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The implementation of democratic justice regimes in the Israeli taxi sector: Economic imperative or ethnic origin?
The Journal of Socio-Economics 37 (2008) 2072–2079
The implementation of democratic justice regimes in the Israeli taxi sector: Economic imperative or ethnic origin? Asaf Darr, Alisa C. Lewin ∗ Department of Sociology and Anthropology, University of Haifa, Mount Carmel, Haifa 31905, Israel Received 24 April 2006; received in revised form 9 September 2007; accepted 5 October 2007
Abstract Ideology and economic imperative are important factors shaping distinct forms of democratic governance structures in work organizations. This study asks whether ethnicity is another factor. To answer this question we compare the implementation of democratic justice regimes in 45 Jewish and Arab taxi stations in Israel. We focus on three measures of workplace democracy: (1) the election of managers by drivers in taxi stations, (2) the separation of powers between the executive and the judicial branches and (3) the establishment of mechanisms for equal distribution of rewards among all the drivers. Our findings show that on an institutional level Jewish stations seem to be more democratic in their structure than Arab stations. Yet, on the shop floor level members of Arab private stations enjoy more workplace democracy than their Jewish counterparts in the form of a system that promotes egalitarian distribution of rewards. © 2008 Published by Elsevier Inc. JEL classification: J54 - Producer cooperatives, Labor Managed Firms; P13 - Cooperative Enterprises; Z13 - Economic Sociology Keywords: Workplace democracy; Justice regimes; Taxi cooperatives; Ethnicity
1. Introduction Workplace democracy has suffered a series of blows in the past three decades, which include the demise of the Israeli kibbutz, the decline of Yugoslav cooperatives and the failure of many employee buyouts in the United States (Darr and Stern, 2002; Hammer et al., 1982; Russell, 1995; Stern and Darr, 1995). These blows have threatened to erase any possibility of engraving democratic values in the daily operation of work organizations. Nevertheless, in some sectors we still find a viable population of cooperatives with democratic governance structures. The taxi sector is a key example. There is good empirical evidence that the taxi sector is a bastion of workplace democracy (Russell, 1985; Gunn, 1992; Darr, 1999; Darr and Lewin, 2001; Hansmann, 1990). For example, in Sweden all taxicab services are organized as cooperatives (Hansmann, 1990, p. 1760), and so are most of the stations in the Northern Israeli City of Haifa (Darr and Lewin, 2001). In Glasgow, Scotland, the taxi industry is dominated by a huge democratic cooperative of about 800 members. In New York City the majority of black-car companies, (whose drivers are booked in advance and cannot be hailed like the yellow cabs), are also cooperatives (New York ∗
Corresponding author. Tel.: +972 4 8240996; fax: +972 4 8240819. E-mail addresses: [email protected] (A. Darr), [email protected] (A.C. Lewin).
1053-5357/$ – see front matter © 2008 Published by Elsevier Inc. doi:10.1016/j.socec.2007.10.013
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Times, 6 December 1992). Russell (1985) describes democratic taxi cooperatives in Boston and Los Angeles. The implementation of democratic governance structures in taxi cooperatives is intensive, and is often manifested through the institution of democratic justice regimes (Darr and Lewin, 2001). These include different combinations of four basic components: the election of managers and judges by cooperative members, a separation of powers between the executive and the judicial branches so that managers cannot serve as judges, and the establishment of mechanisms for equal distribution of rewards among all the drivers in the taxi station. Scholars studying workplace democracy have often asked: given the demise of many forms of workplace democracy, why do democratic governance structures proliferate in the taxi sector? Researchers argue more generally that there are two main explanations for the implementation of democratic governance structures in work organizations: ideology and economic imperative. Ideology is the primary explanation for democracy in the kibbutz and other forms of secular and religious work communes (for a description of USbased communes see Oved, 1986). Yet, in the taxi sector socialist ideology and religion clearly have no role in the establishment of cooperatives. Instead, economic imperative is presented in the literature as the cause for the democratic organization of taxi work, and we review these explanations below. In the current study we set out to examine the effect of ethnicity, a neglected explanatory factor that might also have a role in shaping distinct forms of workplace democracy in the taxi sector. Our two main research questions are: Could economic imperative alone explain the existence of distinct forms of democratic justice regimes in taxi cooperatives? Could ethnicity also be a factor shaping distinct forms of democratic justice regimes? To try and answer these questions we compare the governance structure of Jewish and Arab taxi stations in Israel. By using three different components of democratic justice regimes we are able to offer a more fine-grained comparison of democracy in Arab and Jewish taxi stations than previous literature offers. But before we present the design and the results of our empirical study, we will review the literature which describes the success of democratic justice regimes in the taxi sector in economic terms. 2. Economic explanations for workplace democracy in the taxi sector Oppenheimer (1917), a German economist, formulated in the late 19th century the “law of transformation” by which he explained the futility of trying to create an economy based on producer or service cooperatives that might present an alternative to capitalism. As producer and service cooperatives mature and succeed economically, Oppenheimer argued, members have a declining incentive to admit new members/owners who will share the profits and the value of the shared assets. Instead, members of successful producer cooperatives tend to hire labor and thus gradually transform themselves into a regular capitalist enterprise. While the law of transformation might apply to most producer and service cooperatives, as Russell’s (1995) study of the Israeli producer cooperatives clearly demonstrates, Oppenheimer’s prediction does not apply to the taxi sector, which has been dominated by cooperatives for decades (Darr, 1999; Darr and Lewin, 2001). Unlike other cooperatives, the means of production, namely the taxis, are privately owned, as are the public licenses to drive a taxi. The shared assets that might provide an incentive to hire rather than admit new members are restricted to the station’s “goodwill” assets, namely its reputation and clientele. Contrary to the law of transformation, as the goodwill assets increase, so does the tendency to admit new members. This tendency is grounded in the need to supply more rides to a growing clientele, and at the same time to monitor the behavior of drivers who might harm the station’s reputation while interacting with clients. Monitoring agents’ behavior, which is part and parcel of any economic activity, poses a challenge in the taxi sector because drivers work individually and far beyond the purview of management and fellow drivers. At the same time, drivers can harm the stations’ reputation, by mistreating clients. In line with Alchian and Demsetz’s (1972) argument, worker–ownership can be seen as a solution to this monitoring problem because it gives each member, who is also a co-owner, a personal incentive to contribute to building the firm’s “goodwill” assets. Similar to law and accounting firms (see Tolbert and Stern, 1991) each driver’s potential to become a member motivates and monitors drivers’ behavior. Other economic explanations for the general rarity of workplace democracy focus on financial markets. Yet, these explanations again do not apply to the taxi sector. For example, Hansmann (1990) argues that financial institutions are reluctant to grant loans for highly specialized machines or equipment to member-owned producer cooperatives in sectors requiring large investments in firm-specific assets. Generally, any investment in firm-specific assets, typical in
