The literature concerning incentives, profit sharing, and internal labour markets has grown steadily in recent times. The research on labour management has developed some themes related to property rights theory, the accumulation of capital and to the reaction of self-managed production organisations to external market stimuli. Not all problems concerning the cited topics are settled. For example the ownership of a labour managed firm still awaits a clear definition. Furthermore, very little work has been devoted so far to the study of the internal structure of labour managed firms, specifically with respect to structure of incentives and career advancement. An attempt to apply incentive theory, profit sharing theory and internal labour market theory in their latest developments to the case of workers co-operatives can give potentially fruitful results. The present work is intended to head in that direction.