ABSTRACT: The principal purpose of this study is to evaluate if management and innovation capabilities differ between cooperatives and investor-owned firms (IOF). We do also want to analyze if those differences, in case they exist, cause different business performance levels. The fieldwork is based on a sample representative of the population of Basque industrial firms comprising 861 firms, 44 of them cooperatives. The results of our analysis are contrary to Social Economy literature statements. Basque industrial cooperatives are in a situation of competitive parity to investor-owned firms and do not differ in management and innovation capabilities. The large size of Basque industrial cooperatives, environmental factors, networking and the help of the supra-structure of Mondragon Corporation are explored as possible causes of those results.