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most industrial sectors, is risky for banks and lenders because there is a limited number of potential buyers and these assets are difficult to sell on the open market. With capitalist firms, lenders such as banks protect their property rights through part ownership. But this solution is not feasible in the case of cooperatives, with their democratic governance structure, and lenders are reluctant to grant loans because they cannot protect themselves against opportunistic behavior by the many worker–owners. Producer cooperatives are thus at a disadvantage in capital-intensive markets, but they can survive in labor-intensive sectors. Alternatively, cooperatives can be found in sectors in which the assets purchased are relatively inexpensive, are not firm-specific and can easily be resold. These factors reduce the risk for lenders, and create a situation whereby borrowing on reasonable terms is feasible. Taxis are an example of a sector where borrowing can take place on favorable terms because the taxis are not firm-specific and can easily be resold. The taxi sector is also labor-intensive. Thus, the limitations imposed by financial markets on producer cooperatives in capital-intensive sectors with firm-specific assets do not apply to the taxi sector. Theses explanations for the concentration of democratic governance structures in the taxi sector are rooted in economic practice, and should apply almost universally. Indeed, studies describe similar governance structures in taxi cooperatives worldwide. Yet other factors, such as the ethnicity of the members might also have an impact on the tendency to adopt specific democratic governance structures. Russell (1984, 1985) examined the relationship between ethnicity and the tendency of cooperatives to “degenerate”, or to lose their democratic features over time. While the founders of the taxi cooperatives he studied in Los Angeles, who came from a similar ethnic background, saw cab driving as a vocation, their successors in the 1970s, new immigrants to the US, perceived taxi driving as a means of quick economic absorption, thus limiting membership and sacrificing democratic values for direct economic returns. Still, to date we know of no comparative studies that systematically examine the effect of ethnicity on the adoption and implementation, rather than the degeneration, of the different components of justice regimes. 3. The social fabric of taxi stations Taxi stations in Israel can be privately or collectively owned. The owner of a private station typically has a license from the local municipality to operate a station. He or she has the right to be the only taxi station within a pre-determined territory, to own a list of corporate clients and to rent access to this list to taxi drivers for about $200 a month. The drivers usually own their taxi and either own or rent a public license to operate the taxi. In a few cases the owner of a private taxi station also owns a fleet of cars and rents public licenses. Then, for a fixed sum of money per shift, he or she leases the taxis to drivers, who keep all their takings during the shift. But the vast majority of taxi stations in Israel are organized as cooperatives in which membership is restricted to those who work in them and which are controlled by their workforce (see Cornforth et al., 1988). A taxi cooperative has two main types of workers, members and hired drivers. A member owns his or her taxi, possesses a public license from the city or the state to drive it, and owns a share in the station itself. By buying a share a member has become co-owner of the station’s list of clients and its reputation, namely its “goodwill” assets. Co-ownership also secures work for as long as the station continues to operate. By the “one share, one vote” rule, a member can participate in the station’s annual general meeting, voice an opinion, vote for managers, judges and a watchdog committee and run as a candidate for any of these positions. There are two types of hired drivers: those who own their own taxis and rent a public license, and those who possess only their driving skills. The latter group rent the taxi from its owner, usually for a night shift, at a fixed price, or on the basis of the number of miles driven during the shift. A hired driver takes no part in the station’s democratic proceedings and does not own a share. 4. Ethnicity in Israel Israeli society is heterogeneous, composed of a variety of nationalities, ethnicities and religions that differ in their socio-demographic attributes, as well as in their socio-political standing within the state of Israel. Jews are the dominant majority (80% of the total population) and Palestinians the minority (20% of the total population). Jews in Israel have higher status than Palestinians in almost all socio-economic attributes, education, employment and earnings (Okun and Friedlander, 2005; Semyonov, 1988; Lewin-Epstein and Semyonov, 1992, 1993).
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The Palestinian population consists of three religious groups, Muslim, Christian and Druze. The great majority (76%) of all Palestinians in Israel are Muslim, 15% are Christian and a small minority (9%) are Druze (Goldscheider, 1996). Generally, Muslims tend to be more rural, while Christians tend to be more urban and more educated (Goldscheider, 1996). It is important to note that the ethnic composition of taxi stations in Israel reflect this diversity. Arab ethnicity in Israel is defined by religion, whereas Jewish ethnicity is defined by country of origin (Goldscheider, 2001). Thus, Arab taxi stations are composed of members who are either Muslim, Druze or Christian, and Jewish stations are composed of Ashkenazi (European origin) and Sephardi (North African and Asian origin) drivers. The Jewish–Arab ethnic cleavage is considered more significant than the internal divides within the Arab and Jewish populations in Israel. For this reason we decided to focus on the Arab–Jewish cleavage when examining if and how ethnicity impacts on democratic justice regimes in taxi stations. We also identified ethnically mixed taxi stations in our analysis, defined here as stations that are composed of both Jewish and Arab drivers. In this study we ask whether Jewish, Arab and ethnically mixed taxi stations differ in their democratic workplace regimes.
5. Design and research questions This study is composed of three stages. First, we compare Jewish, Arab and ethnically mixed taxi stations in Israel and we measure three dimensions of democratic justice regimes. We ask whether there are democratic elections for management, whether there is a separation of powers between managers and judges and whether there is a formal system ensuring egalitarian distribution of rewards, such as the ‘X-list’. Darr (1999) explains that on the X-list each ride (“X-ride”) is allocated a fixed amount of points based on its expected income. The names of all the station’s drivers are listed, and beside each one a record of the points they collected from previous X-rides. When an order for a long-distance ride is received, the dispatcher announces it on the radio dispatch system and all drivers interested in taking the ride respond. The dispatcher then allocates the ride to the applicant with the least number of points, and updates the chart. Thus, the X-list promotes equality in the distribution of rewards accruing from the long-distance rides. Next, we distinguish privately owned and cooperative stations and we ask whether ethnic composition plays a role in implementing democratic justice regimes, over and above ownership type. Most taxi stations in Israel are cooperatives, that is, ownership is shared by a large group of drivers/members. In contrast, in privately owned taxi stations all the drivers are hired. If ownership type alone determines the extent to which democratic justice regimes are implemented (economic imperative), we can expect to find different forms of implementation by ownership type and similar forms of implementation across ethnicity. Thus, we can expect the cooperatives to institute the full range of democratic justice regimes while expecting to find no election of management or separation of powers in the private taxi cooperatives. Finally, we ask whether ethnic composition plays a role in implementing democratic justice regimes over and above the economic need for effective monitoring. Based on the literature, we assume that having a majority of hired drivers (over 50% of all the drivers in a taxi cooperative) is a sign of restricted access to membership and a signal of a degeneration of shared ownership and the democratic values it entails. We expect to find that private stations and cooperatives with a higher percentage of hired drivers are less democratic in the election of managers and judges and the separation of powers than cooperatives with a low percentage of hired drivers. But we have a different expectation regarding the relationship between having a majority of hired drivers and having an egalitarian system for the distribution of rides. We argue that a majority of hired drivers represents restricted membership therefore the station’s management needs to implement forms of control other than membership. The egalitarian distribution of rides to all drivers, regardless of ownership status is one such form of control. Thus, we expect that taxi cooperatives with a majority of hired drivers will tend to implement equal distribution of rewards, regardless of ethnic composition, as a means of controlling the drivers’ behavior. In the absence of other incentives, such as future membership in the station, private stations should also have equal distribution of rewards to motivate a high level of service to clients. We need to remember that private owners make their profit from the monthly rents they charge their drivers, and the existence of an egalitarian system of distributing reward does not restrict their profit, but instead might prevent conflicts among the station’s drivers. Thus, we expect that regardless of ethnic composition, even private stations will institute an egalitarian distribution of economic rewards (X-list).
