization DesignModularity and the mirroring hypothesis1960s to the presentWhat it claimsComplex systems are built of nearly decomposable parts, and an organization's structure tends to mirror the architecture of what it makes: modular products allow loosely coupled organizations, and tightly coupled products need tightly coupled teams. Conway's law runs in reverse.What it has shownColfer and Baldwin (2016) review the empirical studies and report both support and principled exceptions. Direct tests point both ways: MacCormack, Baldwin, and Rusnak (2012) found open source products more modular than their commercial pairs; dynamic components break the mirror.Who disputes itNo school in the record disputes it head on; it answers information processing, which meets the coordination load inside the organization; mirroring writers locate it in the product's architecture.Modularity and the mirroring hypothesis in The Schools of Organization DesignStrategy and structure1960s to 1980sWhat it claimsStructure follows strategy: firms that diversify by product or geography outgrow the centralized functional structure and, after a lag and usually a crisis, adopt divisions. Chandler drew this from the histories of DuPont, General Motors, Standard Oil of New Jersey, and Sears.What it has shownChandler (1962) is comparative business history of four firms set against a wider survey. Rumelt (1974) related diversification and structure to performance, and Egelhoff (1988), with 34 multinationals, found some of Stopford and Wells's relationships supported and others not.Who disputes itInstitutional theory: in Fligstein's model divisions spread with a product-related or unrelated strategy, presidents from sales or finance, and other firms in the industry changing; strategy was one of three.Strategy and structure in The Schools of Organization DesignStructural contingency theory1960s to the presentWhat it claimsThere is no one best structure. Performance depends on fit between structure and contingencies such as environment, technology, size, and strategy, on an open-system view of the organization. Drazin and Van de Ven separate fit as selection, interaction, and systems.What it has shownBurns and Stalker, Woodward, and the Aston group related structure to context; Drazin and Van de Ven (1985) supported selection and systems fit only. Pennings (1975) found that fit did not explain effectiveness; Schoonhoven (1981) found traditional hypotheses unsupported.Who disputes itStrategic choice: Child argued that contingency theory explains structure by the constraints of context and leaves out the political process by which power-holders choose strategic action, structural forms included.Structural contingency theory in The Schools of Organization DesignThe French bureaucratic school (strategic analysis)1960s to 1980sWhat it claimsA bureaucracy is a system of power relations organized around zones of uncertainty. Impersonal rules and centralization protect members from depending on one another, those who control uncertainties hold power, and, unable to correct its errors, it changes only through crisis.What it has shownLe phénomène bureaucratique (1963; English 1964) rests on two case studies, a clerical agency and a state industrial monopoly. L'acteur et le système (1977; English 1980) is theoretical.Who disputes itSocietal effect and comparative business systems: D'Iribarne argues that national logics of conduct, such as a French logic of honor, explain differences that Crozier attributed to power games.The French bureaucratic school (strategic analysis) in The Schools of Organization DesignThe Japanese-firm literature1960s to the presentWhat it claimsThe large Japanese firm coordinates operating decisions through horizontal information sharing among semi-autonomous shops and uses its ranking hierarchy mainly as an incentive scheme (Aoki). It creates knowledge through middle-up-down management (Nonaka and Takeuchi).What it has shownAoki (1986) is a formal model. Lincoln, Hanada, and McBride (1986) compared 51 Japanese and 55 United States manufacturing plants, and Nonaka and Takeuchi (1995) rest on case studies, chiefly of Japanese firms. Fruin (1994) found the enterprise system defined at three levels.Who disputes itLabor process and critical theory reads shop-floor delegation as control: Sewell and Wilkinson argue that just-in-time and total quality regimes delegate tactical responsibility while centralizing strategic control.The Japanese-firm literature in The Schools of Organization DesignThe Scandinavian and Dutch socio-technical schools1960s to 2000sWhat it claimsThe Scandinavian program sought democracy at work through field experiments with semi-autonomous groups, then through democratic dialogue. The Dutch school's design theory turns complex organizations with simple jobs into simple organizations with complex jobs.What it has shownEmery and Thorsrud reported field experiments in Norwegian industry; Gustavsen (1992) records that they spread less than hoped, his reason for turning to dialogue. Berggren studied work organization in the Swedish auto industry. The Dutch work rests on design cases and argument.Who disputes itThe Japanese-firm literature: defenders of the Toyota system hold that standardized work with employee participation learns faster; Berggren reports Swedish long-cycle plants matching a line plant on productivity.The Scandinavian and Dutch socio-technical schools in The Schools of Organization DesignConfiguration theory1970s to the presentWhat it claimsStructures cluster into a small number of internally coherent configurations whose elements reinforce one another, so organizations move between a few types in large jumps, not small steps. Mintzberg's five configurations each rest on one coordinating mechanism.What it has shownDoty, Glick, and Huber (1993) found that fit to Miles and Snow's ideal types predicted effectiveness while fit to Mintzberg's did not. A meta-analysis of 40 tests (Ketchen and colleagues 1997) found that configuration partly explains performance, more so with broad definitions.Who disputes itStructural contingency theory: Donaldson counters that most organizations sit at intermediate points on a continuum of fits, not in a few configurations, and that studies over time find mostly incremental change.Configuration theory in The Schools of Organization DesignInformation processing1970s to the presentWhat it claimsThe more uncertain the task, the more information must be processed during its execution. An organization either reduces that need, through slack resources or self-contained tasks, or raises its capacity, through vertical information systems or lateral relations up to the matrix.What it has shownGalbraith (1973, 1974) built the framework from cases and from Simon's theory of bounded rationality, and Tushman and Nadler (1978) set it out as an integrating concept for design. Daft and Lengel (1986) argued that structure must reduce equivocality as well as supply data.Who disputes itThe Carnegie school and the attention-based view: Ocasio holds that firm behavior results from how the firm channels and distributes attention, so structure governs where attention goes, not only how much is processed.Information processing in The Schools of Organization DesignLabor process and critical theory1970s to the presentWhat it claimsStructure is above all a system of control over labor. Braverman argued that management deskills work by separating conception from execution; Edwards traced a sequence from simple control by the boss to technical control through machines to bureaucratic control through rules.What it has shownHistorical and theoretical (Braverman 1974; Edwards 1979). Delbridge (1995), observing a Japanese-owned plant in England, found that just-in-time and total quality regimes combined the control of labor with management's economic goals more completely than piece rates had.Who disputes itBureaucracy and its critics: Adler argues that labor process theory ignores the progressive socialization of the labor process, which drives long-term skill upgrading, and disputes deskilling as the trend.Labor process and critical theory in The Schools of Organization DesignStrategic choice1970s to the presentWhat it claimsStructure is the outcome of choices by those with power in the organization, who decide on strategic action, including the structural form, the manipulation of environmental features, and the performance standards to be met. Context constrains but does not determine structure.What it has shownLargely conceptual: Child (1972) built the argument from gaps in contingency findings, and the empirical case rests mostly on the modest share of structural variance contingencies explain. A 2026 review of 42 studies finds upper echelons theory their main theoretical anchor.Who disputes itStructural contingency theory: Donaldson replies that organizations mostly adopt the structures their contingencies dictate, to avoid the loss of performance misfit brings, so choice over structure is at most limited.Strategic choice in The Schools of Organization DesignThe German codetermination literature1970s to the presentWhat it claimsWorks councils and employee board seats form a structural layer through which coordination can become negotiation between management and employees. Defenders argue that it supports long-term employment, training, and cooperation; critics, that it weakens shareholder control.What it has shownJäger, Schoefer, and Heining (2021) found board-level codetermination left wages unchanged and, if anything, raised capital formation. Jirjahn (2011) reports studies pointing to positive works council effects; a meta-analysis found codetermination laws tied to lower productivity.Who disputes itOrganizational economics (Gorton and Schmid) found that firms with equal employee and shareholder representation did worse for their shareholders than firms with one-third employee representation.The German codetermination literature in The Schools of Organization DesignOrganizational economics: decision rights, authority, and complementarities1976 to the presentWhat it claimsDesign is the joint choice of who holds which decision rights, how performance is measured, and how it is rewarded. Rights should be placed where the specific knowledge lies, formal authority differs from real authority, and practices are complements that pay off in clusters.What it has shownIchniowski, Shaw, and Prennushi (1997) found, on 36 steel finishing lines, that lines using a set of innovative work practices achieved substantially higher productivity, consistent with complementarities. Bloom and colleagues found more decentralization where trust was higher.Who disputes itGhoshal argued that management research has shaped managers' worldview with ideologically inspired amoral theories, built on a scientific model that excludes human intentionality and so denies moral considerations.Organizational economics: decision rights, authority, and complementarities in The Schools of Organization DesignInstitutional theory1977 to the presentWhat it claimsFormal structures are often adopted because they are legitimate in the organization's field, as rationalized myths, and then decoupled from the work done. Organizations in a field grow alike through coercive, mimetic, and normative isomorphism, whether or not it is efficient.What it has shownTolbert and Zucker (1983) found that city characteristics predicted early but not later adoption of civil service reform, which they read as institutionalization. Palmer, Jennings, and Zhou (1993) found support for institutional and economic accounts of late M-form adoption.Who disputes itStructural contingency theory: Kraatz and Zajac found little support for neoinstitutional predictions in 631 liberal arts