No Heir apparent? Exploring the Worker Co-operative Model as a Solution to Family Business Continuity

Issues: Volume 6, Issue 2
Authors: LINDA MURPHY, OLIVE MCCARTHY, BRIDGET CARROLL

Family businesses, with no apparent heir, face the risk of discontinuity. While a number of family businesses rely heavily on non-family employees, the role of non-family employees in the continuity of family businesses is under-researched. The workers’ co-operative model offers one way to address this gap as it represents a model whereby non-family employees gain a stake in ownership whilst the family remains involved. In practice, conversion to ensure continuity is actively promoted in a number of countries. In this paper, the authors explore the role of the workers’ co-operative model as one possible solution to succession difficulties facing family firms. Based on the reported experiences in a number of countries, we identify the motivations behind conversion, the barriers faced and the benefits accruing. We find that, in theory, the worker co-operative model merits the attention of family business scholars as a means of securing continuity and survival of family business. We explore the factors that appear to aid or hinder successful conversions in practice and we make recommendations to policy-makers surrounding the supports required to encourage and facilitate successful conversion.

Keywords: WORKERS CO-OPERATIVE MODEL; FAMILY BUSINESSES; CONVERSION; CONTINUITY; SUCCESSION
JEL classification: O10; P13
DOI: http://dx.doi.org/10.5947/jeod.2017.008
About authors: Bridget Carroll    Linda Murphy    Olive McCarthy    Download .PDF