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Table 1 Definition of variables used in the analyses Variable name Independent variables Ethnicity Ownership type Hired drivers majority Size Dependent variables Elections of management Separation of powers Egalitarian distribution of rewards
Variable definition Categorical variable distinguishing Jewish, Arab and mixed Jewish–Arab taxi stations. Stations were coded as ‘mixed’ if they had at least 5% representation of each group Binary variable indicating whether a station is worker-owned or investor-owned A binary variable indicating whether hired drivers compose over 50% of all drivers in the station A continuous variable measuring the number of drivers in the station Binary variable indicating whether the station has elections for managers Binary variable indicating whether the station has separate elections for managers and judges Binary variable indicating whether station has formal mechanisms for equal distribution of preferred rides
6. Data, variables and method Our study encompassed the entire population of taxi stations in a non-random sample of Israeli cities. It covered three types of localities: ethnically mixed cities (Haifa and Tel Aviv–Jaffa), Jewish cities (Ramat Gan and Givatayim) and Arab cities and villages (Nazareth, Shfaram, Ilabun, Kefar Khana and Rehna). In these localities, our study included all taxi stations that operated at least 12 taxis, the number required by law to be considered a taxi station by local authorities.1 The data used for this study were collected through face-to-face interviews with one of the managers in each of the 45 stations operating in these localities. Table 1 describes the variables used in the following analyses. We have measures for three aspects of democratization: the first is the existence of democratic elections for managers, the second is a separation of powers between managers (executive branch) and judges (judicial branch). The third aspect of democratization is distributive in nature. We examine if a mechanism exists that allows an egalitarian distribution of rewards among all drivers. The first aspect is measured by this question: Does the station have elections for managers? The separation of powers in the station is measured by this question: Does the station have separate elections for managers and judges? The egalitarian distribution of rewards is identified by the answer to this question: Does the station have formal mechanisms for equal distribution of rides? Our independent variables are (1) ownership, whether a station is investor-owned or worker-owned, (2) ethnic composition, whether the station is Jewish, ethnically mixed or Arab and (3) whether hired drivers constitute the majority (over 50%) of all drivers. A majority of hired drivers represents a high level of degeneration of the cooperative. 7. Results Table 2 shows the percentage distribution of democratic workplace practices, by ethnic composition. Our findings show that a higher percentage of Jewish taxi stations have elections for management than Arab stations and mixed stations (95%, 31% and 50%, respectively), and a higher percentage of Jewish stations have separation of powers (58%, 13% and 40%). A higher percentage of Arab stations have an egalitarian system for distributing rides than Jewish stations and mixed stations (81%, 79% and 40%). This finding is especially surprising given that a higher percentage of Jewish and mixed stations than Arab stations are cooperatives (95%, 60% and 50%). Table 2 also shows that mixed stations are on average larger (113 drivers) and have a higher percentage of hired drivers (82%) than Jewish stations. Arab stations are substantially smaller (25) than both mixed (113) and Jewish stations (101), on average. Does ownership type account for the differences we observe in Table 2 in democratic workplace practices in Jewish, mixed and Arab taxi stations? Table 3 shows percentage distribution of democratic workplace practices by ethnic composition and by ownership type. The findings presented in Table 3 show that ownership type does account for 1
Because the data represent the “entire population” of taxi stations in these localities there is no “sampling error” and conventional statistical inference does not apply (see Berk et al., 1995).
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Table 2 Means and percentage distribution of selected variables by ethnicity Jewish station Dependent variables % Stations with elections for management % Stations with separation of powers % Stations with distribution of rides Independent variables % Stations that are worker-owned Size Percent of hired workers N
Mixed station
95% 58 79
Arab station
50% 40 40
95 101 56 19
31% 13 81
60 113 82 10
50 25 62 16
Table 3 Percentage distribution by ethnic composition and ownership Cooperative
Elections of management (%) Separation of powers Distribution of rides Total
Private
Jewish
Mixed
Arab
Jewish
Mixed
Arab
100 61 83.3
83 67 66.7
63 25 75
0 0 0
0 0 0
0 0 87.5
18
6
8
1
4
8
differences in election of management and separation of powers, as these practices are never implemented in privately owned stations and often implemented in worker-owned stations. Yet ownership type does not account for all the differences between Jewish, mixed and Arab taxi worker-owned stations, and it does not account for differences in implementing an egalitarian system for the distribution of rides. The democratic regimes of justice in Jewish, ethnically mixed and Arab taxi cooperatives differ substantially. The great majority of all taxi cooperatives have instituted elections for management (100% of Jewish, 83% of mixed and 63% of Arab cooperative stations). But substantially fewer Arab taxi cooperatives have a separation of powers (25%) than Jewish and mixed cooperative stations (61% and 67%, respectively). Finally, a higher percentage of Jewish cooperatives have egalitarian systems of distributing resources (83%) than mixed and Arab cooperatives (67% and 75%). In all privately owned stations there are no elections of management and there is no separation of powers, that is, there is no egalitarian distribution of power. In Jewish and ethnically mixed private stations there is also no egalitarian distribution of rides. However, in 88% (7) of the Arab private stations there is a mechanism for the egalitarian distribution of rides, even though there is no egalitarian distribution of power. In other words, privately owned Jewish, mixed and Arab stations are alike in the non-implementation of two components of the democratic justice regimes—elections of managers and the existence of internal court systems. But they differ in their allocation of economic resources, as only Arab private stations have enforced systems of distributing rides equally while Jewish and mixed private stations do not. Thus, we find that on the shop floor level private Arab taxi stations seem to be more democratic than private Jewish and ethnically mixed stations regarding a more egalitarian distribution of rewards. Could the economic need to monitor drivers’ behavior account for the differences between democratic workplace practices in Jewish, mixed and Arab worker-owned taxi stations? We have argued that having a majority of hired drivers increases the economic need to monitor agents’ behavior. We now ask whether having a majority of hired drivers accounts for differences in workplace democratic practices in worker-owned stations. Table 4 shows the percentage distribution of workplace democratic practices by ethnic composition, and percentage of hired drivers (majority vs. minority), among worker-owned stations. The findings suggest a different pattern of democracy in Jewish and Arab taxi cooperatives. Arab taxi cooperatives with a minority of hired drivers tend to have more democratic practices than Arab cooperative stations with a majority of hired drivers, whereas among Jewish taxi cooperatives, having a majority of hired drivers is related to more democratic regimes. Paradoxically, in the case of
