The evidence from studies of worker cooperatives makes it clear that they are not inferior to investor-owned firms, other things more or less equal -- and very probably more productive. This was what J. S. Mill expected: "[C]ooperation tends ... to increase the productiveness of labour, consists in the vast stimulus given to productive energies, by placing the labourers, as a mass, in a relation to their work which would make it their principle and their interest -- at present it is neither -- to do the utmost, instead of the least possible, in exchange for their remuneration." But don't take my word for it.
References on productivity in worker cooperatives:
Bartlett, Will and John Cable, Saul Estrin, Derek Jones, and Stephen Smith (1992), “Labor-managed cooperatives and private firms in North Central Italy: an empirical comparison,” Industrial and Labor Relations Review v. 46, no. 1 (Oct.) pp. 103-118.
Bellas, Carl (1972), Industrial Democracy and the Worker-Owned Firm: A Study of Twenty-One Plywood Companies in the Pacific Northwest (New York: Praeger).
Berman, K. V. (1967), Worker-Owned Plywood Companies (Pullman, Washington: Washington State University).
Bernstein, Paul (1976), Workplace Democratization: Its Internal Dynamics (Kent, Ohio: Kent State University Press).
Blasi, Joseph and Michael Conte, Douglas Kruse (1996), “Employee Ownership and Corporate Performance Among Public Corporations,” Industrial and Labor Relations Review v. 50, no. 1 (October) pp. 60-79.
Bonin, J. P. and D. C. Jones, and L. Putterman (1993), “THEORETICAL AND EMPIRICAL-STUDIES OF PRODUCER COOPERATIVES - WILL EVER THE TWAIN MEET,” JOURNAL OF ECONOMIC LITERATURE v. 31, no. 3 (Sept.) pp. 1290-1320.
Cable, John and and F. Fitzroy (1980), “Productivity, Efficiency, Incentives and Employee Participation,” Kyklos v. 33, pp. 100-121.
Craig, Ben and John Pencavel (1992), “The Behavior of Worker Cooperatives: The Plywood Companies of the Pacific Northwest,” American Economic Review v. 82, no. 5 (Dec) pp. 1083-1105.
Craig, Ben and John Pencavel (1993), “The Objectives of Worker Cooperatives,” Journal of Comparative Economics v. 17, pp. 288-308.
Craig, Ben and John Pencavel (1995), “Participation and productivity: A comparison of worker cooperatives and conventional firms in the plywood industry,” Brookings Papers on Economic Activity, p. 121.
Craig, Ben and John Pencavel (1994), “The Empricial Perfomance of Orthodox Models of the Firm: conventional firms and worker cooperatives,” Journal of Political Economy v. 104, no. 4 (Auf) pp. 718-744.
Defourney, J. S. and Saul Estrin and Derek Jones (1985), “The Effects of Workers' Participation on Enterprise Performance: Empirical Evidence from French Cooperatives,” International Journal of Industrial Organization v. 3, pp. 197-217.
Defourny, J. S. (1992), “Comparative Measures of Technical Efficiency for Five Hundred French Workers' Cooperatives,” Advances in the Economic Analysis of Participatory and Labor Managed Firms edited by Derek Jones and Jan Svejnar (Greenwich, Conn: JAI press) pp. 27-62.
Doucouliagos, Chris (1995), “Worker Participation and Productivity in Labor-Managed and Participatory Capitalist Firms: A Meta-analysis,” Industrial and Labor Relations Review v. 49, no. 1 (Oct) pp. 58-77.
Estrin, Saul and Derek Jones (1992), “The Viability of Employee-Owned Firms: Evidence from France,” Industrial & Labor Relations Review v. 45, no. 2 (January) pp. 323-338.
Jones, Derek and D. Backus (1977), “British Producer Cooperatives in the Footwear Industry: An Empirical Evaluation of the Theory of Financing,” Economic Journal v. 87, pp. 488-510.
Jones, Derek (1985), “The Cooperative Sector and Dualism in Command Economies: Theory and Evidence for the Case of Poland,” Advances in the Economics of Participatory and Labor-Managed Firms v. 1, pp. 195-218.
Mygind, Niels (1987), “Are Self-Managed Firms Efficient? The Experience of Danish Fully and Partly Self-Managed Firms,” Advances in the Economics of Participatory and Self-Managed Firms edited by D. Jones & J. Svejnar (Greenwich, Conn: JAI Press) pp. 243-323.
Perotin, Virginie (1987), “Conditions of Survival and Closure of French Worker Cooperatives: Some Preliminary Findings,” Advances in the Economic Analysis of Participatory and Labor-Managed Firms edited by D. C. Jones and J. Svejnar (Greenwich, Conn: JAI Press) pp. 201-224.