Tremors in Cuba’s Private Sector and a New Business Architecture
This proposal responds to the particular characteristics of Cuba’s private sector. It does not seek to create “more businesses,” but to connect existing businesses in order to develop new capabilities.
The package of 176 economic and social measures, supplemented by the September 2026 regulatory changes promulgated in Decree-Laws 127 and 126 in the Gaceta Oficial, opens a new window of opportunity for the non-state sector.
However, behind the optimism generated by these announcements, [1] the sector faces a difficult structural reality: institutional instability, deteriorating infrastructure, and a logistical maze that appears designed to exhaust even the most resilient entrepreneur.
Although the rise of small and medium enterprises (MSMEs) has democratized private participation in the economy, it has also exposed a design flaw: These businesses are forced to navigate a difficult environment largely on their own, with little ability to pool resources or share capabilities. The greatest challenge facing the private sector lies not only in limited managerial capacity, but in the small scale of its operations, its fragmentation, and, ultimately, the costs of operating in a hostile environment.[2]
Today, every business in Cuba spends time and resources trying to solve the same problems on its own: supplies, transportation, energy, and access to foreign currency. Businesses therefore duplicate costs that they could otherwise share. Moreover, administrative discretion, ideological resistance, and access to foreign currency—when available—sometimes carry more weight in decision-making than economic logic and sound business management.
This article proposes an alternative business architecture that takes advantage of recent legal changes promising to give Cuba’s private sector greater freedom to associate and operate.
The proposal does not simply add a new legal procedure or a new bureaucratic structure. Instead, it changes the underlying logic: businesses would jointly manage logistics, strategic purchasing, and technological infrastructure by creating new enterprises to which they could outsource these operations.
The Trap of Atomization: The Cost of Fighting a Hostile System
The growth of MSMEs in Cuba has expanded private participation in the economy, but much of the business sector still operates as a collection of islands. Each individual business must separately and simultaneously confront problems involving transportation, energy, supplies, access to foreign currency, financing, and the absence of stable supply chains. As a result, businesses devote resources that they should use to produce, innovate, or develop markets to solving recurring operational problems.
The energy problem illustrates the point. An individual business rarely has sufficient scale to negotiate better electricity supply. Similarly, direct importation does not eliminate the costs of consolidating orders, arranging freight, transferring goods from ports, and maintaining inventories.
The same problem arises with energy infrastructure. A photovoltaic system, energy storage, or backup generation may cost too much for a single company, even though several companies could make the investment economically viable by sharing both its cost and its use.
Weaknesses in the national supply system also produce vertical integration. Businesses create their own agricultural production, workshops, processing facilities, or logistical capabilities to obtain what neither the market nor the State supplies. Entrepreneurs therefore perform within their own companies activities that specialized providers could perform more efficiently.[3]
This system produces strong individual adaptability but weak systemic resilience. The problem, ultimately, does not arise simply because MSMEs are small. They also lack institutional mechanisms that can transform isolated problems into collective solutions.
The distinction between size and architecture is crucial. A small company can compete effectively when it has efficient access to suppliers, infrastructure, knowledge, and markets. Conversely, even a larger company remains vulnerable if it must independently resolve every disruption involving energy, transportation, or supplies.
The challenge, therefore, is not simply to increase the number of workers or assets. Businesses must build relationships that increase the effective scale of their productive capabilities.
Engineering Interdependence: Beyond Survival
The answer is not to “join together” informally. Businesses should instead establish a permanent structure for business cooperation: a jointly owned entity through which several businesses or entrepreneurs pool their purchasing needs, acquire goods and services collectively, and supply them to the participating businesses.
For purposes of this article, we call this organizational form a cooperative (in Spanish, Organización Empresarial Compartida, or “OEC”)[4]. An OEC differs from a one-time commercial alliance because its participants do not create it merely to complete a transaction. They use it to organize certain resources, services, or capabilities on a permanent basis.
An OEC could share warehouses, technological systems, energy infrastructure, transportation, or specialized administrative functions.[5] It could also establish shared service centers for centralized purchasing, foreign trade, logistics, accounting, technology, or human resources.
The model does more than reduce costs. By relieving participating businesses of certain operational burdens, an OEC allows them to concentrate their resources on productivity, innovation, quality, and added value.[6]
An OEC can also create an intermediate layer between participating businesses and a highly uncertain operating environment. It does not need to assume the core functions of the businesses that own it. Instead, it can assume functions that the participants can manage more efficiently together because those functions require greater scale, specialization, or risk-sharing.