colleges, which grew less alike; the change they studied was curricular, not structural.Institutional theory in The Schools of Organization DesignPopulation ecology1977 to the presentWhat it claimsOrganizations face strong structural inertia, because selection favors the reliability and accountability of stable structures. Change in a population's forms comes mainly from founding and failure, not adaptation, and changing core features resets the liability of newness.What it has shownAmburgey, Kelly, and Barnett (1993) found that the effects of change on the hazard of failure vary by type of change and over time, and that rates of change depend on how often and how recently an organization has changed. Carroll and Hannan (2000) set out the program's methods.Who disputes itFor structural contingency theory, Donaldson argues that ecology understates managers' capacity to adapt structure.Population ecology in The Schools of Organization DesignResource dependence1978 to the presentWhat it claimsOrganizations depend on outside parties for critical resources, and structure follows the management of that dependence: units that cope with critical dependencies gain power, and boundaries are redrawn through cooptation, joint ventures, and mergers to absorb constraint.What it has shownPfeffer and Salancik (1978) assembled studies of boards, mergers, and joint ventures. A meta-analysis of 157 tests (Drees and Heugens 2013) corroborated the main prediction: organizations meet resource dependencies with interorganizational arrangements that raise their autonomy.Who disputes itTransaction cost economics and the M-form hypothesis explains boundaries by efficiency; resource dependence, by power and constraint.Resource dependence in The Schools of Organization DesignThe business-groups literature1978 to the presentWhat it claimsGroups of legally independent firms bound by ownership and social ties are a durable form of their own, neither one firm nor a market. Where institutions function poorly, groups can benefit member firms and can destroy value; they are sometimes paragons, sometimes parasites.What it has shownKhanna and Palepu (2000) found that affiliates of the most diversified Indian groups outperformed unaffiliated firms. A meta-analysis of 141 studies (Carney and colleagues 2011) found that affiliation lowers performance in general, less so where institutions are underdeveloped.Who disputes itOrganizational economics: agency writers read pyramids and cross-holdings as devices that separate control from ownership; Almeida and Wolfenzon offer a financing rationale for pyramids instead.The business-groups literature in The Schools of Organization DesignScandinavian institutionalism1980s to the presentWhat it claimsIdeas of organizing do not diffuse unchanged; they travel and are translated as they are adopted, so a form taken up in one place is not the same form elsewhere. Organizations can also be built of organizations (meta-organizations), which behave differently.What it has shownA discussion paper by Czarniawska and Joerges (1995) contrasts the diffusion of ideas with their translation, drawing on examples such as Swedish municipal reform; the work on meta-organizations (Ahrne and Brunsson 2008) is conceptual.Who disputes itInstitutional theory can read the same processes, seen from a translocal view, as institutional isomorphism, though translation holds that each adopter modifies an idea, so an institution re-created elsewhere is new.Scandinavian institutionalism in The Schools of Organization DesignSocietal effect and comparative business systems1980s to the presentWhat it claimsFirms matched on size, technology, and industry differ systematically by country, because how a society educates, trains, recruits, and promotes its workforce, and its industrial relations, shape how work is divided and supervised, so structure is partly a national product.What it has shownMaurice, Sorge, and Warner (1980) compared closely matched manufacturing units in France, West Germany, and Great Britain and found more pervasive differences in their organization than usually recognized. Whitley (1999) set out a comparative account of business systems.Who disputes itStructural contingency theory stresses culture-free elements of structure; matched comparisons find nationally different shapes of organization.Societal effect and comparative business systems in The Schools of Organization DesignThe network perspective on organizations1985 to the presentWhat it claimsOrganizations and their members are nodes joined by ties, and the pattern of ties shapes what they can do. Economic action is embedded in networks of personal relations (Granovetter 1985), and network forms are a distinct form, not a hybrid of market and hierarchy (Powell 1990).What it has shownPodolny and Page (1998) review the research and find that network forms foster learning, confer status and legitimacy, bring economic benefits, help manage resource dependencies, and give employees considerable autonomy, and they ask for attention to networks' dysfunctions.Who disputes itTransaction cost economics: Williamson treats the hybrid as a third generic form between market and hierarchy; for Powell, network forms are a distinct form, not a mix of the two.The network perspective on organizations in The Schools of Organization DesignComputational organization design and search1990s to the presentWhat it claimsDesign choices interact, so design space is a rugged landscape with many local peaks, and structure affects how well an organization searches it. Decentralizing interdependent decisions can trap units on poor peaks; temporary decentralization, then reintegration, can help.What it has shownMostly simulation, with one field test: Csaszar (2012), with more than 150,000 stock-picking decisions by 609 mutual funds, found that decision-making structure affects the number of initiatives pursued and the omission and commission errors made.Who disputes itNo school in the record disputes it head on; it disputes structural contingency theory, whose bivariate fit, its simulations show, cannot capture how the best design depends on interactions among choices.Computational organization design and search in The Schools of Organization DesignThe new-forms debate1990s to the presentWhat it claimsOrganizations must solve four universal problems (dividing tasks, allocating them, providing rewards, and providing information), and a form is new when it solves them in new ways. Self-managing organizations radically decentralize authority; skeptics hold hierarchy reappears.What it has shownFoss (2003) traced the rise and partial reversal of Oticon's spaghetti organization to the problem of selective intervention. A meta-analysis of 54 studies of 13,914 teams (Greer and colleagues 2018) found that hierarchy within teams on net slightly lowers team performance.Who disputes itBureaucracy and its critics: removing formal structure leaves informal elites whose power is unaccountable (Freeman), and democratic and network organizations are much less hierarchy-free than their labels suggest.The new-forms debate in The Schools of Organization DesignThe algorithmic-management literature2015 to the presentWhat it claimsSoftware does much of the directing, evaluating, and disciplining that managers and rules once did. Kellogg, Valentine, and Christin (2020) call algorithmic control a new contested terrain; Puranam (2021) treats dividing decisions between people and machines as a design problem.What it has shownMostly qualitative field studies of gig work. Wood and colleagues (2019), with 107 interviews in six countries and 679 survey respondents, found that algorithmic management tends to give remote gig workers flexibility and autonomy, but also low pay, isolation, and overwork.Who disputes itLabor process and critical theory reads control at work as contested terrain; Kellogg, Valentine, and Christin take up that view but argue that algorithmic control is distinct from earlier forms.The algorithmic-management literature in The Schools of Organization DesignFunctional structureOrigin: 1911 to 1937.Family: Classical hierarchies.Line and staffOrigin: 1916 to 1943.Family: Classical hierarchies.Multidivisional (M-form) by productOrigin: 1920s practice; named and analyzed 1962 to 1975.Family: Divisionalized forms.Machine bureaucracyOrigin: 1922 (Weber); 1979 (Mintzberg).Family: Classical hierarchies.Divisional by customer or market segmentOrigin: 1937; 2005.Family: Divisionalized forms.Matrix organizationOrigin: 1950s to 1960s practice; analyzed 1971 to 1977.Family: Lateral and multidimensional forms.Co-determined organizationOrigin: 1951 to 1976 (the laws); 1984 to 2022 (the main studies).Family: Forms from other traditions.Socio-technical autonomous work groupsOrigin: 1951 to 1965.Family: Team-based and self-managing forms.Stratified hierarchy (requisite organization)Origin: 1951 to 1989.Family: Classical hierarchies.Cooperative organizationOrigin: 1958 to 1999.Family: Forms from other traditions.Linking-pin organization (System 4)Origin: 1961 to 1967.Family: Team-based and self-managing forms.Divisional by regionOrigin: 1962 to 1972.Family: Divisionalized forms.Adhocracy (innovative organization)Origin: 1968 to 1979.Family: Professional, project, and knowledge forms.J-form (the Japanese firm)Origin: 1968 to 1990.Family: Forms from other traditions.Professional bureaucracyOrigin: 1968 to 1979.Family: Professional, project, and knowledge forms.Holding company (H-form)Origin: 1972 to 1975; 1987.Family: Divisionalized forms.Ambidextrous organizationOrigin: 1976 to 2004.Family: Professional, project, and knowledge forms.Simple structureOrigin: 1979.Family: Classical hierarchies.Hybrid structureOrigin: 1980 to the present.Family: Lateral and multidimensional forms.Missionary (ideological) organizationOrigin: 1980 to 1989.Family: Ideological forms.Network, modular, and virtual organizationOrigin: 1986 to 1990.Family: Network and market-like forms.Transnational and multidimensional organizationOrigin: 1987 to 1989.Family: Lateral and multidimensional forms.Business group (keiretsu, chaebol, family house)Origin: 1988 to 2007.Family: Forms from other traditions.Shamrock organizationOrigin: 1988 to 1989.Family: Network and market-like forms.Federal organizationOrigin: 1989 to 1992.Family: Network and market-like forms.Self-managing organization (less-hierarchical forms)Origin: 1989 to 2017.Family: Team-based and self-managing forms.Boundaryless organizationOrigin: 1990 to 1995.Family: Network and market-like forms.Front-back organizationOrigin: 1990s to 2007.Family: Lateral and multidimensional forms.Professional partnership (P2 form)Origin: 1990.Family: Professional, project, and knowledge forms.The corporate center and shared servicesOrigin: 1991 to 2000.Family: Divisionalized forms.Internal market organizationOrigin: 1993 to 1994.Family: Network and market-like forms.Process (horizontal) organizationOrigin: 1993 to 1999.Family: Lateral and multidimensional forms.Cellular organizationOrigin: 1994 to 1997.Family: Network and market-like forms.Hypertext organizationOrigin: 1994 to 1995.Family: Forms from other traditions.Team-based organizationOrigin: 1995.Family: Team-based and self-managing forms.Project-based organizationOrigin: 2000 to 2006.Family: Professional, project, and knowledge forms.Agile at scaleOrigin: 2001 to 2016.Family: Contemporary and emerging forms.Distributed (all-remote) organizationOrigin: 2002 to 2021.Family: Contemporary and emerging forms.Open-source and community-based organizationOrigin: 2002 to 2007.Family: Contemporary and emerging forms.Algorithmically managed organizationOrigin: 2015 to 2020.Family: Contemporary and emerging forms.Team of teamsOrigin: 2015.Family: Team-based and self-managing forms.

