The Constitution of the Not-For-Profit Organisation: Reciprocal Conformity to Morality
Gianluca F. Grimalda
University of Warwick - Centre for the Study of Globalisation and Regionalisation
University of Trento - Department of Economics and Management
Costitutional Political Economy, Vol. 16, No. 3, September 2005
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-interested ones. We assume that individuals desire to comply with the prescriptions of a universally recognised moral principle conditionally on the expectation of alike compliance by other agents. This principle will shape the constitutive ideology 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 then 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.
Keywords: Non-profit, non-self-interested motivations, conformism, reciprocity, ideology
JEL Classification: L31, D11, D63, Z13Accepted Paper Series
Date posted: May 30, 2005
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