09.06 Gigs of their Own: Are Worker-Owned and Worker-Governed Platforms Viable?

Aim of the project

To provide insight into the viability and competitive (dis)advantages of platform cooperatives as one institutional approach for organising decent work in the gig economy by analysing the conditions under which cooperatives of gig workers can become resilient.

Theoretical background

The future of work is central to socio-economic debates all over the world. And it is not only about the number of jobs created or destroyed by automation, but more generally about how to organise work in the 21st century so that it is decent for everyone. At the forefront of these debates is the shift from stable towards flexible work arrangements and the increasingly ubiquitous digitalisation, both most prominent in the rise of gig platforms. Gig platforms are organisations that use digital tools to connect large crowds of supply and demand for services.

Just as economists have long wondered why firms are usually controlled by capital suppliers instead of by labour suppliers, this study addresses the puzzle of why gig platforms are not more commonly owned and governed by workers. Most gig platforms are owned by investors and managed on their behalf, such as Uber or Deliveroo. While there are enthusiasts and critics of gig platforms, both agree that their effects on incumbent industries and existing work arrangements are disruptive.

Do platform cooperatives present an alternative governance model for the future of work? Amidst attempts at state regulation, industry measures, and other grassroots initiatives, these cooperatives strive for decent work based on collective ownership and democratic governance by worker-members. However, since platform cooperatives are relatively rare, it is expected that there are challenges to starting or sustaining them. These challenges can be internal failures, external barriers or threats, but also just a lack of interest or capacity on the part of workers for organising like this. At the same time, there are some existing cases out there that can help us learn how to overcome such challenges.

Research design

Ultimately, the project will provide insights into the competitive (dis)advantages of platform cooperatives as one institutional approach to create decent work in the gig economy. Looking at the larger literature on worker cooperatives and labour-managed firms, there can be two reasons why platform cooperatives are rare: lower market entry or higher market exit rates. The first sub-study investigates the challenges in starting platform cooperatives and how founders deal with them. It uses insights from the paradox perspective on social enterprises. Methodologically, the study employs business biography interviews with founders of platform cooperatives in Europe to analyse why they emerge amidst various other efforts to achieve decent work in the gig economy and how founders manage to balance competing demands during formation.

The other three sub-studies focus on challenges for platform cooperatives that might induce failure if not addressed. The second sub-study examines the challenge of maintaining organisational commitment given preference heterogeneity of worker-members. Because preferences of workers are likely more heterogenous than profit-maximising investors, social choice theory would predict that preference aggregation in these democratically run cooperatives leaves at least part of the members unsatisfied. These workers would then go seek higher utility in a different type of work arrangement, leading to high turnover. However, social interaction amongst workers may develop solidarity and shared standards that diminish the problem of preference aggregation. Members that are socially embedded in informal networks with other gig workers would then on average perceive more benefits, and thus be more motivated to stay committed as a member of the cooperative. These expectations will be tested through a survey and statistical analysis on the members of a large cooperative of gig workers.

The third sub-study addresses the challenge of equal participation in decision-making processes by worker-members. With his ‘iron law of oligarchy’ sociologist Robert Michels already theorised that in any organisation, even those started with democratic values, power will eventually concentrate at the top. Platform cooperatives may face a similar danger, especially if digital divides result in a select technically skilled leadership. On the other hand, digital mediation may provide new opportunities for democratic member participation by facilitating communication in large, socially heterogenous and geographically dispersed groups. To test these contrasting expectations, a field experiment will be administered with a subset of worker-members in a large cooperatives of gig workers by manipulating the online/offline options offered to them to participate in decision-making.

The fourth sub-study analyses the challenge of efficiently coordinating productive and shirking behaviour of worker-members under varying economic circumstances. Compared to traditional worker cooperatives, the work that is executed in platform cooperatives is mostly an individual effort instead of a collective one. Nonetheless, all kinds of employee benefits and worker protections provided to members could be viewed as a public good. Proper incentives for work effort and monitoring of this effort, next to rules and possible punishments for freeriding are therefore probably still required. Exactly what and how rules are used by the large cooperative of gig workers is studied through document analysis on its history of bylaws, meeting minutes, and reports, complemented by statistical analysis on its year reports and national data on economic circumstances. Analysis is supported by Elinor Ostrom’s approach of institutional grammar.