The schools by first year

  1. Bureaucracy and its critics1900s to 1950s, revived from the 1990sWhat it claimsWeber held that rational-legal authority exercised through an office hierarchy, written rules, trained officials, and promotion by qualification is technically superior in precision, speed, and reliability. Critics studied its unintended consequences, Michels's iron law sharpest.What it has shownMerton (1940) argued, with no test, that rules can turn from means into ends; case studies followed. The Aston group concluded that the type's dimensions vary independently, and Wagner's meta-analysis (2021) found that many of their interrelationships have weakened.Who disputes itHuman relations and System 4 sets the costs of impersonal rules to motivation and cooperation against the technical superiority Weber stresses.
  2. Classical administration1910s to 1940s, and in German to the 1970sWhat it claimsThere are general principles of administration, among them division of work, unity of command, a scalar chain of authority, and a limited span of control, and a structure built to them will be efficient in most settings. Taylor added that planners should set work methods.What it has shownThe school offered reasoning and experience, not tests. Woodward (1965) found that the spans and levels of the more successful firms in her sample differed by production system, and Simon (1946) showed that the principles come in pairs that point in opposite directions.Who disputes itStructural contingency theory found that the structure of successful firms varies with technology and environment, where classical writers treat their principles as general.
  3. Human relations and System 41920s to 1960sWhat it claimsOutput depends on the social relations of work, the norms of informal groups, and the style of supervision as much as on formal design. Likert's System 4, overlapping work groups joined by linking-pin managers under participative management, outperforms authoritative systems.What it has shownThe founding evidence is the Hawthorne studies, which later reanalyses dispute (Carey 1967; Levitt and List 2011). Likert's support came largely from his own institute's surveys. Wagner (1994) found participation's effects on performance and satisfaction significant but small.Who disputes itLabor process and critical theory reads human relations as a technique of managerial control rather than a change in the distribution of power.
  4. Transaction cost economics and the M-form hypothesis1937, then the 1970s to the presentWhat it claimsFirms exist, and are organized as they are, to economize on transaction costs. Hierarchy replaces the market when assets are specific, uncertainty is high, and exchange is frequent, and the multidivisional form should outperform the functional form in large, diversified firms.What it has shownArmour and Teece (1978) found, in United States petroleum firms from 1955 to 1973, a positive relationship between the multidivisional form and profitability while the form was spreading, but not once an equilibrium in organizational form was reached.Who disputes itThe network perspective on organizations: Granovetter argued that the theory undersocializes economic action, which is embedded in networks of personal relations that also produce trust and order.
  5. The Carnegie school and the attention-based view1940s to the presentWhat it claimsPeople in organizations are boundedly rational, so structure matters because it sets the premises of their decisions and channels their attention: who sees which problems, which goals they pursue, and which routines they follow. Ocasio makes structure distribute attention.What it has shownMarch and Simon (1958) drew propositions from the existing literature, and Cyert and March (1963) added process models and simulations. Two studies show hierarchy shaping what is sent up as well as what is chosen (Reitzig and Maciejovsky 2015; Keum and See 2017).Who disputes itOrganizational economics: decision rights, authority, and complementarities models a principal and agents with defined objectives; the Carnegie school, firms as coalitions with unresolved goal conflict.
  6. Socio-technical systems1950s to 1980sWhat it claimsAn organization is a social system and a technical system that must be designed together. The same technology admits more than one way of organizing work, and groups that own a whole task and control its variances at the source perform better and are more satisfied.What it has shownTrist and Bamforth (1951) found that longwall mechanization broke up self-regulating work groups. A review of 134 experiments found them extremely successful overall, and Stewart (2006) linked team autonomy to performance; studies of socialist brigades and Volkswagen qualify it.Who disputes itLabor process and critical theory: Kelly argued that labor intensification, not joint optimization, accounts for what socio-technical redesign achieved, and that the part of pay incentives was seriously underestimated.
  7. The economics of the labor-managed firm and of enterprise ownership1958 to the presentWhat it claimsA firm run by its workers behaves differently from one run for investors: Ward modeled the Yugoslav-style firm as maximizing income per worker. Hansmann argued that an ownership form's success depends on the balance between the costs of market contracting and of ownership.What it has shownBurdín (2014) found a 29 percent lower hazard of dissolution for Uruguayan worker-managed firms than for conventional ones, and Fakhfakh, Pérotin, and Gago (2012) found French labor-managed firms as productive or more so in every industry studied.Who disputes itOrganizational economics (Jensen and Meckling) contrasts the labor-managed firm, in which tradable residual claims are legally prohibited, with cooperatives and partnerships that arise out of voluntary contracting.
  8. Modularity and the mirroring hypothesis1960s to the presentWhat it claimsComplex systems are built of nearly decomposable parts, and an organization's structure tends to mirror the architecture of what it makes: modular products allow loosely coupled organizations, and tightly coupled products need tightly coupled teams. Conway's law runs in reverse.What it has shownColfer and Baldwin (2016) review the empirical studies and report both support and principled exceptions. Direct tests point both ways: MacCormack, Baldwin, and Rusnak (2012) found open source products more modular than their commercial pairs; dynamic components break the mirror.Who disputes itNo school in the record disputes it head on; it answers information processing, which meets the coordination load inside the organization; mirroring writers locate it in the product's architecture.
  9. Strategy and structure1960s to 1980sWhat it claimsStructure follows strategy: firms that diversify by product or geography outgrow the centralized functional structure and, after a lag and usually a crisis, adopt divisions. Chandler drew this from the histories of DuPont, General Motors, Standard Oil of New Jersey, and Sears.What it has shownChandler (1962) is comparative business history of four firms set against a wider survey. Rumelt (1974) related diversification and structure to performance, and Egelhoff (1988), with 34 multinationals, found some of Stopford and Wells's relationships supported and others not.Who disputes itInstitutional theory: in Fligstein's model divisions spread with a product-related or unrelated strategy, presidents from sales or finance, and other firms in the industry changing; strategy was one of three.
  10. Structural contingency theory1960s to the presentWhat it claimsThere is no one best structure. Performance depends on fit between structure and contingencies such as environment, technology, size, and strategy, on an open-system view of the organization. Drazin and Van de Ven separate fit as selection, interaction, and systems.What it has shownBurns and Stalker, Woodward, and the Aston group related structure to context; Drazin and Van de Ven (1985) supported selection and systems fit only. Pennings (1975) found that fit did not explain effectiveness; Schoonhoven (1981) found traditional hypotheses unsupported.Who disputes itStrategic choice: Child argued that contingency theory explains structure by the constraints of context and leaves out the political process by which power-holders choose strategic action, structural forms included.
  11. The French bureaucratic school (strategic analysis)1960s to 1980sWhat it claimsA bureaucracy is a system of power relations organized around zones of uncertainty. Impersonal rules and centralization protect members from depending on one another, those who control uncertainties hold power, and, unable to correct its errors, it changes only through crisis.What it has shownLe phénomène bureaucratique (1963; English 1964) rests on two case studies, a clerical agency and a state industrial monopoly. L'acteur et le système (1977; English 1980) is theoretical.Who disputes itSocietal effect and comparative business systems: D'Iribarne argues that national logics of conduct, such as a French logic of honor, explain differences that Crozier attributed to power games.
  12. The Japanese-firm literature1960s to the presentWhat it claimsThe large Japanese firm coordinates operating decisions through horizontal information sharing among semi-autonomous shops and uses its ranking hierarchy mainly as an incentive scheme (Aoki). It creates knowledge through middle-up-down management (Nonaka and Takeuchi).What it has shownAoki (1986) is a formal model. Lincoln, Hanada, and McBride (1986) compared 51 Japanese and 55 United States manufacturing plants, and Nonaka and Takeuchi (1995) rest on case studies, chiefly of Japanese firms. Fruin (1994) found the enterprise system defined at three levels.Who disputes itLabor process and critical theory reads shop-floor delegation as control: Sewell and Wilkinson argue that just-in-time and total quality regimes delegate tactical responsibility while centralizing strategic control.
  13. The Scandinavian and Dutch socio-technical schools1960s to 2000sWhat it claimsThe Scandinavian program sought democracy at work through field experiments with semi-autonomous groups, then through democratic dialogue. The Dutch school's design theory turns complex organizations with simple jobs into simple organizations with complex jobs.What it has shownEmery and Thorsrud reported field experiments in Norwegian industry; Gustavsen (1992) records that they spread less than hoped, his reason for turning to dialogue. Berggren studied work organization in the Swedish auto industry. The Dutch work rests on design cases and argument.Who disputes itThe Japanese-firm literature: defenders of the Toyota system hold that standardized work with employee participation learns faster; Berggren reports Swedish long-cycle plants matching a line plant on productivity.
  14. Configuration theory1970s to the presentWhat it claimsStructures cluster into a small number of internally coherent configurations whose elements reinforce one another, so organizations move between a few types in large jumps, not small steps. Mintzberg's five configurations each rest on one coordinating mechanism.What it has shownDoty, Glick, and Huber (1993) found that fit to Miles and Snow's ideal types predicted effectiveness while fit to Mintzberg's did not. A meta-analysis of 40 tests (Ketchen and colleagues 1997) found that configuration partly explains performance, more so with broad definitions.Who disputes itStructural contingency theory: Donaldson counters that most organizations sit at intermediate points on a continuum of fits, not in a few configurations, and that studies over time find mostly incremental change.
