Although seven years have passed since the co-management experiment started in the Invepal and Inveval factories, its business performance has not been thoroughly analyzed, It is the aim of this study to analyze systematically the business performance of the co-management experiment with special reference to Invepal and Inveval.
The low factory operation rate around 10% in Invepal and laveval demonstrates the co-managed firms largely failed in their business performance. Invepal finds itself on the verge of financial bankruptcy while Inveval falls far behind the pre-nationalization level of performance regarding its employment size although it manages to countervail financial losses by providing services of repair and maintenance. It was not easy for the companies to normalize factory operation and yield profits due to such constraints as financial resource depletion, obsolete production facilities, and the loss of channels for raw material acquisition and product sales, which are largely attributable to their more than two-year period of protracted lockout preceding nationalization. Although both companies failed in enhancing economic efficiency, they have achieved significant progress in contributing to public utility. Given that co-managed companies differ from private companies in their raison d"etre and management objectives, additional criteria including contribution to public utility should be considered in evaluating their business performance.
Co-managed companies tend to face a dilemma of financial funding because workers find difficulties in mobilizing additional investment resources owing to the inability of their companies to yield profits although they desperately need additional investments for the normalization of factory operation. Further government investment would decrease workers" shares while government lending would deteriorate the financial soundness of their companies. Besides, co-managed companies are required to yield profits in order to survive as isolated experimental units in the ocean of market competition on the one hand and to carry out social responsibility as state-owned enterprises on the other hand. Thus, the co-managed companies cannot avoid the dilemma of the dual imperative unless the socioeconomic system of the market economy is transformed into a post-capitalist system. While the dilemma of financial funding is applicable only to the companies of co-management based on co-ownership, the dilemma of the dual imperative is true not only to co-managed firms but also to all state-owned finns, operating as a significant constraint to those firms in improving their business performance by not appreciating the profit maximization incentive.
The Venezuelan government was rather inactive in providing financial support to Invepal in comparison with Inveval. Inveval workers returned all their shares to the government and maintain co-management practices while Invepal workers found themselves in conflict with government-appointed management by refusing to give up their ownership, In the end, Invepal failed in their co-management practice and business performance without labor-management cooperation while Inveval did perform better in both regards with cooperative labor-management relationship. This contrast verifies that there exists a causal relationship or selective affinity between co-management practice and business performance with the government role as a significant intervening factor.