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

  • Gianluca Grimalda

    ()

  • Lorenzo Sacconi

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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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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  1. Hubert Gabrisch & Maria Luigia Segnana, 2002. "Why is trade between the European Union and the transition economies vertical?," Department of Economics Working Papers 0207, Department of Economics, University of Trento, Italia.
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  11. 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).
  12. Maurizio Pugno, 2003. "The service paradox and endogenous economic growth," Department of Economics Working Papers 0301, Department of Economics, University of Trento, Italia.
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  14. Maurizio Pugno, 2000. "Under Tertiarisation and Unemployment," Department of Economics Working Papers 0004, Department of Economics, University of Trento, Italia.
  15. 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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  17. Roberto Tamborini, 2000. "From Kuwait to Kosovo: what have we learned; reflections on globalization and peace," Department of Economics Working Papers 0002, Department of Economics, University of Trento, Italia.
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