Psychocultural Differences and “Labor-Managed Firm” Distributions Across the United States

Authors: Ian D MacFarlane*, EA Engineering, Science, and Technology, Inc., PBC, Key MacFarlane, University of California Santa Cruz
Topics: Economic Geography, Regional Geography, Social Geography
Keywords: ownership, psychology, cultural differences, big-five personality, cooperative, economic geography, firm
Session Type: Paper
Day: 4/4/2019
Start / End Time: 1:10 PM / 2:50 PM
Room: Diplomat Room, Omni, West
Presentation File: No File Uploaded

Workers in Labor-Managed Firms (LMFs), such as worker cooperatives and professional partnerships, have ultimate control rights of the firm. While LMFs are often found to be more economically efficient and surviving than capital-managed firms (investor controlled), their rarity in market economies has fueled much debate. One possible explanation is that LMFs face formation obstacles, e.g., entry barriers; however, relatively little research on the formation explanation exists. We hypothesize that LMF formation may be related to the psychocultural environment in which the formation agents (e.g., entrepreneurs) operate. We begin to fill the research gap by characterizing the psychocultural conditions where LMFs are more prevalent. Hofstede’s seminal 1980’s cultural dimensions theory (e.g., individualism-collectivism) precipitated numerous studies using geographic cultural difference methods to explore social and economic phenomena. More recently, social psychologists such as Jason Rentfrow have similarly used the “Big Five” personality traits (openness, conscientiousness, extroversion, agreeableness, neuroticism) of regional populations in cross-cultural differences research. Via exploratory multiple-regression modeling, we applied existing research on cultural and personality dimensions and traits (independent variables) to LMF distributions (dependent) across the 48 contiguous United States (state as unit of analysis). Three LMF types were studied: worker cooperatives, partnership entities, and firms owned by Employee Stock Ownership Plans, a type of hybrid LMF. Coefficient valences for variables with significant modeled correlation support conceptual psychocultural profiles for each LMF type, e.g., showing population openness positively related to cooperatives concentration, but negatively related to the two other, perhaps less pure, LMF types. Results and research/policy implications are described.

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