  15. Information processing1970s to the presentWhat it claimsThe more uncertain the task, the more information must be processed during its execution. An organization either reduces that need, through slack resources or self-contained tasks, or raises its capacity, through vertical information systems or lateral relations up to the matrix.What it has shownGalbraith (1973, 1974) built the framework from cases and from Simon's theory of bounded rationality, and Tushman and Nadler (1978) set it out as an integrating concept for design. Daft and Lengel (1986) argued that structure must reduce equivocality as well as supply data.Who disputes itThe Carnegie school and the attention-based view: Ocasio holds that firm behavior results from how the firm channels and distributes attention, so structure governs where attention goes, not only how much is processed.
  16. Labor process and critical theory1970s to the presentWhat it claimsStructure is above all a system of control over labor. Braverman argued that management deskills work by separating conception from execution; Edwards traced a sequence from simple control by the boss to technical control through machines to bureaucratic control through rules.What it has shownHistorical and theoretical (Braverman 1974; Edwards 1979). Delbridge (1995), observing a Japanese-owned plant in England, found that just-in-time and total quality regimes combined the control of labor with management's economic goals more completely than piece rates had.Who disputes itBureaucracy and its critics: Adler argues that labor process theory ignores the progressive socialization of the labor process, which drives long-term skill upgrading, and disputes deskilling as the trend.
  17. Strategic choice1970s to the presentWhat it claimsStructure is the outcome of choices by those with power in the organization, who decide on strategic action, including the structural form, the manipulation of environmental features, and the performance standards to be met. Context constrains but does not determine structure.What it has shownLargely conceptual: Child (1972) built the argument from gaps in contingency findings, and the empirical case rests mostly on the modest share of structural variance contingencies explain. A 2026 review of 42 studies finds upper echelons theory their main theoretical anchor.Who disputes itStructural contingency theory: Donaldson replies that organizations mostly adopt the structures their contingencies dictate, to avoid the loss of performance misfit brings, so choice over structure is at most limited.
  18. The German codetermination literature1970s to the presentWhat it claimsWorks councils and employee board seats form a structural layer through which coordination can become negotiation between management and employees. Defenders argue that it supports long-term employment, training, and cooperation; critics, that it weakens shareholder control.What it has shownJäger, Schoefer, and Heining (2021) found board-level codetermination left wages unchanged and, if anything, raised capital formation. Jirjahn (2011) reports studies pointing to positive works council effects; a meta-analysis found codetermination laws tied to lower productivity.Who disputes itOrganizational economics (Gorton and Schmid) found that firms with equal employee and shareholder representation did worse for their shareholders than firms with one-third employee representation.
  19. Organizational economics: decision rights, authority, and complementarities1976 to the presentWhat it claimsDesign is the joint choice of who holds which decision rights, how performance is measured, and how it is rewarded. Rights should be placed where the specific knowledge lies, formal authority differs from real authority, and practices are complements that pay off in clusters.What it has shownIchniowski, Shaw, and Prennushi (1997) found, on 36 steel finishing lines, that lines using a set of innovative work practices achieved substantially higher productivity, consistent with complementarities. Bloom and colleagues found more decentralization where trust was higher.Who disputes itGhoshal argued that management research has shaped managers' worldview with ideologically inspired amoral theories, built on a scientific model that excludes human intentionality and so denies moral considerations.
  20. Institutional theory1977 to the presentWhat it claimsFormal structures are often adopted because they are legitimate in the organization's field, as rationalized myths, and then decoupled from the work done. Organizations in a field grow alike through coercive, mimetic, and normative isomorphism, whether or not it is efficient.What it has shownTolbert and Zucker (1983) found that city characteristics predicted early but not later adoption of civil service reform, which they read as institutionalization. Palmer, Jennings, and Zhou (1993) found support for institutional and economic accounts of late M-form adoption.Who disputes itStructural contingency theory: Kraatz and Zajac found little support for neoinstitutional predictions in 631 liberal arts colleges, which grew less alike; the change they studied was curricular, not structural.
  21. Population ecology1977 to the presentWhat it claimsOrganizations face strong structural inertia, because selection favors the reliability and accountability of stable structures. Change in a population's forms comes mainly from founding and failure, not adaptation, and changing core features resets the liability of newness.What it has shownAmburgey, Kelly, and Barnett (1993) found that the effects of change on the hazard of failure vary by type of change and over time, and that rates of change depend on how often and how recently an organization has changed. Carroll and Hannan (2000) set out the program's methods.Who disputes itFor structural contingency theory, Donaldson argues that ecology understates managers' capacity to adapt structure.
  22. Resource dependence1978 to the presentWhat it claimsOrganizations depend on outside parties for critical resources, and structure follows the management of that dependence: units that cope with critical dependencies gain power, and boundaries are redrawn through cooptation, joint ventures, and mergers to absorb constraint.What it has shownPfeffer and Salancik (1978) assembled studies of boards, mergers, and joint ventures. A meta-analysis of 157 tests (Drees and Heugens 2013) corroborated the main prediction: organizations meet resource dependencies with interorganizational arrangements that raise their autonomy.Who disputes itTransaction cost economics and the M-form hypothesis explains boundaries by efficiency; resource dependence, by power and constraint.
  23. The business-groups literature1978 to the presentWhat it claimsGroups of legally independent firms bound by ownership and social ties are a durable form of their own, neither one firm nor a market. Where institutions function poorly, groups can benefit member firms and can destroy value; they are sometimes paragons, sometimes parasites.What it has shownKhanna and Palepu (2000) found that affiliates of the most diversified Indian groups outperformed unaffiliated firms. A meta-analysis of 141 studies (Carney and colleagues 2011) found that affiliation lowers performance in general, less so where institutions are underdeveloped.Who disputes itOrganizational economics: agency writers read pyramids and cross-holdings as devices that separate control from ownership; Almeida and Wolfenzon offer a financing rationale for pyramids instead.
  24. Scandinavian institutionalism1980s to the presentWhat it claimsIdeas of organizing do not diffuse unchanged; they travel and are translated as they are adopted, so a form taken up in one place is not the same form elsewhere. Organizations can also be built of organizations (meta-organizations), which behave differently.What it has shownA discussion paper by Czarniawska and Joerges (1995) contrasts the diffusion of ideas with their translation, drawing on examples such as Swedish municipal reform; the work on meta-organizations (Ahrne and Brunsson 2008) is conceptual.Who disputes itInstitutional theory can read the same processes, seen from a translocal view, as institutional isomorphism, though translation holds that each adopter modifies an idea, so an institution re-created elsewhere is new.
  25. Societal effect and comparative business systems1980s to the presentWhat it claimsFirms matched on size, technology, and industry differ systematically by country, because how a society educates, trains, recruits, and promotes its workforce, and its industrial relations, shape how work is divided and supervised, so structure is partly a national product.What it has shownMaurice, Sorge, and Warner (1980) compared closely matched manufacturing units in France, West Germany, and Great Britain and found more pervasive differences in their organization than usually recognized. Whitley (1999) set out a comparative account of business systems.Who disputes itStructural contingency theory stresses culture-free elements of structure; matched comparisons find nationally different shapes of organization.
  26. The network perspective on organizations1985 to the presentWhat it claimsOrganizations and their members are nodes joined by ties, and the pattern of ties shapes what they can do. Economic action is embedded in networks of personal relations (Granovetter 1985), and network forms are a distinct form, not a hybrid of market and hierarchy (Powell 1990).What it has shownPodolny and Page (1998) review the research and find that network forms foster learning, confer status and legitimacy, bring economic benefits, help manage resource dependencies, and give employees considerable autonomy, and they ask for attention to networks' dysfunctions.Who disputes itTransaction cost economics: Williamson treats the hybrid as a third generic form between market and hierarchy; for Powell, network forms are a distinct form, not a mix of the two.
  27. Computational organization design and search1990s to the presentWhat it claimsDesign choices interact, so design space is a rugged landscape with many local peaks, and structure affects how well an organization searches it. Decentralizing interdependent decisions can trap units on poor peaks; temporary decentralization, then reintegration, can help.What it has shownMostly simulation, with one field test: Csaszar (2012), with more than 150,000 stock-picking decisions by 609 mutual funds, found that decision-making structure affects the number of initiatives pursued and the omission and commission errors made.Who disputes itNo school in the record disputes it head on; it disputes structural contingency theory, whose bivariate fit, its simulations show, cannot capture how the best design depends on interactions among choices.
  28. The new-forms debate1990s to the presentWhat it claimsOrganizations must solve four universal problems (dividing tasks, allocating them, providing rewards, and providing information), and a form is new when it solves them in new ways. Self-managing organizations radically decentralize authority; skeptics hold hierarchy reappears.What it has shownFoss (2003) traced the rise and partial reversal of Oticon's spaghetti organization to the problem of selective intervention. A meta-analysis of 54 studies of 13,914 teams (Greer and colleagues 2018) found that hierarchy within teams on net slightly lowers team performance.Who disputes itBureaucracy and its critics: removing formal structure leaves informal elites whose power is unaccountable (Freeman), and democratic and network organizations are much less hierarchy-free than their labels suggest.
  29. The algorithmic-management literature2015 to the presentWhat it claimsSoftware does much of the directing, evaluating, and disciplining that managers and rules once did. Kellogg, Valentine, and Christin (2020) call algorithmic control a new contested terrain; Puranam (2021) treats dividing decisions between people and machines as a design problem.What it has shownMostly qualitative field studies of gig work. Wood and colleagues (2019), with 107 interviews in six countries and 679 survey respondents, found that algorithmic management tends to give remote gig workers flexibility and autonomy, but also low pay, isolation, and overwork.Who disputes itLabor process and critical theory reads control at work as contested terrain; Kellogg, Valentine, and Christin take up that view but argue that algorithmic control is distinct from earlier forms.

