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

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  • Gianluca Grimalda

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  • 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

Suggested Citation

  • Gianluca Grimalda & Lorenzo Sacconi, 2005. "The Constitution of the Not-For-Profit Organisation: Reciprocal Conformity to Morality," Constitutional Political Economy, Springer, vol. 16(3), pages 249-276, September.
  • Handle: RePEc:kap:copoec:v:16:y:2005:i:3:p:249-276
    DOI: 10.1007/s10602-005-2833-2
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    References listed on IDEAS

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    Cited by:

    1. Lorenzo Sacconi & Giacomo Degli Antoni, 2009. "A Theoretical Analysis of the Relationship between Social Capital and Corporate Social Responsibility: Concepts and Definitions," Chapters,in: Knowledge in the Development of Economies, chapter 7 Edward Elgar Publishing.
    2. Giuseppe Danese & Luigi Mittone, 2015. "Trust and trustworthiness in experimental organizations," CEEL Working Papers 1501, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    3. 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.
    4. Timo Tammi, 2011. "Contractual preferences and moral biases: social identity and procedural fairness in the exclusion game experiment," Constitutional Political Economy, Springer, vol. 22(4), pages 373-397, December.
    5. Lorenzo Sacconi, 2010. "A Rawlsian View of CSR and the Game Theory of its Implementation (Part I): the Multistakeholder Model of Corporate Governance," Econometica Working Papers wp22, Econometica.
    6. Giacomo Degli Antoni & Marco Faillo & Lorenzo Sacconi & Pedro Francés-Gomez, 2016. "Distributive Justice with Production and the Social Contract. An Experimental study," Econometica Working Papers wp60, Econometica.
    7. Vladislav Valentinov, 2008. "The exchange paradigm of constitutional economics: implications for understanding the third sector," Constitutional Political Economy, Springer, vol. 19(1), pages 19-33, March.
    8. Marco Faillo & Stefania Ottone & Lorenzo Sacconi, 2015. "The social contract in the laboratory. An experimental analysis of self-enforcing impartial agreements," Public Choice, Springer, vol. 163(3), pages 225-246, June.
    9. Marco Faillo & Stefania Ottone & Lorenzo Sacconi, 2008. "Compliance by believing: an experimental exploration on social norms and impartial agreements," Department of Economics Working Papers 0810, Department of Economics, University of Trento, Italia.
    10. Lorenzo Sacconi, 2011. "Multi-stakeholder governance for effectively sharing social responsibility 1 (social contracts, deliberative democracy and endogenous conformity)," Econometica Working Papers wp26, Econometica.
    11. Lorenzo Sacconi, 2013. "The economics of corporate social responsibility," Chapters,in: Handbook on the Economics of Reciprocity and Social Enterprise, chapter 38, pages 372-399 Edward Elgar Publishing.
    12. Silvia Sacchetti, 2015. "Inclusive and Exclusive Social Preferences: A Deweyan Framework to Explain Governance Heterogeneity," Journal of Business Ethics, Springer, vol. 126(3), pages 473-485, February.
    13. 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, vol. 21(2), pages 171-201, June.
    14. Lorenzo Sacconi, 2012. "Corporate Social Responsibility and Corporate Governance," Econometica Working Papers wp38, Econometica.
    15. Sacchetti, Silvia, 2014. "Prassi deliberativa, creazione di spazi pubblici e community welfare," AICCON Working Papers 134-2014, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    16. Lorenzo Sacconi, 2013. "Ethics, economic organization and the social contract," Chapters,in: Handbook of Economic Organization, chapter 7 Edward Elgar Publishing.
    17. 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.
    18. Lorenzo Sacconi, 2010. "A Rawlsian View of CSR and the Game Theory of its Implementation (III): Conformism, Equilibrium Refinement and Selection," Econometica Working Papers wp24, Econometica.
    19. Lorenzo Sacconi, 2011. "The case against lawyers’ contingent fees and the misapplication of principal-agent models," European Journal of Law and Economics, Springer, vol. 32(2), pages 263-292, October.
    20. Giacomo Degli Antoni & Lorenzo Sacconi, 2010. "Modeling Cognitive Social Capital and Corporate Social Responsibility (CSR) as Preconditions for Sustainable Networks of Relations," Econometica Working Papers wp19, Econometica.
    21. 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, vol. 75(1), pages 77-96, September.
    22. 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;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(3), pages 269-291, September.
    23. 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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