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The purpose of this paper is to analyze the structural problems emerging in the course of managing and safeguarding a French association for home care to a thousand elderly or disabled people between 2007 and 2012, employing 150

190 people and on the verge of bankruptcy. In France, small local businesses not only compete with major capital outlets in this sector but also with associations of varying size and origin. Free market rules apply, under the legislation of 2003, to what is, in part, “competition free”, being “in the public interest” and within the framework of local and national public funding.

This paper analyses those pragmatic solutions put in place to meet the aim of shared governance and in the context of a generalized financial crisis.

Borrowing from cooperatives and associations, the non-profit-based management structure the authors arrived at, including worker participation in the decision-making processes, raises questions for researchers as to the advisability of any short-term models and the validity of present social and supportive economic models.

The hybrid management of this paper is offered as a working model in what the authors have termed an “adhocracy of stakeholders”.

The purpose of this paper is to delve into three themes about democratic enterprises.

(1) The first theme is the question of capital structure where labor-managed firms (LMFs) are often pictured as having “horizon problem.” Yet this is only a minor technical problem which is solved by the system of internal capital accounts as in the Mondragon cooperatives.

(2) The second theme concerns the attempt to implement participative management and the related ideas of active learning in educational theory in the workplace. The point is that the democratic firm is the natural setting to implement these ideas, not the conventional firm where the staff have the legal role of “employees” rented by the company.

(3) The third theme is the old canard the cooperatives are incompatible with entrepreneurship. My rethinking of the issue was inspired by the analysis of the late Jane Jacobs who emphasized that the primary means of growing economic “biomass” is through economic offspring (e.g., spin-offs) – in analogy with the biological principle of plentitude. Yet the conventional form of ownership operates as a fetter on this process since the ownership and management wants to expand its empire and maintain “ownership” of any potential offspring. But that constraint against spin-offs is absent in democratic firms, and the Mondragon complex has indeed illustrated how to catalyze this process of growth through offspring.

A public policy to encourage all companies to grow by affiliated and perhaps democratic spin-offs would create more jobs (through filling extra niches) and more stability (through the agility of separate companies).