The forms by first year

  1. Functional structure: 1911 to 1937
  2. Line and staff: 1916 to 1943
  3. Multidivisional (M-form) by product: 1920s practice; named and analyzed 1962 to 1975
  4. Machine bureaucracy: 1922 (Weber); 1979 (Mintzberg)
  5. Divisional by customer or market segment: 1937; 2005
  6. Matrix organization: 1950s to 1960s practice; analyzed 1971 to 1977
  7. Co-determined organization: 1951 to 1976 (the laws); 1984 to 2022 (the main studies)
  8. Socio-technical autonomous work groups: 1951 to 1965
  9. Stratified hierarchy (requisite organization): 1951 to 1989
  10. Cooperative organization: 1958 to 1999
  11. Linking-pin organization (System 4): 1961 to 1967
  12. Divisional by region: 1962 to 1972
  13. Adhocracy (innovative organization): 1968 to 1979
  14. J-form (the Japanese firm): 1968 to 1990
  15. Professional bureaucracy: 1968 to 1979
  16. Holding company (H-form): 1972 to 1975; 1987
  17. Ambidextrous organization: 1976 to 2004
  18. Simple structure: 1979
  19. Hybrid structure: 1980 to the present
  20. Missionary (ideological) organization: 1980 to 1989
  21. Network, modular, and virtual organization: 1986 to 1990
  22. Transnational and multidimensional organization: 1987 to 1989
  23. Business group (keiretsu, chaebol, family house): 1988 to 2007
  24. Shamrock organization: 1988 to 1989
  25. Federal organization: 1989 to 1992
  26. Self-managing organization (less-hierarchical forms): 1989 to 2017
  27. Boundaryless organization: 1990 to 1995
  28. Front-back organization: 1990s to 2007
  29. Professional partnership (P2 form): 1990
  30. The corporate center and shared services: 1991 to 2000
  31. Internal market organization: 1993 to 1994
  32. Process (horizontal) organization: 1993 to 1999
  33. Cellular organization: 1994 to 1997
  34. Hypertext organization: 1994 to 1995
  35. Team-based organization: 1995
  36. Project-based organization: 2000 to 2006
  37. Agile at scale: 2001 to 2016
  38. Distributed (all-remote) organization: 2002 to 2021
  39. Open-source and community-based organization: 2002 to 2007
  40. Algorithmically managed organization: 2015 to 2020
  41. Team of teams: 2015

Twenty-three of the 29 schools run to the present, and 16 of those began in the 1970s or later. The forms arrive in waves: 14 of the 41 first appear between 1985 and 1994.

Source: Fayol 1949; Weber 1978; Mayo 1933; Trist and Bamforth 1951, an interview-based field study in one industry; Burns and Stalker 1961, a field study of twenty firms; Mintzberg 1979; Child 1972a; Coase 1937; Meyer and Rowan 1977; Hannan and Freeman 1977; Galbraith 1973; Jensen and Meckling 1976; Crozier 1963; Emery and Thorsrud 1969; Yoshino 1968; Streeck 1984a; Kellogg and colleagues 2020, a review of earlier research through one theoretical lens, with no new data; Puranam and colleagues 2014, a conceptual argument; Chandler 1962, several independent case histories by a historian; Pfeffer and Salancik 1978; Simon 1946; Maurice and colleagues 1980, a comparison of matched factories in three countries; Levinthal 1997; Simon 1962; Braverman 1974; Hamilton and Biggart 1988, a comparison of three economies by scholars; Ward 1958; Czarniawska and Joerges 1995; Granovetter 1985.

Scholars modeled and studied it from 1958 to 1999. Benjamin Ward (1958) modeled a firm run by its workers on Yugoslav self-management; Joyce Rothschild-Whitt (1979) set out the collectivist organization against rational-bureaucratic models; William Foote Whyte and Kathleen King Whyte (1988) and George Cheney (1999) studied Mondragon; and Henry Hansmann (1996) set cooperatives beside employee-owned firms, mutuals, and nonprofits.

At issue was whether member ownership and democratic control can run an enterprise at scale, and when ownership by members beats ownership by investors.

Where it fits

Ten factors rest on our judgment and two on evidence; two are contested, and seven are partial at every level.