This logic— “doing together what is expensive or infeasible to do individually”—turns interdependence into a business advantage rather than a shared vulnerability.
Can Cuba Implement This Model Legally? The September 2026 Framework
The new regulatory framework does not create a legal entity with the characteristics of an OEC. It does, however, significantly expand the legal tools that businesses could use to create this type of structure.
Decree-Law 133/2026 expands the regime governing private enterprises, eliminates the historic limit of one hundred workers, permits Cubans residing abroad to participate in private enterprises and, of particular importance to this new proposed model, eliminates the incompatibility that prevented the same person from holding an ownership interest in more than one private enterprise.
This last change is fundamental to launching the OEC model. It allows an entrepreneur to retain an ownership interest and operational autonomy in a principal business while also becoming a partner in a new enterprise created to serve the needs of its own and several other businesses.
In addition, MINCEX Resolution 126/2026 establishes procedures for granting foreign-trade authority for imports and exports, while Decree-Law 128/2026 modifies aspects of the foreign investment regime and relationships with associations.
The law therefore does not specifically create OECs as an autonomous legal form, but the new private-enterprise regime provides room for them to be created. The same entrepreneurs can continue to participate in their original businesses while creating another enterprise to manage logistics, energy, services, production, or foreign trade collectively.
A multi-owner MSME could therefore serve as the operational vehicle. Several businesses could create a new entity as an MSME to provide specific capabilities, resources, or services jointly to members of the MSME, while each participating business retains its operational independence.
The new enterprise would initially serve its owners through transparent and mutually beneficial commercial relationships. After meeting their needs, the enterprise could sell excess capacity or production to third parties at market prices, thereby generating additional income and dividends for its owners.[7]
More broadly, Decree-Law 133/2026 recognizes Economic Interest Groups,[8] which could provide a useful reference for regulations specifically designed to facilitate cooperation among businesses without requiring them to surrender their legal autonomy.
In practical terms, therefore, we should not ask, “Does Cuba have a law governing OECs?” It does not. Instead, we should ask whether existing laws and regulations allow business owners to legally create a new enterprise that they jointly own and that provides services to their individual businesses.
The answer appears to be yes, although participants would need to design the structure carefully. In particular, they must distinguish the ownership relationship between the OEC and its members from the commercial relationship between the OEC and those same members as customers.
Governance and competition concerns also make this distinction important. The fact that the businesses using an OEC’s services also own an economic interest in it, does not mean that the OEC should operate without regard to profitability. The OEC should conduct its transactions with its member businesses on measurable and transparent commercial terms.
When the OEC has excess capacity, it could also sell that capacity to third parties at market prices. Those sales could make the OEC economically sustainable and increase the return on its owners’ investment.
From Concept to Practice: Four Possible OEC Models
The flexible nature of the model allows OECs to adopt different structures depending on the problem that participating businesses seek to solve.
1. Shared purchasing, importation, and logistics OEC. Owners of restaurants, retail businesses, or agricultural producers, for example, could create a company that provides supply and logistics services to the food sector.
The new entity could consolidate international orders, manage importation authority, consolidate cargo, operate warehouses—including refrigerated facilities—and organize a distribution fleet for its members.
Instead of requiring each restaurant to maintain small inventories, vehicles, and personnel specializing in foreign trade, the OEC could concentrate these capabilities in shared infrastructure. After meeting the needs of its members, it could sell available warehouse capacity, transportation, or inventory-management services to third parties.
The model would do more than allow businesses to purchase at lower prices. It would convert dispersed purchasing volume into logistical capacity, free up working capital for the individual businesses, and reduce the duplication of infrastructure and services.
2. Critical-infrastructure OEC. Businesses could also create an MSME to provide shared energy infrastructure. For example, a group of businesses located in the same area or linked through the same production chain could jointly develop and operate a solar facility with shared energy storage. The OEC could invest in, install, maintain, and replace the equipment and manage the energy system, while charging participating businesses for the services they use.
Businesses could apply the same principle to transportation fleets, data centers, or technological infrastructure. After satisfying internal demand, the OEC could sell excess capacity to other businesses. In this way, it could transform an investment that might prove prohibitively expensive for an individual MSME into a shared and potentially profitable productive asset.