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Table 4 Percentage distribution by ethnic composition, ownership and majority hired drivers (coops only) Jewish stations
Elections of management (%) Separation of powers Distribution of rides Total
Mixed stations
Hired drivers majority
Hired drivers minority
Hired drivers majority
100 78 89
100 44 78
9
9
Arab stations Hired drivers minority
Hired drivers majority
Hired drivers minority
83 67 67
33 0 67
80 40 80
6
3
5
the Jewish cooperatives, the degeneration of the cooperative, expressed in its having a majority of hired drivers, is associated with more workplace democracy. Next, we find that all ethnically mixed cooperative stations have a majority of hired drivers. Once controlling for having a majority of hired drivers, we find that a higher percentage of ethnically mixed stations implement elections of managers and separation of powers than Arab stations with a majority of hired drivers, and a lower percentage than Jewish stations with a majority of hired drivers. However, there is no difference between ethnically mixed and Arab stations with a majority of hired drivers in the percentage implementing an egalitarian system for distributing drives. A higher percentage of Jewish stations (89%) have such a mechanism than Arab and ethnically mixed stations (67%). In sum, our findings indicate that economic imperatives such as ownership type and the need to monitor drivers’ behavior cannot explain all the differences in the implementation of democratic justice regimes in Jewish, ethnically mixed and Arab stations. 8. Discussion and conclusions The findings of this study refute any attempt to explain the implementation of workplace democracy in taxi stations in terms of general economic imperatives such as joint ownership of the means of production and or the need to monitor agents’ behavior. Our central finding is that the Arab, Jewish and ethnically mixed taxi stations have distinctively different governance structures although they operate in a similar economic environment and under an identical regulatory regime. In this study we specifically attempted to examine the impact of ethnicity, broadly construed, over and above economic imperatives. Based on our empirical exploration our answer is that ethnicity has a role in shaping governance structures in taxi stations. Jewish stations were found to be more democratic in their structure than Arab stations, with the important exception of the X-list. First, more Jewish stations than Arab stations are organized as cooperatives, and among the Jewish cooperatives, more tend to implement the election of managers and the separation of powers than is the case among their Arab counterparts. Yet more Jewish than Arab cooperatives have a majority of hired drivers, and in this narrow sense we can argue that degeneration of cooperative values is more evident among Jewish cooperatives than Arab cooperatives. The findings lead us to conclude that on the shop floor level, as opposed to the institutional level, members of Arab cooperatives enjoy workplace democracy in the form of a higher membership rate and an X-list that promotes egalitarian distribution of rewards. Interestingly, Arab private stations are more democratic than Jewish private stations, since some of them have instituted an X-list compared to none of the Jewish private stations. As we have explained, implementing X-lists does not incur a cost for the owner of the private station, and might prevent conflicts among the drivers. Put this way, an empirical question for future research might be why the private Jewish stations do not implement X-lists. It is tempting to try to explain the differences between the governance structures of Arab and Jewish taxi stations in terms of ethnic economies. After all, Arabs residing within the Israeli borders of 1948 are a minority that suffers from discrimination, and they operate within an ethnic economy or an ethnic enclave (Semyonov, 1988). It is plausible that differences between the governance structures of Jewish and Arab enterprises could be explained by their differential access to labor markets. Yet the taxi sector is an exception. This sector is highly regulated by the state. Public vehicle
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licenses are won through a lottery system, and even the fares are superimposed, so Jewish, Arab and ethnically mixed stations face similar constraints. Furthermore, our findings are not consistent with an explanation grounded in theories of ethnic economy. For example, ethnic minorities operating within an ethnic economy tend to rely heavily on family ties and resources in developing business. We might expect that such a situation in the taxi sector would promote the establishment of cooperatives in the Arab taxi sector because family ties and mutual economic difficulties often encourage partnerships. But the reality is precisely the opposite, and we find a higher percentage of private taxi stations in the Arab sector than in the Jewish sector. An explanation of the differences in terms of an ethnic economy seems hardly sufficient. In sum, our investigation reveals substantial ethnic differences and leads us to conclude that ethnicity matters, and it is an important factor shaping workplace democracy. But, while our study has answered our basic research question, it has raised several new ones for further investigation. We have shown that economic imperative cannot explain the ethnic differences we find, but we have not shown what can explain these ethnic differences. One reason is that we need to develop new ways to conceptualize “ethnicity” and new ways to isolate “ethnic factors” that might affect socioeconomic structures. “Ethnicity” clearly cannot be reduced to country of origin or language spoken, even though this is often how ethnic groups are distinguished (Goldscheider, 2001), nor should all unexplained differences be attributed to “culture,” a convenient all-encompassing residual category. Instead, our findings point to a pressing need to develop a new research agenda that will isolate different dimensions of ethnicity in an attempt to understand what components of ethnicity matter in different socio-economic contexts. References Alchian, A., Demsetz, H., 1972. Production, information costs, and economic organization. American Economic Review 62, 777–795. Berk, R.A., Western, B., Weiss, R.E., 1995. Statistical inference for apparent populations. Sociological Methodology 25, 421–458. Cornforth, C., Thomas, A., Lewis, J., Spear, R., 1988. Developing Successful Worker Co-Operatives. Sage Publications, London. Darr, A., 1999. Conflict and conflict resolution in a cooperative: the case of the Nir taxi station. Human Relations 3, 279–301. Darr, A., Lewin, A., 2001. Regimes of justice in the workplace: the case of Israeli taxi co-operatives. Economic and Industrial Democracy 22 (3), 383–407. Darr, A., Stern, R., 2002. Coopting change toward industrial democracy: professionals as agents of structural constraint. Sociological Inquiry 72 (2), 171–194. Goldscheider, C., 1996. Israel’s Changing Society: Population, Ethnicity, and Development. Westview Press, Boulder. Goldscheider, C., 2001. Ethnic categorization in censuses: comparative observations from Israel, Canada, and the United States. In: David, I.K., Dominique, A. (Eds.), Census and Identity: The Politics of Race, Ethnicity, and Language in National Censuses. Cambridge University Press, Cambridge, pp. 71–91 (Chapter 3). Gunn, C., 1992. Plywood cooperatives in the United States: an endangered species. Economic and Industrial Democracy 13, 525–534. Hammer, T.H., Stern, R.N., Gurdon, M.A., 1982. Worker ownership and attitudes toward participation. In: Lindenfeld, F., Rothschild-Whitt, J. (Eds.), Workplace Democracy and Social Change. Porter Sargent, Boston. Hansmann, H., 1990. When does worker ownership work? ESOPs, law firms, codetermination, and economic democracy. The Yale Law Journal 99 (8), 1749–1816. Lewin-Epstein, N., Semyonov, M., 1992. Local labor markets, ethnic segregation and income inequality. Social Forces 70, 1101–1119. Lewin-Epstein, N., Semyonov, M., 1993. Arabs in the Israeli Economy. Westview Press, Boulder. Okun, B.S., Friedlander, D., 2005. Educational stratification among Arabs and Jews in Israel: historical disadvantage, discrimination, and opportunity. Population Studies 59 (2), 163–180. Oppenheimer, F., 1917. Collective ownership and private ownership of land. In: Oppenheimer, F., Oettinger, J. (Eds.), Land Tenure in Palestine. Jewish National Fund, The Hague. Oved, Y., 1986. 