The cooperative organization against the twelve contingency factors

Each factor at its three levels, Fits, Partial, or Strain; select a row for its reason, sources, and grade.

Select a factor to read its reason, sources, basis, and grade.Size. Member ownership works at small and mid size; as cooperatives grow, democratic bodies struggle to oversee management on hard strategic choices, and structures must be renewed regularly. Basis: Evidence. Grade: a multi-firm empirical study or several independent case studies by scholars. Sources: Fakhfakh and colleagues 2012; Cornforth 1995; Basterretxea and colleagues 2022; Hansmann 1996; Hansmann 2013. View 1: Small fits, Medium fits, Large partial. In one large cooperative the governing bodies were limited in supervising management on difficult strategic decisions, and collective decision making has costs that rise as owners' interests diverge, which a growing membership can bring. Sources: Basterretxea and colleagues 2022; Hansmann 1996; Hansmann 2013. View 2: Small fits, Medium fits, Large fits. Labor-managed firms are not smaller than conventional ones and grow as fast or faster, and degeneration is not inevitable as cooperatives grow. Sources: Fakhfakh and colleagues 2012; Cornforth 1995.Age. Worker-managed firms in one country had a lower hazard of dissolution than conventional ones, and old cooperatives face pressure to drift from member control, which some resist by renewing their structures; reading these premises as levels of age is our judgment. Basis: Judgment. Sources: Cornforth 1995; Russell and colleagues 2013; Burdín 2014.Environmental uncertainty (unpredictability, dynamism). Member control gave employment stability and a lower hazard of dissolution in one country's worker-managed firms, and at one large cooperative the model affected the speed and quality of decision making on hard strategic choices; reading that as weakness under sharp change is our judgment. Basis: Judgment. Sources: Basterretxea and colleagues 2022; Burdín 2014; Pennings 1975.Environmental complexity. Member ownership and one member, one vote run under any environment; nothing read ties the form to complexity. Basis: Judgment. Sources: Hansmann 1996.Munificence and hostility. Cooperatives enter and serve poorly served, low-income markets that investor-owned firms neglect. Basis: Evidence. Grade: a multi-firm empirical study or several independent case studies by scholars. Sources: Jeong and colleagues 2025; Hansmann 1996; Pennings 1975.Diversity of products and markets. Member owners govern best when their needs are alike; the more diverse what they need, the harder one member, one vote serves them. Basis: Judgment. Sources: Hansmann 1996; Jeong and colleagues 2025; Hansmann 2013; Leviten-Reid and Fairbairn 2011. View 1: Single or dominant business fits, Related diversification partial, Unrelated diversification strain. Member owners govern best when their needs are alike; the more diverse what they need, the harder one member, one vote serves them. Sources: Hansmann 1996; Hansmann 2013; Jeong and colleagues 2025. View 2: Single or dominant business fits, Related diversification partial, Unrelated diversification partial. A review of multi-stakeholder cooperatives found different groups of members able to govern themselves successfully in one cooperative, contrary to the prediction that heterogeneous owners fail, so diverse needs need not strain the form. Sources: Leviten-Reid and Fairbairn 2011.Strategy type. Member ownership sits over any operating structure; one case found the governing bodies limited in handling difficult strategic decisions, but no work ties the form to a strategy type. Basis: Judgment. Sources: Basterretxea and colleagues 2022; Hansmann 2013.Technology and routineness. Member governance overlays any production system, so routineness does not decide the form. Basis: Judgment. Sources: Hansmann 2013.Interdependence. Member ownership and one member, one vote concern governance, not the workflow links between units. Basis: Judgment. Sources: Hansmann 2013.Knowledge intensity and professionalization. Member ownership has worked among farmers, factory workers, and professionals, and no work read ties the form to training levels. Basis: Judgment. Sources: Hansmann 1996; Bunders and colleagues 2022.Global integration pressure. No work read ties member ownership to integration pressure across countries, so this factor gives no reason for or against. Basis: Judgment. Sources: Hansmann 1996.Local responsiveness pressure. No work read ties member ownership to local responsiveness across countries, so this factor gives no reason for or against. Basis: Judgment. Sources: Hansmann 1996.

Counting each contested cell by its first view, the 36 settings read Fits at 8, Partial at 27, and Strain at 1, the one strain unrelated diversification, which the other view reads as Partial. Two of the twelve cells are contested, size and diversity, and ten rest on judgment.

Source: Fakhfakh and colleagues 2012, a study of large representative samples of French firms; Cornforth 1995, four case studies; Basterretxea and colleagues 2022, one case study; Hansmann 1996; Hansmann 2013; Russell and colleagues 2013, a study of a whole population of communities over two decades; Burdín 2014, a survival study of many firms in one country; Pennings 1975, a quantitative field test of the structural-contingency model; Jeong and colleagues 2025, a multi-firm quantitative study; Leviten-Reid and Fairbairn 2011, a narrative review of the available evidence; Bunders and colleagues 2022, a conceptual feasibility analysis, illustrated with a table of 31 platform cooperatives.

Your own situation against the cooperative organization

Set any factor to outline its cell in the strip above; the lines under the switches give the counts, the form's place among the 41, and the misfit rules that fire.

Size
Age
Environmental uncertainty (unpredictability, dynamism)
Environmental complexity
Munificence and hostility
Diversity of products and markets
Strategy type
Technology and routineness
Interdependence
Knowledge intensity and professionalization
Global integration pressure
Local responsiveness pressure

Set: 0 of 12 factors. Fits on 0, Partial on 0, Strain on 0, Contested on 0.

Its place in the explorer's rankingEvery factor is on Any: all 41 forms tie, and the explorer lists them alphabetically.1st of 411st of 41, tied with one other1st of 41, tied with 0 othersSunk by a misfit rule: 1st of 41Sunk by a misfit rule: 1st of 41, tied with one otherSunk by a misfit rule: 1st of 41, tied with 0 others

No misfit rule can fire for this form at any setting.

Ranking rule: by count of Fits on the factors the reader has set, then fewest Strains, then alphabetical; a fired misfit rule that no source disputes sinks the form to the bottom when every level of the form's profile meets it, a disputed one, or one that meets the form only through one end of a spanned level, one view of a contested profile cell, or one part of a two-part form, is flagged on the row (with both views where it is disputed), and a misfit between two of the reader's own settings is shown once above the list; a contested cell counts only where its views agree at the reader's level, and otherwise shows as Contested; factors on "Any" count for nothing; with every factor on "Any" the list is alphabetical and says so.

Open these settings in the explorer

No misfit rule can fire for this form at any setting.

None of the 39 contingency misfit rules names the form or meets its profile, which sits at medium formalization and mixed centralization, so no setting sinks or flags it.

Source: Burton and Obel 2004; Burton and colleagues 2020a.

  • Size. Contested, evidence. Fits small and medium, partial large: in one large cooperative the governing bodies were limited on difficult strategic decisions (Basterretxea and colleagues 2022, one case study), and collective decision making grows costly as owners' interests diverge (Hansmann 2013, a theory), which on our reading a growing membership can bring; that case's finding is not tied to size. Or fits at every size: labor-managed firms are not smaller than conventional ones and grow as fast or faster (Fakhfakh, Pérotin, and Gago 2012, a study of large representative samples of French firms), and degeneration is not inevitable as cooperatives grow (Cornforth 1995, four case studies). The ranking counts small and medium as fits and shows large as Contested.
  • Age. Our judgment: fits young and established, partial old, since old cooperatives face pressure to drift from member control, which some resist by renewing their structures. Its premises do not vary age: Burdín's (2014) survival study found Uruguayan worker-managed firms less likely than conventional ones to dissolve; Russell and colleagues' whole-population study tied kibbutz reform to weakness; Cornforth's four case studies found degeneration not inevitable.
  • Environmental uncertainty. Our judgment: fits stable and shifting, partial unpredictable. Premises: Burdín's survival study ties that lower hazard in one country to employment stability, and at Fagor (one case study) the model affected the speed and quality of decision making, its abstract not saying which way. Neither varies uncertainty.
  • Munificence and hostility. Evidence, a multi-firm quantitative study: fits hostile, partial neutral and munificent. Cooperative internet providers in the United States were likelier than investor-owned firms to enter poorly served rural and low-income communities, and served them better (Jeong, Kaul, and Luo 2025). That matches half the hostile level: thin markets with weak incumbents, not intense competition, in one industry, a public service with positive externalities. It shows who enters and the quality served, not how the cooperative fares as an organization. Pennings (1975), a quantitative field test of the structural-contingency model, found environment and structure fit failing to explain effectiveness, a limit here and on uncertainty, though Donaldson (2001) traces such failures to method.
  • Diversity. Contested, our judgment in both views: fits a single business, partial related. Unrelated is strain in view one, on Hansmann's contracting and ownership costs (1996) and collective decisions growing costly as owners' interests diverge (2013), and because in Jeong and colleagues' multi-firm quantitative study the service advantage was strongest where needs were less diverse. It is partial in view two, on Leviten-Reid and Fairbairn's (2011) narrative review, against the prediction that heterogeneous owners fail. Both read members' needs, not products; the ranking shows unrelated as Contested.
  • Strategy. Our judgment: partial throughout. The premise is one case study, Fagor's governance (Basterretxea and colleagues); no work ties the form to a strategy type.
  • Complexity, technology, interdependence, knowledge intensity, global integration, and local responsiveness. Our judgment: partial throughout. On our reading member governance overlays any production system and workflow; no work read ties the form to complexity or to pressures across countries. Bunders and colleagues' (2022) conceptual feasibility analysis, not a test, favors platform cooperatives for professional jobs.

