Extending the firm versus industry debate into social enterprises: A multilevel analysis on Spanish cooperatives 2008–2023

An important debate in the field of strategy and industrial organization economics has long focused on whether the industry environment or firm idiosyncrasies have a greater impact on firm performance. However, cooperatives have been excluded from this inquiry, despite profits being the primary means to achieve their social objectives. This article examines the relative impact of firm and industry effects on cooperative profitability and compares these effects with those in investor‐owned firms (IOFs). Additionally, it analyses how generalized economic adversity impacts the relative importance of firm and industry effects on cooperative profitability and compares these changes with those in IOFs. Using multilevel modelling, the study analyses around 8,678 Spanish cooperatives and equivalent IOFs from 2008 to 2023. The findings indicate that industry‐level factors account for a greater share of profitability variation in cooperatives than in IOFs, whereas firm‐specific effects are comparatively weaker. These patterns are accentuated during periods of economic recession, suggesting that cooperatives are more sensitive to sectoral conditions under adverse macroeconomic contexts.