The literature on relational goods has frequently focused on their linkage with happiness and it has demonstrated that also in the working environment the development of good relationships on the job increases the employee well-being. At the same time, relational goods has been recognized as important public benefits, since for example they develop trustful atmosphere. However, less attention has been paid to the social relevance of relations when studying employment relationships and their contribution to increase both the organizational atmosphere and the well-being of the main stakeholders of organizations. The paper proposes an estimation of the social impact of on-the-job relationships in a specific types of organizations: social cooperatives.

The interest for these organizations emerges from different aspects linked to the features of both the sector of activity and the organizational form in itself. Specifically, social cooperatives act in a sector characterized by the social interest of the activity, by the labor intensive nature of the production, and by the competitiveness with other organizational forms, both public and private enterprises. Furthermore, social cooperatives are cooperative institutions and coordination can emerge as a natural equilibrium amongst their various stakeholders.

Looking in depth to these features, it is firstly to note that the social interest of the activity implies that organizations interrelates with many different stakeholders and with them they build specific relationships. Exchanges with clients, donors, employees and the local community are based not only on financial trades, but mainly on the development of reciprocal knowledge and trust, which in turn are afflicted by the quality of relationships. Consequently, social cooperatives increase social well-being in terms of both community interest services and relational goods production.

Secondly, the labor-intensity of services supplied implies that employees and their ability to interact with other stakeholders are crucial aspects for the efficiency and the effectiveness of organizations, especially in terms of quality of services. The development of good relationships between employees and clients is a clear example of the ability to increase the production, other than the consumption, of relational goods.

Thirdly, social cooperatives compete on the market of production with other organizational types and therefore they must enjoy of comparative advantages to survive on the market and support their social relevance. Looking at relationships, certainly social cooperatives are better involved in the local community than other organizations and concurrently they involve different stakeholders (among which people belonging to the community) in their decision making process. Relationships are therefore many-sided and this is a features of social enterprises. It seems possible to claim that social cooperatives enjoy comparative advantages in increasing the internal production of relational goods.

Strictly linked to the previous point, social cooperatives are altruistic and democratic institutions and enjoy of the collaboration of their different stakeholders. As asserted in literature, also the production of relational goods could be affected by problems of coordination, since it is typically a public good. Coordination is guaranteed only by altruistic and pro-social behaviors, which in turn generate an externality. The risk of under-investment in coordination and democratic decisions is high in for-profit enterprises, where stakeholders (especially the employer and employees) are self-interested. The consequence would be the under-production even of relational goods. On the opposite, in social cooperatives the democratic decision making process and the capability to coordinate agents in pursuing the social interest also increase the production of relations goods. It is the same to say that social cooperatives internalize in their aims the social well-being generated by relationships and therefore their services production overcome the under-production of positive externalities and increase the level of relational goods produces (and consumed) by their stakeholders.

The paper deeply analyses the abovementioned features of social cooperatives in the production of relational goods. It firstly suggests a theoretical explanation for the relevance of social cooperatives in increasing the level of relational goods within a community and the effects on the social well-being. Furthermore, it supports the theoretical hypotheses with an empirical investigation on social cooperatives. By investigating a sample of more than 4000 employees and about 340 managers in a similar number of Italian social cooperatives, the data aim to underline the relevance of relationships for both the organization in itself and its employees and demonstrate the ability of these organizations to overcome the failures linked to the over-production of relational goods. Their impact on the quality of services, the development of trustful environment, and the job performance is then evaluated in order to describe the possible consequences in terms of effectiveness of the activity and social well-being generation.