An exploratory analysis of the impact of Co-operative and Mutual Enterprise (CME) and Equity Owned Firm (EOF) models on employment returns and employment outcomes
This report examines the relationship between employment and firm returns comparing two distinct entity models, Equity Owned Firms (EOFs) and Co-operative and Mutual Enterprises (CMEs). The research was commissioned by the Business Council of Co-operatives and Mutuals and conducted by Per Capita Australia.
The report identifies significant differences in the employment maintained by both entity models. CMEs were shown to be more likely to employ staff (part time or permanent) at lower profit levels, than EOFs, that showed a propensity to hire an equivalent staff number only at higher profit levels.
Co-operative and mutual enterprises are a distinct form of socio-economic organisation. Driven by shared values and principles, CMEs have played a pivotal role in fostering economic sustainability, and enabling community participation. These firm models differ from EOFs markedly. EOFs sometimes referred to as ‘profit maximising firms’ (PMFs) are driven by the imperative of profit. CMEs have a different motivation, namely generation of benefits for members and their communities. In this study, we explore the dynamics of CMEs, in comparison to EOFs with a focus on employment effects, shedding light on their structural frameworks, governance models, and the economic and social impacts of each model, to employment opportunities, and employee derived returns.
While equity-owned firms might exhibit higher profitability metrics, co-operatives and mutuals often provide more stable and long-term employment. The stability of employment in CMEs is partly due to their less volatile profit expectations and a stronger focus on long-term community and member welfare.