What it does well

Doucouliagos's (1995) meta-analysis of 43 published studies found worker participation in decisions, profit sharing, and worker ownership associated with higher productivity, more strongly in labor-managed firms. Fakhfakh and colleagues, a study of large representative samples of French firms, found labor-managed firms as productive as conventional ones or more so in every industry studied. Burdín's survival study of many Uruguayan firms found a 29 percent lower hazard of dissolution for worker-managed ones, tied to greater employment stability.

Inside Eroski, cooperative hypermarkets grew sales significantly faster than stores with modest employee ownership and limited voice, though supermarkets showed no significant difference (Arando, Gago, Jones, and Kato 2015, an econometric study of stores inside one cooperative). Cooperative members there were better paid than peers yet less satisfied with their jobs than those stores' workers, which the authors read as higher expectations or a high-stress work system.

What it costs

Collective decisions cost more as owners' interests diverge. Hansmann (2013), a theory, argues that this is why firms with more than a few owners are owned by one homogeneous class of patrons, and notes the lack of systematic evidence on it. Against the decision-cost prediction that multi-stakeholder governance is untenable, Leviten-Reid and Fairbairn (2011), a narrative review of a small evidence base mostly from Québec and Italy, find different groups governing one cooperative successfully, untested over time.

Oversight is the second, as at Fagor (one case study). Growth brings a third: in Cornforth's four case studies, growing cooperatives built new management structures, which he concludes need regular review to stay efficient and renew democracy.

Fakhfakh and colleagues' study of large representative samples of French firms runs against the hypothesis that self-financed labor-managed firms underinvest.

How it fails

How the cooperative organization fails, and the coordination failures behind it

The entry's failure modes at the left, each tied to the Coordination Failures patterns it names at the right; a pattern links its entry there.

Oversight-body failureAggregation incoherenceConstraint drift across delegationCaptured or dependent verification
Oversight-body failureAggregation incoherenceConstraint drift across delegationCaptured or dependent verification

How many ties the failure has. Highest: Governing bodies cannot oversee management on the hard decisionsCollective choice stalls as members' interests divergeMember control drifts toward management and the marketMember democracy holds only within limited boundsOversight-body failureAggregation incoherenceConstraint drift across delegationCaptured or dependent verification

Select a failure to read its place in the network.Governing bodies cannot oversee management on the hard decisions. Degree 1Collective choice stalls as members' interests diverge. Degree 1Member control drifts toward management and the market. Degree 1Member democracy holds only within limited bounds. Degree 1Oversight-body failure. Degree 1Aggregation incoherence. Degree 1Constraint drift across delegation. Degree 1Captured or dependent verification. Degree 1
FailureDegree
Governing bodies cannot oversee management on the hard decisions1
Collective choice stalls as members' interests diverge1
Member control drifts toward management and the market1
Member democracy holds only within limited bounds1
Oversight-body failure1
Aggregation incoherence1
Constraint drift across delegation1
Captured or dependent verification1

Four failure modes name four patterns, one each: oversight-body failure, aggregation incoherence, constraint drift across delegation, and captured or dependent verification. Every tie is our reading, and the third, the degeneration thesis, is disputed by studies finding degeneration not inevitable, resisted, and even reversed.

Source: Basterretxea and colleagues 2022, one case study; Hansmann 2013; Cornforth 1995, four case studies; Siedlok and colleagues 2024, one longitudinal case study; Gorbachev and Semerikova 2023, an archival study of one region; Rojek and Wilson 1987, conceptual.

The governing bodies cannot oversee management on the hard decisions. At Fagor (Basterretxea and colleagues 2022, one case study) the three governing bodies were limited in supervising and working with management on difficult strategic decisions, which the authors say might have contributed to the bankruptcy. Our reading: oversight-body failure.

Collective choice stalls as members' interests diverge. Hansmann's (2013) costs of collective decision making rise with the heterogeneity of owners' interests. On our reading, pushed far enough, one member, one vote yields no stable choice, close to aggregation incoherence. No study recorded here measures it; Leviten-Reid and Fairbairn's review finds the evidence against the prediction of failure.

Member control drifts toward management and the market. The degeneration thesis holds that producer cooperatives lose their democratic character as they age and grow; our reading is constraint drift across delegation. Against it, Cornforth (1995), four case studies of survivors, details how regeneration may occur, and Siedlok and colleagues (2024), one longitudinal case study, show pressures on Zespri, a producer cooperative, to degenerate resisted and even reversed.

Member democracy holds only within limited bounds. Gorbachev and Semerikova (2023), an archival study of one region, question the thesis that collective farm chairmen were appointed from above. In the Middle Urals from 1965 to 1982 they find at least three routes: members electing a candidate independent of the party committee, infrequently; the meeting confirming the committee's candidate, mostly unanimously, though some resisted; and a compromise. Democracy existed, they conclude, within limited bounds. Rojek and Wilson (1987), conceptual, call Yugoslav self-management largely a myth. Our reading: captured or dependent verification.

This profile sits at medium and mixed, and Burton and Obel's (2004) propositions, from the most developed scholarly fit model, fire on formalization or centralization at an extreme; no misfit rule names the form or meets its profile.

What the research found

Some theories predicted that worker-managed firms are prone to fail in competitive markets; a classic hypothesis held that labor-managed firms relying on collective self-finance underinvest; and received wisdom held them small. Burdín, a survival study of many firms in one country, does not bear out the first; Fakhfakh and colleagues, a study of large representative samples of French firms, found them neither smaller nor at inefficiently low scales, on observational data. Jensen and Meckling (1979), a theoretical analysis, set the labor-managed firm, which bars tradable residual claims, against cooperatives and partnerships formed by voluntary contracting; Berti and Pitelis (2022), conceptual, answer that under open team production a cooperative and capitalist hybrid can hold efficiency advantages over both. Doucouliagos's meta-analysis of 43 published studies leaves publication bias and endogeneity open.

Inside the form, Slade Shantz and colleagues (2020), a field experiment across 40 new rural Ghanaian cooperatives, found hierarchical formal control lowering collective psychological ownership and so raising conflict, depending on informal hierarchy; the abstract reports no performance. Prašnikar, Svejnar, and Klinedinst (1992), a panel study of a stratified random sample of Yugoslav firms, found productive efficiency unaffected by legally imposed divisionalization.

Russell and colleagues (2013), a study of all 248 nonreligious kibbutzim over two decades, found the weaker most open to reform and reforms spreading to stronger kibbutzim by imitation: on our reading, existing kibbutzim adapting, not the founding and failure through which population ecology holds that forms mainly change (Hannan and Freeman 1977, 1984). Two dissents answer that school: Donaldson (1995), in a disputed critique, says it understates managers' capacity to adapt, and Astley and Van de Ven (1983) set its deterministic view against strategic choice, a standoff Lewin and Volberda (1999, 2003) propose to reframe as coevolution.

Schmidt and Bouville (2026), the most recent study and one case study, follow a factory's conversion into a worker cooperative; their abstract does not describe the structure after the takeover.

The evidence ledger holds 22 studies filed under this form.

In practice: one published case

Fagor Electrodomésticos is one case study, by Basterretxea, Cornforth, and Heras-Saizarbitoria (2022), "Corporate governance as a key aspect in the failure of worker cooperatives," read here in its abstract.

For decades the world's largest industrial cooperative, Fagor Electrodomésticos governed itself through a General Assembly, a Governing Council, and a Social Council.

Fagor went bankrupt. The study evaluated how those three bodies worked, and how the cooperative model affected the speed and quality of its decision making.

