A General Model of Codetermination

Abstract

Attempts to compare the so-called “codetermined” firm with the “conventional” capitalist firm tend to run into difficulty quickly because there is, normally, no general agreement on the precise characteristics of the respective organizations being compared. Given the possible variations in the institutional arrangements of codetermination, many different types of codetermined firms are conceivable.¹ Similarly, there are many variant forms of conventional (or non-participatory) firms. And, depending on structure, each separate firm, codetermined or conventional, can be expected to exhibit its own distinctive pattern of behavior. In principle, the new property-rights approach to comparative economics provides a general framework for analyzing the various organizational cases. By examining systematically the effects of different institutional configurations on transaction costs and economic incentives, predictions about the behavior of firms can be made. In this way,then, it is possible to relate variant models of codetermination to each other and to models of the conventional capitalist firm. But the possibility of conducting methodical analysis does not banish all problems. If, as we would anticipate, the behavior of a codetermined firm is quite sensitive to the specific institutional structure established to implement codetermination,² the task still remains to define the particular type of codetermined firm we wish to consider. Moreover, if questions of relative efficiency are to be broached,it is also necessary to decide on the type of non-participatory firm that will be used as the basis for behavioral comparisons.