3. Shared procurement, production, and business-services OEC. Businesses could also create an enterprise that provides supplies and services that many companies currently must develop internally.
A group of restaurants, for example, could create common facilities for food collection, processing, storage, maintenance, refrigeration, and distribution. A larger group of MSMEs could share accounting, technology, human resources, legal, marketing, or foreign-trade services.
This model would replace multiple small and costly solutions with specialized capabilities operating at a larger scale. The OEC would provide services to its own members on commercial terms and, where appropriate, sell excess capacity to third parties.
The structure would transform a common need into a new business activity rather than forcing every business to divert resources from its principal activity.
4. Export and external-capital linkage OEC. Businesses could create an integrated export platform for food products, beverages, manufactured goods, or professional services that individually lack sufficient scale to manage certification, international promotion, negotiations with foreign distributors, or international logistics.
The OEC could centralize these functions and combine its members’ local knowledge with capital, technology, commercial expertise, or market access provided by other investors, including Cubans residing abroad.
The participation of Cubans residing abroad has become particularly relevant since Decree-Law 133/2026 allows them to become partners in private enterprises and permits the same person to hold interests in more than one private enterprise.
The OEC could initially serve its member businesses and, after meeting their needs, provide commercial representation, export, or logistics services to third-party producers.
5. An additional frontier: financial OECs. A further possibility deserves separate consideration because of both its strategic importance and its greater regulatory complexity: an OEC that provides financial services to businesses. Within the limits established by financial regulation, such an entity could provide foreign-exchange services, microfinance, or specialized financing for working capital and imports.
This possibility has particular relevance because access to foreign currency remains one of the principal bottlenecks confronting Cuba’s private sector. The regulatory framework for foreign-trade operations makes the sale of foreign currency on behalf of individuals and non-state legal entities an important mechanism. Decree-Law 362 recognizes various categories of financial institutions, including savings banks, development banks, second-tier banks, and nonbank financial institutions.
In addition, in 2026 the authorities announced that they would permit private banks and nonbank financial institutions to provide microcredit. All of these models rest on the same principle: individual autonomy combined with shared infrastructure and governance. Cooperation provides the mechanism; the new enterprise provides the instrument. Selling excess capacity transforms shared resources into an additional source of revenue.
The model also requires explicit financial discipline. OECs should not depend on internal subsidies among their members, and “sharing” should not mean that members receive services without paying for them.
The OEC should charge participating businesses enough to cover its costs and generate a reasonable margin. In this way, a member receives an advantage as a customer while simultaneously participating, as an owner, in the entity’s financial results.
If an OEC can provide services for less than each member would spend individually and can also sell excess capacity to third parties, it can create two economic benefits: operating savings for its members and a return on their joint investment.
The model also imposes discipline on scale. An OEC need not grow indefinitely. It should grow only to the point at which the common use of assets economically justifies the additional costs of coordination and governance.
This rule prevents cooperation from turning into another bureaucratic structure and requires participants to justify each new asset, service, or member by the value that it contributes to the organization as a whole.
The relevant question, therefore, is not how many businesses can join an OEC, but how much additional capacity each business can create through its participation.
Conclusions
The development of Cuba’s private sector has shown that many of its principal limitations arise not simply from the small size of individual businesses, but also from their fragmentation within an environment characterized by structural problems involving energy, supplies, logistics, and access to foreign currency.
At the same time, the state system has limited capacity to provide the goods, inputs, and services that private businesses need in a stable and predictable manner. Uncertainty over supplies therefore imposes significant costs on private businesses. In this context, OECs could transform individual needs into shared business capabilities without requiring the participating businesses to surrender their autonomy.
Although the September 2026 regulatory framework does not establish a specific legal form called an OEC, it creates room to explore these structures through private entities whose owners retain their original businesses while creating new companies to manage resources, services, or capabilities collectively.
The OEC proposal therefore responds to the particular characteristics of Cuba’s private sector. It does not seek to create “more businesses.” It seeks to connect existing businesses and develop capabilities that none of them could achieve as efficiently on its own.
Transparent governance will determine the model’s viability. Participants will need clear rules governing contributions, costs, access, benefits, assets, and withdrawal, as well as commercial relationships that ensure the OEC’s financial sustainability.
In an economy where energy, logistics, foreign currency, and supplies have become structural constraints, businesses can reduce their dependence on individual suppliers by organizing some of these capabilities collectively. In doing so, they can improve not only operational efficiency but also predictability and resilience.