200 Years of Communes in the Unites States. Hakibbutz Hameuchad, Tel Aviv (Hebrew). Russell, R., 1984. The role of culture and ethnicity in the degeneration of democratic workplaces. Economic and Industrial Democracy 5, 73–96. Russell, R., 1985. Sharing Ownership in the Workplace. SUNY Press, Albany. Russell, R., 1995. Utopia in Zion: The Israeli Experience with Worker Cooperatives. SUNY Press, Albany. Semyonov, M., 1988. Bi-ethnic labor markets, mono-ethnic labor markets, and socioeconomic inequality. American Sociological Review 53, 256–266. Stern, N.R., Darr, A., 1995. Consultants and workplace democracy: reproducing the relations of production? In: Drenth, P.J., Koopman, L.P., Wilpert, B. (Eds.), Organizational Decision Making Under Different Economic and Political Conditions. The Royal Netherlands Academy of Art and Sciences and the Kurt Lewin Institute, Amsterdam, pp. 149–158. Tolbert, P.S., Stern, R.N., 1991. Organizations of professionals: Governance structures in large law firms. Research in the Sociology of Organizations 8, 97–117.
The implementation of democratic justice regimes in the Israeli taxi sector: Economic imperative or ethnic origin? Asaf Darr, Alisa C. Lewin ∗ Department of Sociology and Anthropology, University of Haifa, Mount Carmel, Haifa 31905, Israel Received 24 April 2006; received in revised form 9 September 2007; accepted 5 October 2007
Abstract Ideology and economic imperative are important factors shaping distinct forms of democratic governance structures in work organizations. This study asks whether ethnicity is another factor. To answer this question we compare the implementation of democratic justice regimes in 45 Jewish and Arab taxi stations in Israel. We focus on three measures of workplace democracy: (1) the election of managers by drivers in taxi stations, (2) the separation of powers between the executive and the judicial branches and (3) the establishment of mechanisms for equal distribution of rewards among all the drivers. Our findings show that on an institutional level Jewish stations seem to be more democratic in their structure than Arab stations. Yet, on the shop floor level members of Arab private stations enjoy more workplace democracy than their Jewish counterparts in the form of a system that promotes egalitarian distribution of rewards. © 2008 Published by Elsevier Inc. JEL classification: J54 - Producer cooperatives, Labor Managed Firms; P13 - Cooperative Enterprises; Z13 - Economic Sociology Keywords: Workplace democracy; Justice regimes; Taxi cooperatives; Ethnicity
1. Introduction Workplace democracy has suffered a series of blows in the past three decades, which include the demise of the Israeli kibbutz, the decline of Yugoslav cooperatives and the failure of many employee buyouts in the United States (Darr and Stern, 2002; Hammer et al., 1982; Russell, 1995; Stern and Darr, 1995). These blows have threatened to erase any possibility of engraving democratic values in the daily operation of work organizations. Nevertheless, in some sectors we still find a viable population of cooperatives with democratic governance structures. The taxi sector is a key example. There is good empirical evidence that the taxi sector is a bastion of workplace democracy (Russell, 1985; Gunn, 1992; Darr, 1999; Darr and Lewin, 2001; Hansmann, 1990). For example, in Sweden all taxicab services are organized as cooperatives (Hansmann, 1990, p. 1760), and so are most of the stations in the Northern Israeli City of Haifa (Darr and Lewin, 2001). In Glasgow, Scotland, the taxi industry is dominated by a huge democratic cooperative of about 800 members. In New York City the majority of black-car companies, (whose drivers are booked in advance and cannot be hailed like the yellow cabs), are also cooperatives (New York ∗
Corresponding author. Tel.: +972 4 8240996; fax: +972 4 8240819. E-mail addresses: [email protected] (A. Darr), [email protected] (A.C. Lewin).
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Times, 6 December 1992). Russell (1985) describes democratic taxi cooperatives in Boston and Los Angeles. The implementation of democratic governance structures in taxi cooperatives is intensive, and is often manifested through the institution of democratic justice regimes (Darr and Lewin, 2001). These include different combinations of four basic components: the election of managers and judges by cooperative members, a separation of powers between the executive and the judicial branches so that managers cannot serve as judges, and the establishment of mechanisms for equal distribution of rewards among all the drivers in the taxi station. Scholars studying workplace democracy have often asked: given the demise of many forms of workplace democracy, why do democratic governance structures proliferate in the taxi sector? Researchers argue more generally that there are two main explanations for the implementation of democratic governance structures in work organizations: ideology and economic imperative. Ideology is the primary explanation for democracy in the kibbutz and other forms of secular and religious work communes (for a description of USbased communes see Oved, 1986). Yet, in the taxi sector socialist ideology and religion clearly have no role in the establishment of cooperatives. Instead, economic imperative is presented in the literature as the cause for the democratic organization of taxi work, and we review these explanations below. In the current study we set out to examine the effect of ethnicity, a neglected explanatory factor that might also have a role in shaping distinct forms of workplace democracy in the taxi sector. Our two main research questions are: Could economic imperative alone explain the existence of distinct forms of democratic justice regimes in taxi cooperatives? Could ethnicity also be a factor shaping distinct forms of democratic justice regimes? To try and answer these questions we compare the governance structure of Jewish and Arab taxi stations in Israel. By using three different components of democratic justice regimes we are able to offer a more fine-grained comparison of democracy in Arab and Jewish taxi stations than previous literature offers. But before we present the design and the results of our empirical study, we will review the literature which describes the success of democratic justice regimes in the taxi sector in economic terms. 