Generalized Trust and Sustainable Coexistence between Socially Responsible Firms and Nonprofit Organizations
AbstractIn this paper, we focus on a specific component of economically rel- evant trust, i.e. on what we call `institutionally produced generalized trust', defined as the amount of widespread trust (which is a public good for the economic system as a whole) endogenously and continuously gen- erated by the interaction of two types of private organizations operating in the economy: for-profit firms and nonprofit organizations. Through an evolutionary model with a trust accumulation equation and two replicator equations (capturing the evolution of economic organizations over time) we show that (1) The fixed point where all the four sub-types of private organizations considered in the model are simultaneously present can be attractive only if `virtuous' for-profits (i.e. socially responsible firms) and `virtuous' nonprofits (i.e. actually trustworthy mission-oriented organiza- tions) generate a negative externality on the other organizations of the same type. (2) The fixed point where the level of trust is very low and no socially responsible firms neither trustworthy organizations are present can be attractive; this social configuration interestingly recalls, to some extent, what some prominent social scientists depict as a trend currently occurring in the United States. (3) A socio-economic scenario where four pure population fixed points are simultaneously attractive exists.
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Bibliographic InfoPaper provided by University of Verona, Department of Economics in its series Working Papers with number 22/2005.
Date of creation: Dec 2005
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Other versions of this item:
- Angelo Antoci & Marcello Galeotti & Paolo Russu & Zarri, 2005. "Generalized Trust and Sustainable Coexistence between Socially Responsible Firms and Non Profit Organizations," Working Papers 22, University of Verona, Department of Economics.
- L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
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