The true test of the model will be whether it can transform business interdependence into greater resilience, operational autonomy, and capacity for growth, gradually shifting businesses away from managing scarcity and toward productivity, innovation, and added value.
Looking forward, this change will require Cuba to move progressively beyond an excessively state-centered conception of economic activity and expand opportunities for Cubans to associate with one another and contribute capital, knowledge, technology, management expertise, and market access.
The national government, for its part, should create conditions that allow businesses to transform shared needs into opportunities to reduce costs and overcome the structural constraints that currently limit the country’s development.
References
Camarinha-Matos, L. M., & Afsarmanesh, H. (2005). “Collaborative Networks—A New Scientific Discipline.” Journal of Intelligent Manufacturing, 16(4–5), 439–452.
Coase, R. H. (1937). “The Nature of the Firm.” Economica, 4(16), 386–405.
Dyer, J. H., & Singh, H. (1998). “The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage.” Academy of Management Review, 23(4), 660–679.
Duchek, S. (2020). “Organizational Resilience: A Capability-Based Conceptualization.” Business Research, 13(1), 215–246.
Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press.
Powell, W. W. (1990). “Neither Market nor Hierarchy: Network Forms of Organization.” In B. M. Staw & L. L. Cummings (eds.), Research in Organizational Behavior (Vol. 12, pp. 295–336). JAI Press.
Schulz, V., & Brenner, W. (2010). “Characteristics of Shared Service Centers.” Transforming Government: People, Process and Policy, 4(3), 210–219.
Teece, D. J., Pisano, G., & Shuen, A. (1997). “Dynamic Capabilities and Strategic Management.” Strategic Management Journal, 18(7), 509–533.
Williamson, O. E. (1981). “The Economics of Organization: The Transaction Cost Approach.” American Journal of Sociology, 87(3), 548–577.
[1] The announcements include Decree-Law 133/2026, which eliminated the one-hundred-worker ceiling; MINCEX Resolution 126/2026, which granted new foreign-trade powers; and Decree-Law 128/2026, which liberalized foreign investment.
[2] The literature on network forms of organization suggests precisely that economic coordination need not rely exclusively on either market relationships or hierarchical integration. Powell (1990) identifies networks as a distinct organizational form based on recurring exchanges and cooperation among independent actors. This perspective has particular relevance when independent businesses need to coordinate specialized capabilities and resources without merging.
[3] We can understand this phenomenon as an “invisible tax of inefficiency”: businesses that devote time, capital, and energy to managing transportation, energy, supply, or other contingencies cannot use those resources to create value. From the perspective of transaction-cost economics, Coase (1937) and Williamson (1981) demonstrate that the way businesses organize an activity matter because coordination, negotiation, supervision, and adaptation also impose costs.
[4] We use the term cooperative in this English translation, because that is the accepted description of the type of organization. In Cuba, “cooperatives” have a different set of characteristics defined by law. Therefore, the author chose OEC to distinguish these enterprises from cooperatives, as known in Cuba.
[5] Shared-service models provide precedents for this approach by concentrating functions to achieve specialization and efficiency. An OEC would extend this logic into the interorganizational sphere: several independent businesses could simultaneously own and use a new entity that provides shared capabilities (Schulz & Brenner, 2010).
[6] The dynamic-capabilities literature similarly emphasizes that competitiveness depends on an organization’s ability to coordinate and reconfigure resources as conditions change (Teece et al., 1997). Through an OEC, businesses could jointly develop specialized capabilities that they would struggle to develop effectively on their own.
[7] OECs differ from Agricultural Cooperatives (CNAs). Under Decree-Law 89/2024 (Gaceta Oficial No. 78, Ordinary Edition, 2024), natural persons voluntarily associate to form a CNA primarily to perform productive work. Collective decision-making and equality among members determine their rights. By contrast, businesses would form an OEC while retaining their separate enterprises. They would participate in the OEC to share capital, productive assets, or services while continuing to conduct business independently through their original enterprises.
[8] Economic Interest Groups (AIEs) provide a mechanism through which entities or professionals can pool resources to improve their operations. Rather than replacing the individual activities of their members, an AIE complements those activities. It creates a separate legal entity through which members can undertake auxiliary projects, share costs, and increase competitiveness without surrendering their individual autonomy.