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Values and Governance Systems


  • Ruys, P.H.M.

    (Tilburg University, Center For Economic Research)

  • van den Brink, J.R.

    (Tilburg University, Center For Economic Research)

  • Semenov, R.

    (Tilburg University, Center For Economic Research)


Cooperative 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.

Suggested Citation

  • Ruys, P.H.M. & van den Brink, J.R. & Semenov, R., 1999. "Values and Governance Systems," Discussion Paper 1999-66, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:7b3f7549-e97f-4e5b-92e6-2eb732029bf0

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    • Pieter H.M. Ruys & René van den Brink & Radislav Semenov, 2000. "Values and governance systems," Chapters,in: Institutions, Contracts and Organizations, chapter 27 Edward Elgar Publishing.

    References listed on IDEAS

    1. van den Brink, J.R. & Ruys, P.H.M., 1996. "The internal organization of the firm and its external environment," Discussion Paper 1996-113, Tilburg University, Center for Economic Research.
    2. H.M. Prast, 1997. "Inflation, distortionary taxation and the design of monetary policy: the role of social cohesion," WO Research Memoranda (discontinued) 508, Netherlands Central Bank, Research Department.
    3. Ellingsen, Tore, 1998. "Externalities vs internalities: a model of political integration," Journal of Public Economics, Elsevier, vol. 68(2), pages 251-268, May.
    4. Michael Keren & David Levhari, 1979. "The Optimum Span of Control in a Pure Hierarchy," Management Science, INFORMS, vol. 25(11), pages 1162-1172, November.
    5. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
    6. van den Brink, J.R. & Ruys, P.H.M. & Semenov, R., 1999. "Governance of Clubs and Firms with Cultural Dimensions," Discussion Paper 1999-101, Tilburg University, Center for Economic Research.
    7. repec:fth:tilbur:99101 is not listed on IDEAS
    8. Oliver E. Williamson, 1967. "Hierarchical Control and Optimum Firm Size," Journal of Political Economy, University of Chicago Press, vol. 75, pages 123-123.
    9. van den Brink, Rene & Gilles, Robert P., 1996. "Axiomatizations of the Conjunctive Permission Value for Games with Permission Structures," Games and Economic Behavior, Elsevier, vol. 12(1), pages 113-126, January.
    10. van den Brink, J.R., 1996. "Skewness of the wage distribution in a firm and the substitutability of labor inputs," Research Memorandum FEW 739, Tilburg University, School of Economics and Management.
    11. Herbert A. Simon, 1991. "Organizations and Markets," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 25-44, Spring.
    12. Michael Keren & David Levhari, 1983. "The Internal Organization of the Firm and the Shape of Average Costs," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 474-486, Autumn.
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    Cited by:

    1. René van den Brink, 2017. "Games with a Permission Structure: a survey on generalizations and applications," Tinbergen Institute Discussion Papers 17-016/II, Tinbergen Institute.
    2. Edward Kane, 2000. "Architecture of Supra-Governmental International Financial Regulation," Journal of Financial Services Research, Springer;Western Finance Association, vol. 18(2), pages 301-318, December.
    3. René Brink & Pieter Ruys, 2008. "Technology driven organizational structure of the firm," Annals of Finance, Springer, vol. 4(4), pages 481-503, October.
    4. van den Brink, J.R. & Ruys, P.H.M. & Semenov, R., 1999. "Governance of Clubs and Firms with Cultural Dimensions," Discussion Paper 1999-101, Tilburg University, Center for Economic Research.

    More about this item


    Governance; cooperation; hierarchy; club; firm; institution; service economy; values; culture; organization;

    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


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