Property Rights and Incentives in Social Cooperatives

This paper analyzes Italian social cooperatives as a typical delivery service firm, focusing on employee incentive systems characterized by "role tension" linked to the dual position of being employee and owner at the same time. The answers to three questions: "Why to incentivize", "What to incentivize" "How to incentivize" are searched, building on both the lack of employee's controllability in the sector and the reconstruction of property rights consistent with the characteristics of social cooperatives and the profit non-distribution constraint. The conclusion is that, because they are able to structure a richer incentive set, social cooperatives are more efficient in the provision of social utility services even though they pay lower wages than public organizations and for-profit firms. © 2009 Physica-Verlag Heidelberg