Co-operative wineries: Temporal solution or efficient firms? The Spanish case during late Francoism, 1970–1981.

Part of economic theory has regarded co-operative firms as useful tools for dealing with market failures during periods of economic contraction, but also as suffering severe efficiency problems during periods of growth. The main aim of this article is to test this hypothesis in the case of Spanish co-operative wineries during the years of late Francoism. In order to do this, the balance sheets of 75 co-operative firms from the 1970s have been subject to financial-ratio analyses. The main conclusion is that these firms were inefficient due to their excessive financial debt. The Spanish Francoist government promoted their creation and granted financial aid – for their value as social and economic control systems – framing them within a rigid corporate system typical of authoritarian states. This involved limited autonomy and conditions conducive to free-riding behaviour, which is at the core of their inefficient performance. [ABSTRACT FROM PUBLISHER]