Values and Governance Systems
AbstractCooperative behavior as well as other cultural rules and values are made explicit in organizational units that procure and provide a common service. The common service is procured by a club, which consists of a user-value function, a representation governance, and a budget-allocation function. The common service is provided by a firm, which consists of a value-production function, an implementation governance, and a remuneration function. They extend the concepts of the consumer and the producer in neoclassical theory. The functions mentioned are determined by cooperative games. A governance is represented by a structure of principal-agent relations. The representation governance is a bottom-up hierarchy, empowered by the members of the club. The implementation governance is a top-down hierarchy, empowered by the governor of the firm. The optimal size of the club organization and the firm organization in a competitive environment is determined under certain conditions. This description of a club and a firm allows characterization of some cultural dimensions in the society. For one such cultural dimension, viz. the degree of collectivism in society, the impact on the optimal organization is shown.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1999-66.
Date of creation: 1999
Date of revision:
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Web page: http://center.uvt.nl
Governance; cooperation; hierarchy; club; firm; institution; service economy; values; culture; organization;
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- H1 - Public Economics - - Structure and Scope of Government
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-09-09 (All new papers)
- NEP-CDM-1999-09-09 (Collective Decision-Making)
- NEP-IND-1999-09-09 (Industrial Organization)
- NEP-MIC-1999-09-09 (Microeconomics)
- NEP-PBE-1999-09-09 (Public Economics)
- NEP-POL-1999-09-09 (Positive Political Economics)
- NEP-PUB-1999-09-09 (Public Finance)
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