2. Economic explanations for workplace democracy in the taxi sector Oppenheimer (1917), a German economist, formulated in the late 19th century the “law of transformation” by which he explained the futility of trying to create an economy based on producer or service cooperatives that might present an alternative to capitalism. As producer and service cooperatives mature and succeed economically, Oppenheimer argued, members have a declining incentive to admit new members/owners who will share the profits and the value of the shared assets. Instead, members of successful producer cooperatives tend to hire labor and thus gradually transform themselves into a regular capitalist enterprise. While the law of transformation might apply to most producer and service cooperatives, as Russell’s (1995) study of the Israeli producer cooperatives clearly demonstrates, Oppenheimer’s prediction does not apply to the taxi sector, which has been dominated by cooperatives for decades (Darr, 1999; Darr and Lewin, 2001). Unlike other cooperatives, the means of production, namely the taxis, are privately owned, as are the public licenses to drive a taxi. The shared assets that might provide an incentive to hire rather than admit new members are restricted to the station’s “goodwill” assets, namely its reputation and clientele. Contrary to the law of transformation, as the goodwill assets increase, so does the tendency to admit new members. This tendency is grounded in the need to supply more rides to a growing clientele, and at the same time to monitor the behavior of drivers who might harm the station’s reputation while interacting with clients. Monitoring agents’ behavior, which is part and parcel of any economic activity, poses a challenge in the taxi sector because drivers work individually and far beyond the purview of management and fellow drivers. At the same time, drivers can harm the stations’ reputation, by mistreating clients. In line with Alchian and Demsetz’s (1972) argument, worker–ownership can be seen as a solution to this monitoring problem because it gives each member, who is also a co-owner, a personal incentive to contribute to building the firm’s “goodwill” assets. Similar to law and accounting firms (see Tolbert and Stern, 1991) each driver’s potential to become a member motivates and monitors drivers’ behavior. Other economic explanations for the general rarity of workplace democracy focus on financial markets. Yet, these explanations again do not apply to the taxi sector. For example, Hansmann (1990) argues that financial institutions are reluctant to grant loans for highly specialized machines or equipment to member-owned producer cooperatives in sectors requiring large investments in firm-specific assets. Generally, any investment in firm-specific assets, typical in
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most industrial sectors, is risky for banks and lenders because there is a limited number of potential buyers and these assets are difficult to sell on the open market. With capitalist firms, lenders such as banks protect their property rights through part ownership. But this solution is not feasible in the case of cooperatives, with their democratic governance structure, and lenders are reluctant to grant loans because they cannot protect themselves against opportunistic behavior by the many worker–owners. Producer cooperatives are thus at a disadvantage in capital-intensive markets, but they can survive in labor-intensive sectors. Alternatively, cooperatives can be found in sectors in which the assets purchased are relatively inexpensive, are not firm-specific and can easily be resold. These factors reduce the risk for lenders, and create a situation whereby borrowing on reasonable terms is feasible. Taxis are an example of a sector where borrowing can take place on favorable terms because the taxis are not firm-specific and can easily be resold. The taxi sector is also labor-intensive. Thus, the limitations imposed by financial markets on producer cooperatives in capital-intensive sectors with firm-specific assets do not apply to the taxi sector. Theses explanations for the concentration of democratic governance structures in the taxi sector are rooted in economic practice, and should apply almost universally. Indeed, studies describe similar governance structures in taxi cooperatives worldwide. Yet other factors, such as the ethnicity of the members might also have an impact on the tendency to adopt specific democratic governance structures. Russell (1984, 1985) examined the relationship between ethnicity and the tendency of cooperatives to “degenerate”, or to lose their democratic features over time. While the founders of the taxi cooperatives he studied in Los Angeles, who came from a similar ethnic background, saw cab driving as a vocation, their successors in the 1970s, new immigrants to the US, perceived taxi driving as a means of quick economic absorption, thus limiting membership and sacrificing democratic values for direct economic returns. Still, to date we know of no comparative studies that systematically examine the effect of ethnicity on the adoption and implementation, rather than the degeneration, of the different components of justice regimes. 3. The social fabric of taxi stations Taxi stations in Israel can be privately or collectively owned. The owner of a private station typically has a license from the local municipality to operate a station. He or she has the right to be the only taxi station within a pre-determined territory, to own a list of corporate clients and to rent access to this list to taxi drivers for about $200 a month. The drivers usually own their taxi and either own or rent a public license to operate the taxi. In a few cases the owner of a private taxi station also owns a fleet of cars and rents public licenses. Then, for a fixed sum of money per shift, he or she leases the taxis to drivers, who keep all their takings during the shift. But the vast majority of taxi stations in Israel are organized as cooperatives in which membership is restricted to those who work in them and which are controlled by their workforce (see Cornforth et al., 1988). A taxi cooperative has two main types of workers, members and hired drivers. A member owns his or her taxi, possesses a public license from the city or the state to drive it, and owns a share in the station itself. By buying a share a member has become co-owner of the station’s list of clients and its reputation, namely its “goodwill” assets. Co-ownership also secures work for as long as the station continues to operate. By the “one share, one vote” rule, a member can participate in the station’s annual general meeting, voice an opinion, vote for managers, judges and a watchdog committee and run as a candidate for any of these positions. There are two types of hired drivers: those who own their own taxis and rent a public license, and those who possess only their driving skills. The latter group rent the taxi from its owner, usually for a night shift, at a fixed price, or on the basis of the number of miles driven during the shift. A hired driver takes no part in the station’s democratic proceedings and does not own a share. 4. Ethnicity in Israel Israeli society is heterogeneous, composed of a variety of nationalities, ethnicities and religions that differ in their socio-demographic attributes, as well as in their socio-political standing within the state of Israel. Jews are the dominant majority (80% of the total population) and Palestinians the minority (20% of the total population). Jews in Israel have higher status than Palestinians in almost all socio-economic attributes, education, employment and earnings (Okun and Friedlander, 2005; Semyonov, 1988; Lewin-Epstein and Semyonov, 1992, 1993).
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The Palestinian population consists of three religious groups, Muslim, Christian and Druze. The great majority (76%) of all Palestinians in Israel are Muslim, 15% are Christian and a small minority (9%) are Druze (Goldscheider, 1996). Generally, Muslims tend to be more rural, while Christians tend to be more urban and more educated (Goldscheider, 1996). It is important to note that the ethnic composition of taxi stations in Israel reflect this diversity. Arab ethnicity in Israel is defined by religion, whereas Jewish ethnicity is defined by country of origin (Goldscheider, 2001). Thus, Arab taxi stations are composed of members who are either Muslim, Druze or Christian, and Jewish stations are composed of Ashkenazi (European origin) and Sephardi (North African and Asian origin) drivers. The Jewish–Arab ethnic cleavage is considered more significant than the internal divides within the Arab and Jewish populations in Israel. For this reason we decided to focus on the Arab–Jewish cleavage when examining if and how ethnicity impacts on democratic justice regimes in taxi stations. We also identified ethnically mixed taxi stations in our analysis, defined here as stations that are composed of both Jewish and Arab drivers. In this study we ask whether Jewish, Arab and ethnically mixed taxi stations differ in their democratic workplace regimes.