The authors conclude that the governing bodies were limited in their ability to supervise management and to work with it on difficult strategic decisions, and that the cooperative model and its governance might have contributed to the bankruptcy. They propose governance measures to help other large cooperatives combine democratic control with economically sound governance.

Their analysis covers one firm's governance difficulties, and they say only that the model might have contributed. Their abstract does not say in which direction the model moved speed and quality. The search also looked at Whyte and Whyte (1988) and Cheney (1999) on Mondragon, in brief passages of their scans, not read in full and not used as the case, and at Arando and colleagues (2015) on Eroski.

Source: Basterretxea and colleagues 2022. Corporate governance as a key aspect in the failure of worker cooperatives, Economic and Industrial Democracy 43(1), 362 to 387 (online 2020); one case study.

Variants and near relatives

Worker cooperative group (Mondragon). Worker-owned firms federated into a group sharing support bodies, Eroski its retail cooperative (Whyte and Whyte 1988; Cheney 1999; Arando and colleagues 2015).

Consumer and producer cooperatives. Owned by their customers or their suppliers (Hansmann 1996). He counts partnerships of service professionals among employee-owned firms, as producer cooperatives of a special type.

Multi-stakeholder cooperative. More than one class of stakeholder governs together, where consumer and producer cooperatives have one (Leviten-Reid and Fairbairn 2011, a narrative review). Hybrid social enterprise is a different sense.

Federated three-tier cooperative (the Anand pattern, AMUL). Village societies collect milk, thirteen district unions process it, and a state federation markets it, each tier a legal entity whose farmer board is drawn from the tier below (Chandra and Tirupati 2002, one case study). The producers essentially own the stack, where the federal entry's nonprofit federation is an association over affiliates.

Labor-managed firm. The self-managed Yugoslav enterprise run by its workers' council (Ward 1958).

Basic organizations of associated labor. Yugoslavia's 1971 constitutional amendment and 1974 constitution set out to break enterprises into the smallest viable units, each expected to decide most economic matters and to bargain with the others. Bargaining between units belongs to the internal market entry.

Kibbutz. Israel's communal settlement and its enterprises, collective in living, working, and income until reforms from the late 1980s (Russell and colleagues 2013, a whole-population study).

Soviet collective farm (kolkhoz). The Soviet agricultural artel (Vucinich 1949). The typical small 1920s kolkhoz governed itself in law and largely in practice, its general meeting supreme and able to replace the head it elected (Davies 1980). The planned economy lies outside the boundary.

Collectivist-democratic organization. Rothschild-Whitt's (1979) ideal type, drawn from organizations such as free clinics and food cooperatives, vesting authority in the collective with minimal rules.

Worker-recuperated enterprise. Firms their workers took over and run as cooperatives, studied above all in Argentina, where Vieta's (2012) account is set; at Vio.Me in Thessaloniki, over 1,000 supporters may join the workers' assembly with an advisory vote (Daskalaki and Kokkinidis 2017, two qualitative case studies by members of the initiative).

Platform cooperative. Members own the app that matches workers to gigs, against the investor-owned platforms of the algorithmically managed organization (Bunders and colleagues 2022, a conceptual feasibility analysis).

In the Co-determined organization, the nearest neighbor, the employees of a firm that investors own have a voice by statute; in a cooperative the members own the enterprise and hold final authority, one member, one vote. Hansmann counts the Professional partnership a special producer cooperative, so it is kin on ownership; on our reading, there ownership, production, and management are fused in each partner, where a cooperative's members oversee management through an elected council. The kibbutz and the collectivist-democratic organization sit near the Missionary organization too, which coordinates through internalized beliefs whoever owns it. A firm held in trust for its workers with an elected council, such as the John Lewis Partnership, belongs to the Co-determined organization: a trust, not the members, holds it (Cathcart 2013; Paranque and Willmott 2014). Employee ownership plans belong to People & Talent. The Self-managing organization removes the manager-subordinate relationship; a cooperative keeps management under its members.

The cooperative beside its nearest neighbor, the co-determined organization

Select a number to fill what it marks in both drawings; the list under them gives the dimensions on which the two profiles differ.

Members own the enterprise and hold final authority one member, one vote, where codetermination gives a voice to the employees of a firm that investors own.

Cooperative organization

ElectsAppoints and overseesMembersGoverningcouncilManagementOperating lineGeneralassemblyGoverningcouncilManagementFunctionalunitProduct unitBy function or by productDN12233
ElectsAppoints and overseesMembersGoverning councilManagementOperating lineAssemblyCouncilManagersFunctionProductBy function or by productDN12233

Reports toDDirect supervisionNStandardization of norms

Co-determined organization

NegotiateManagement andcouncilOperatingstructureManagementWorks councilFunctionalunitProduct unitBy function or by productM123
NegotiateManagement and councilOperating structureManagersCouncilFunctionProductBy function or by productM123

Reports toAdjust to each other directlyMMutual adjustment

  1. The members own the cooperative and hold final authority, one member, one vote, where the co-determined firm's employees elect a works council that holds legal rights without ownership.
  2. The council the members elect stands above management, appointing and overseeing it. The works council stands beside co-determined management with no reporting line between them.
  3. Management supervises directly and shared norms hold across the cooperative, whereas co-determined management and the council coordinate by mutual adjustment, which can become negotiation.

Differs on 4 of 11 dimensions

  • Standardization and formalization Medium; Co-determined organization: Medium to high
  • Decision rights and the locus of authority Vertical and horizontal decentralization; Co-determined organization: Selective vertical and horizontal decentralization
  • Prime coordinating mechanism Direct supervision and standardization of norms; Co-determined organization: Mutual adjustment
  • Mode of exchange and control Bureaucracy and clan; Co-determined organization: Bureaucracy

In both forms people elect a body that acts for them while management runs the line, and both leave the grouping beneath to the operating structure. A cooperative's members gain that voice by owning the enterprise, where codetermination gives it by statute to the employees of a firm that investors own.

Source: Hansmann 1996; Whyte and Whyte 1988; Cheney 1999; Jackson 2005; Streeck 1984a.

Moving into or out of it

Two routes lead into the form. Founding comes where incumbents leave room or threaten farmers' autonomy (Boone and Özcan 2014 and Liu and Guenther 2024, each a quantitative study across one national industry), though communities the Spanish flu struck could not form new retail cooperatives, an effect that weakened over time, countered by civic capacity to form diverse nonprofits (Rao and Greve 2018, a quantitative historical study). In takeovers, from the early 1990s Argentina's workers reopened failing or failed firms, usually as cooperatives (Vieta 2012, ungraded here).

Fagor exited by going bankrupt. Within the form came Yugoslavia's 1971 to 1974 program to split self-managed enterprises into basic organizations, political forces largely setting how far (Prašnikar and colleagues, a panel study of firms in one country), its 1989 law ending compulsory divisionalization, and the kibbutz reforms from the late 1980s.

For Hannan and Freeman (1984), reorganization sets the liability-of-newness clock back toward zero; Amburgey, Kelly, and Barnett (1993), a quantitative study of organizational change and failure rates, found the effects of change on failure varying by type of change and over time. Change & Transformation covers how a reorganization is run.

The thinking behind it

Benjamin Ward ("The firm in Illyria," 1958): a firm whose directors the workers' council appoints maximizes wages per worker; a model, behind the labor-managed firm variant.

Joyce Rothschild-Whitt (1979): the collectivist organization, an ideal type drawn from small organizations, vesting authority in the collective; the collectivist-democratic variant.

William Foote Whyte (Making Mondragón, 1988, with Kathleen King Whyte) and George Cheney (Values at Work, 1999): how Mondragon grew into a federated group and participation met market pressure; the worker cooperative group.

Henry Hansmann (1996, 2013): ownership by one class of patrons, set by contracting and ownership costs, with collective decisions growing costly as owners' interests diverge; a theory, behind the diversity judgment and the first cost.

Raymond Russell (2013, a whole-population study): kibbutz reform spreading by imitation from weaker to stronger; how the kibbutz left its purer version.

Stephen R. Sacks (1983): whether splitting Yugoslav firms into self-managed units cost efficiency, asked with transaction cost analysis; the basic organizations variant.

Also called

Co-op, worker cooperative, member-owned organization, labor-managed firm, and self-managed enterprise. The sources also write of the Illyrian firm, the worker-managed firm, the producer cooperative, the collectivist organization, workers' self-management, the kolkhoz and agricultural artel, and the basic organization of associated labor (BOAL).

Works cited

On this page, “read” means read by this series: where a line says a work, or part of one, was not read, the series did not read it.

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