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The Constitution of the Not-For-Profit Organisation: Reciprocal Conformity to Morality

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  • Gianluca Grimalda

    ()

  • Lorenzo Sacconi

Abstract

We investigate the link between individual motivations and economic organisations by focusing on the case of non-profit firms. First, we provide a model of individual behaviour that allows for agents to have motivations different from self-interest. We assume that individuals desire to comply with the prescriptions of a universally recognised moral principle conditionally on the expectation of similar compliance by other agents. This principle will shape the constitution of the non-profit organisation. Second, we study a simple ‘production game’ where a ‘for-profit’ and a ‘non-profit’ equilibria both exist. In the former, self-interested considerations prevail, so that agents implement the free-market standard; conversely, in the latter, conformist preferences are dominant, so that players act in such a way that the moral principle is fulfilled. The non-profit organisation is characterised in terms of a ‘social contract’ between the founders of the firm and its stakeholders. We also point out that the structure of the ‘psychological game’ underlying the interaction is akin to a co-ordination problem, so that the possibility of co-ordination failures underscores the risk of ‘distorting’ individual dispositions in the shift from the ‘micro’ level of the individuals to the ‘macro’ level of the organisation as a whole. Copyright Springer Science+Business Media, Inc. 2005

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Bibliographic Info

Article provided by Springer in its journal Constitutional Political Economy.

Volume (Year): 16 (2005)
Issue (Month): 3 (09)
Pages: 249-276

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Handle: RePEc:kap:copoec:v:16:y:2005:i:3:p:249-276

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Web page: http://www.springerlink.com/link.asp?id=102866

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Keywords: Non-profit; non-self-interested motivations; conformism; reciprocity; ideology;

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  1. Roberto Tamborini, 2002. "One "monetary giant" with many "fiscal dwarfs": The efficiency of macroeconomic stabilization policies in the European Monetary Union," Department of Economics Working Papers 0204, Department of Economics, University of Trento, Italia.
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  12. Giulia Felice, 2003. "Dinamica strutturale e occupazione nei servizi," Department of Economics Working Papers 0304, Department of Economics, University of Trento, Italia.
  13. Roberto Tamborini & Riccardo Fiorentini, 2001. "The monetary transmission mechanism in Italy: the credit channel and a missing ring," Department of Economics Working Papers 0101, Department of Economics, University of Trento, Italia.
  14. Roberto Tamborini, 2004. "The economic consequences of Mr. G.W. Bush's foreign policy. can the us afford it?," Department of Economics Working Papers 0402, Department of Economics, University of Trento, Italia.
  15. Lorenzo Sacconi, 2001. "Incomplete contracts and corporate ethics: a game theoretical model under fuzzy information," LIUC Papers in Ethics, Law and Economics 91, Cattaneo University (LIUC).
  16. Matteo Ploner, 2003. "The financial markets and wealth effects on consumption - an experimental analysis," Department of Economics Working Papers 0306, Department of Economics, University of Trento, Italia.
  17. Marco Bee & Giuseppe Espa & Roberto Tamborini, 2002. "Firms’ bankruptcy and turnover in a macroeconomy," Department of Economics Working Papers 0203, Department of Economics, University of Trento, Italia.
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Citations

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Cited by:
  1. Lorenzo Sacconi, 2011. "The case against lawyers’ contingent fees and the misapplication of principal-agent models," European Journal of Law and Economics, Springer, Springer, vol. 32(2), pages 263-292, October.
  2. Leonardo Becchetti & Giacomo Degli Antoni & Marco Faillo, 2013. "Team reasoning theory: an experimental analysis of common reason to believe and social distance," International Review of Economics, Springer, Springer, vol. 60(3), pages 269-291, September.
  3. Lorenzo Sacconi & Marco Faillo, 2010. "Conformity, reciprocity and the sense of justice. How social contract-based preferences and beliefs explain norm compliance: the experimental evidence," Constitutional Political Economy, Springer, Springer, vol. 21(2), pages 171-201, June.
  4. Timo Tammi, 2011. "Contractual preferences and moral biases: social identity and procedural fairness in the exclusion game experiment," Constitutional Political Economy, Springer, Springer, vol. 22(4), pages 373-397, December.
  5. Vladislav Valentinov, 2008. "The exchange paradigm of constitutional economics: implications for understanding the third sector," Constitutional Political Economy, Springer, Springer, vol. 19(1), pages 19-33, March.
  6. Marco Faillo & Stefania Ottone & Lorenzo Sacconi, 2008. "Compliance by Believing: An Experimental Exploration on Social Norms and Impartial Agreements," Econometica Working Papers wp02, Econometica, revised Aug 2008.
  7. Giacomo Degli Antoni & Lorenzo Sacconi, 2008. "A Theoretical Analysis of the Relationship between Social Capital and Corporate Social Responsibility: Concepts and Definitions," Econometica Working Papers wp01, Econometica.
  8. Lorenzo Sacconi & Marco Faillo, 2005. "Conformity and reciprocity in the "exclusion game": an experimental investigation," Department of Economics Working Papers 0512, Department of Economics, University of Trento, Italia.
  9. Lorenzo Sacconi, 2007. "A Social Contract Account for CSR as an Extended Model of Corporate Governance (II): Compliance, Reputation and Reciprocity," Journal of Business Ethics, Springer, Springer, vol. 75(1), pages 77-96, September.
  10. Lorenzo Sacconi, 2008. "CSR as contractarian model of multi-stakeholder corporate governance and the game-theory of its implementation," Department of Economics Working Papers 0818, Department of Economics, University of Trento, Italia.
  11. Ermanno Tortia, 2006. "Worker satisfaction and perceived fairness: result of a survey in public, and non-profit organizations," Department of Economics Working Papers 0604, Department of Economics, University of Trento, Italia.

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