5. Design and research questions This study is composed of three stages. First, we compare Jewish, Arab and ethnically mixed taxi stations in Israel and we measure three dimensions of democratic justice regimes. We ask whether there are democratic elections for management, whether there is a separation of powers between managers and judges and whether there is a formal system ensuring egalitarian distribution of rewards, such as the ‘X-list’. Darr (1999) explains that on the X-list each ride (“X-ride”) is allocated a fixed amount of points based on its expected income. The names of all the station’s drivers are listed, and beside each one a record of the points they collected from previous X-rides. When an order for a long-distance ride is received, the dispatcher announces it on the radio dispatch system and all drivers interested in taking the ride respond. The dispatcher then allocates the ride to the applicant with the least number of points, and updates the chart. Thus, the X-list promotes equality in the distribution of rewards accruing from the long-distance rides. Next, we distinguish privately owned and cooperative stations and we ask whether ethnic composition plays a role in implementing democratic justice regimes, over and above ownership type. Most taxi stations in Israel are cooperatives, that is, ownership is shared by a large group of drivers/members. In contrast, in privately owned taxi stations all the drivers are hired. If ownership type alone determines the extent to which democratic justice regimes are implemented (economic imperative), we can expect to find different forms of implementation by ownership type and similar forms of implementation across ethnicity. Thus, we can expect the cooperatives to institute the full range of democratic justice regimes while expecting to find no election of management or separation of powers in the private taxi cooperatives. Finally, we ask whether ethnic composition plays a role in implementing democratic justice regimes over and above the economic need for effective monitoring. Based on the literature, we assume that having a majority of hired drivers (over 50% of all the drivers in a taxi cooperative) is a sign of restricted access to membership and a signal of a degeneration of shared ownership and the democratic values it entails. We expect to find that private stations and cooperatives with a higher percentage of hired drivers are less democratic in the election of managers and judges and the separation of powers than cooperatives with a low percentage of hired drivers. But we have a different expectation regarding the relationship between having a majority of hired drivers and having an egalitarian system for the distribution of rides. We argue that a majority of hired drivers represents restricted membership therefore the station’s management needs to implement forms of control other than membership. The egalitarian distribution of rides to all drivers, regardless of ownership status is one such form of control. Thus, we expect that taxi cooperatives with a majority of hired drivers will tend to implement equal distribution of rewards, regardless of ethnic composition, as a means of controlling the drivers’ behavior. In the absence of other incentives, such as future membership in the station, private stations should also have equal distribution of rewards to motivate a high level of service to clients. We need to remember that private owners make their profit from the monthly rents they charge their drivers, and the existence of an egalitarian system of distributing reward does not restrict their profit, but instead might prevent conflicts among the station’s drivers. Thus, we expect that regardless of ethnic composition, even private stations will institute an egalitarian distribution of economic rewards (X-list).
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Table 1 Definition of variables used in the analyses Variable name Independent variables Ethnicity Ownership type Hired drivers majority Size Dependent variables Elections of management Separation of powers Egalitarian distribution of rewards
Variable definition Categorical variable distinguishing Jewish, Arab and mixed Jewish–Arab taxi stations. Stations were coded as ‘mixed’ if they had at least 5% representation of each group Binary variable indicating whether a station is worker-owned or investor-owned A binary variable indicating whether hired drivers compose over 50% of all drivers in the station A continuous variable measuring the number of drivers in the station Binary variable indicating whether the station has elections for managers Binary variable indicating whether the station has separate elections for managers and judges Binary variable indicating whether station has formal mechanisms for equal distribution of preferred rides
6. Data, variables and method Our study encompassed the entire population of taxi stations in a non-random sample of Israeli cities. It covered three types of localities: ethnically mixed cities (Haifa and Tel Aviv–Jaffa), Jewish cities (Ramat Gan and Givatayim) and Arab cities and villages (Nazareth, Shfaram, Ilabun, Kefar Khana and Rehna). In these localities, our study included all taxi stations that operated at least 12 taxis, the number required by law to be considered a taxi station by local authorities.1 The data used for this study were collected through face-to-face interviews with one of the managers in each of the 45 stations operating in these localities. Table 1 describes the variables used in the following analyses. We have measures for three aspects of democratization: the first is the existence of democratic elections for managers, the second is a separation of powers between managers (executive branch) and judges (judicial branch). The third aspect of democratization is distributive in nature. We examine if a mechanism exists that allows an egalitarian distribution of rewards among all drivers. The first aspect is measured by this question: Does the station have elections for managers? The separation of powers in the station is measured by this question: Does the station have separate elections for managers and judges? The egalitarian distribution of rewards is identified by the answer to this question: Does the station have formal mechanisms for equal distribution of rides? Our independent variables are (1) ownership, whether a station is investor-owned or worker-owned, (2) ethnic composition, whether the station is Jewish, ethnically mixed or Arab and (3) whether hired drivers constitute the majority (over 50%) of all drivers. A majority of hired drivers represents a high level of degeneration of the cooperative. 7. Results Table 2 shows the percentage distribution of democratic workplace practices, by ethnic composition. Our findings show that a higher percentage of Jewish taxi stations have elections for management than Arab stations and mixed stations (95%, 31% and 50%, respectively), and a higher percentage of Jewish stations have separation of powers (58%, 13% and 40%). A higher percentage of Arab stations have an egalitarian system for distributing rides than Jewish stations and mixed stations (81%, 79% and 40%). This finding is especially surprising given that a higher percentage of Jewish and mixed stations than Arab stations are cooperatives (95%, 60% and 50%). Table 2 also shows that mixed stations are on average larger (113 drivers) and have a higher percentage of hired drivers (82%) than Jewish stations. Arab stations are substantially smaller (25) than both mixed (113) and Jewish stations (101), on average. Does ownership type account for the differences we observe in Table 2 in democratic workplace practices in Jewish, mixed and Arab taxi stations? Table 3 shows percentage distribution of democratic workplace practices by ethnic composition and by ownership type. The findings presented in Table 3 show that ownership type does account for 1
Because the data represent the “entire population” of taxi stations in these localities there is no “sampling error” and conventional statistical inference does not apply (see Berk et al., 1995).
