Business Ownership by Workers: Are WorkerCooperatives a Viable Option?

One possible strategy for both succession and new business development is employee ownership.New business formation as an employee-owned firm or cooperative may have some advantagesover formation as a sole proprietorship or partnership: pooling financial resources, spreading riskand combining the various knowledge and skills of the members involved. In the case ofbusiness succession, selling to employees provides a tax benefit to the owners and increases theprobability that the business will continue to exist in its current location, benefitting both theemployees themselves and the local community. While worker cooperatives (or employeeownedcooperatives) are currently rare in the United States, successful examples exist,suggesting potential for future development of this type of organization. This paper reviews theliterature on worker cooperatives and presents data on the extent and nature of workercooperatives in the United States. It concludes with a discussion of the implications foremployee-owned cooperative development in Iowa and provides suggestions for future researchand outreach programming on this topic.[...]