Ownership of the Firm

Abstract

Most large-scale enterprise in the United States is organized in the form of the conventional business corporation, in which the firm is owned collectively by investors of capital. Other ownership patterns are prominent in a number of important industries, however. Many firms, for example, are owned by their customers. These include not just consumer retail cooperatives, which are relatively rare, but also business-owned wholesale and supply cooperatives, which are quite common, as well as public utility cooperatives, mutual insurance companies, mutual banking institutions, and cooperative and condominium housing. Further, many firms are owned by persons who supply the firm with some factor of production other than capital. Worker-owned firms, which predominate in professional services such as law and accounting, are conspicuous examples, as are the agricultural processing and marketing cooperatives that dominate the markets for many farm products. Finally, a number of important service industries are populated heavily by nonprofit firms, which have no owners at all. In this essay I explore the economic factors responsible for these different patterns of ownership.