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Table 2 Means and percentage distribution of selected variables by ethnicity Jewish station Dependent variables % Stations with elections for management % Stations with separation of powers % Stations with distribution of rides Independent variables % Stations that are worker-owned Size Percent of hired workers N
Mixed station
95% 58 79
Arab station
50% 40 40
95 101 56 19
31% 13 81
60 113 82 10
50 25 62 16
Table 3 Percentage distribution by ethnic composition and ownership Cooperative
Elections of management (%) Separation of powers Distribution of rides Total
Private
Jewish
Mixed
Arab
Jewish
Mixed
Arab
100 61 83.3
83 67 66.7
63 25 75
0 0 0
0 0 0
0 0 87.5
18
6
8
1
4
8
differences in election of management and separation of powers, as these practices are never implemented in privately owned stations and often implemented in worker-owned stations. Yet ownership type does not account for all the differences between Jewish, mixed and Arab taxi worker-owned stations, and it does not account for differences in implementing an egalitarian system for the distribution of rides. The democratic regimes of justice in Jewish, ethnically mixed and Arab taxi cooperatives differ substantially. The great majority of all taxi cooperatives have instituted elections for management (100% of Jewish, 83% of mixed and 63% of Arab cooperative stations). But substantially fewer Arab taxi cooperatives have a separation of powers (25%) than Jewish and mixed cooperative stations (61% and 67%, respectively). Finally, a higher percentage of Jewish cooperatives have egalitarian systems of distributing resources (83%) than mixed and Arab cooperatives (67% and 75%). In all privately owned stations there are no elections of management and there is no separation of powers, that is, there is no egalitarian distribution of power. In Jewish and ethnically mixed private stations there is also no egalitarian distribution of rides. However, in 88% (7) of the Arab private stations there is a mechanism for the egalitarian distribution of rides, even though there is no egalitarian distribution of power. In other words, privately owned Jewish, mixed and Arab stations are alike in the non-implementation of two components of the democratic justice regimes—elections of managers and the existence of internal court systems. But they differ in their allocation of economic resources, as only Arab private stations have enforced systems of distributing rides equally while Jewish and mixed private stations do not. Thus, we find that on the shop floor level private Arab taxi stations seem to be more democratic than private Jewish and ethnically mixed stations regarding a more egalitarian distribution of rewards. Could the economic need to monitor drivers’ behavior account for the differences between democratic workplace practices in Jewish, mixed and Arab worker-owned taxi stations? We have argued that having a majority of hired drivers increases the economic need to monitor agents’ behavior. We now ask whether having a majority of hired drivers accounts for differences in workplace democratic practices in worker-owned stations. Table 4 shows the percentage distribution of workplace democratic practices by ethnic composition, and percentage of hired drivers (majority vs. minority), among worker-owned stations. The findings suggest a different pattern of democracy in Jewish and Arab taxi cooperatives. Arab taxi cooperatives with a minority of hired drivers tend to have more democratic practices than Arab cooperative stations with a majority of hired drivers, whereas among Jewish taxi cooperatives, having a majority of hired drivers is related to more democratic regimes. Paradoxically, in the case of
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Table 4 Percentage distribution by ethnic composition, ownership and majority hired drivers (coops only) Jewish stations
Elections of management (%) Separation of powers Distribution of rides Total
Mixed stations
Hired drivers majority
Hired drivers minority
Hired drivers majority
100 78 89
100 44 78
9
9
Arab stations Hired drivers minority
Hired drivers majority
Hired drivers minority
83 67 67
33 0 67
80 40 80
6
3
5
the Jewish cooperatives, the degeneration of the cooperative, expressed in its having a majority of hired drivers, is associated with more workplace democracy. Next, we find that all ethnically mixed cooperative stations have a majority of hired drivers. Once controlling for having a majority of hired drivers, we find that a higher percentage of ethnically mixed stations implement elections of managers and separation of powers than Arab stations with a majority of hired drivers, and a lower percentage than Jewish stations with a majority of hired drivers. However, there is no difference between ethnically mixed and Arab stations with a majority of hired drivers in the percentage implementing an egalitarian system for distributing drives. A higher percentage of Jewish stations (89%) have such a mechanism than Arab and ethnically mixed stations (67%). In sum, our findings indicate that economic imperatives such as ownership type and the need to monitor drivers’ behavior cannot explain all the differences in the implementation of democratic justice regimes in Jewish, ethnically mixed and Arab stations. 8. Discussion and conclusions The findings of this study refute any attempt to explain the implementation of workplace democracy in taxi stations in terms of general economic imperatives such as joint ownership of the means of production and or the need to monitor agents’ behavior. Our central finding is that the Arab, Jewish and ethnically mixed taxi stations have distinctively different governance structures although they operate in a similar economic environment and under an identical regulatory regime. In this study we specifically attempted to examine the impact of ethnicity, broadly construed, over and above economic imperatives. Based on our empirical exploration our answer is that ethnicity has a role in shaping governance structures in taxi stations. Jewish stations were found to be more democratic in their structure than Arab stations, with the important exception of the X-list. First, more Jewish stations than Arab stations are organized as cooperatives, and among the Jewish cooperatives, more tend to implement the election of managers and the separation of powers than is the case among their Arab counterparts. Yet more Jewish than Arab cooperatives have a majority of hired drivers, and in this narrow sense we can argue that degeneration of cooperative values is more evident among Jewish cooperatives than Arab cooperatives. The findings lead us to conclude that on the shop floor level, as opposed to the institutional level, members of Arab cooperatives enjoy workplace democracy in the form of a higher membership rate and an X-list that promotes egalitarian distribution of rewards. Interestingly, Arab private stations are more democratic than Jewish private stations, since some of them have instituted an X-list compared to none of the Jewish private stations. As we have explained, implementing X-lists does not incur a cost for the owner of the private station, and might prevent conflicts among the drivers. Put this way, an empirical question for future research might be why the private Jewish stations do not implement X-lists. It is tempting to try to explain the differences between the governance structures of Arab and Jewish taxi stations in terms of ethnic economies. After all, Arabs residing within the Israeli borders of 1948 are a minority that suffers from discrimination, and they operate within an ethnic economy or an ethnic enclave (Semyonov, 1988). It is plausible that differences between the governance structures of Jewish and Arab enterprises could be explained by their differential access to labor markets. Yet the taxi sector is an exception. This sector is highly regulated by the state. Public vehicle
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licenses are won through a lottery system, and even the fares are superimposed, so Jewish, Arab and ethnically mixed stations face similar constraints. Furthermore, our findings are not consistent with an explanation grounded in theories of ethnic economy. For example, ethnic minorities operating within an ethnic economy tend to rely heavily on family ties and resources in developing business. We might expect that such a situation in the taxi sector would promote the establishment of cooperatives in the Arab taxi sector because family ties and mutual economic difficulties often encourage partnerships. But the reality is precisely the opposite, and we find a higher percentage of private taxi stations in the Arab sector than in the Jewish sector. An explanation of the differences in terms of an ethnic economy seems hardly sufficient. In sum, our investigation reveals substantial ethnic differences and leads us to conclude that ethnicity matters, and it is an important factor shaping workplace democracy. But, while our study has answered our basic research question, it has raised several new ones for further investigation. We have shown that economic imperative cannot explain the ethnic differences we find, but we have not shown what can explain these ethnic differences. One reason is that we need to develop new ways to conceptualize “ethnicity” and new ways to isolate “ethnic factors” that might affect socioeconomic structures. “Ethnicity” clearly cannot be reduced to country of origin or language spoken, even though this is often how ethnic groups are distinguished (Goldscheider, 2001), nor should all unexplained differences be attributed to “culture,” a convenient all-encompassing residual category. 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