VOTING IN FIRMS: THE ROLE OF AGENDA CONTROL, SIZE AND VOTER HOMOGENEITY

Voting is a common feature of most firms. Unrestricted voting, however, can lead to unstable decision making. We find that firms make tradeoffs among collective decision making, production scale, firm structure, and voter characteristics that are consistent with efforts to economize on the costs of voting. Firm responses include agenda control, restrictions to obtain a homogeneous voting population, and limits on firm size. We consider three long-surviving producer cooperatives, representing extreme cases of collective decision making, and find that their organization is sensitive to the costs of voting and to the employment of mechanisms to constrain those costs.