This book looks at the governance of values-based organizations, which are organizations with an ideal mission and identity. Examples of these VBOs include non-profit organizations, charities, NGOs, environmental, educational or cultural organizations, and social enterprises. The main objective of any VBO is to evolve and grow without losing its identity, to which its survival is linked in the middle and long run. The focus of the book is the study of the relational and motivational dynamics during identity crisis, using critical (...) mass models and Hirschman's "exit and voice" framework. This book analyses the dynamics that arise in VBOs when ideal quality deteriorates. On the basis of Hirschman's ''exit and voice'' model, it analyses the mechanism that encourages the best subjects, the ones intrinsically motivated who care most about the mission and ideal quality of the organization, to leave the organization if their voice is ignored. By combining Hirschman's and a ''critical mass'' model, it is shown that the possible cumulative effects caused by the ''exit'' of the intrinsically motivated members, which can bring the organization into a deterioration process. This book offers an analysis of these phenomena, which are usually studied in sociology or political science, by using an economic approach and the language of evolutionary game theory. To combine sociological politics and economics theoretical tool in order to explore crisis in organizations can be considered the main original contribution of this book. (shrink)

It is a truism that a market economy cannot function without trust. We must be able to rely on other people to respect our property rights, and on our trading partners to keep their promises. The theory of economics is incomplete unless it can explain why economic agents often trust one another, and why that trust is often repaid. There is a long history of work in economics and philosophy which tries to explain the kinds of reasoning that people use (...) when they engage in practices of trust: this work develops theoriesoftrust. A related tradition in economics, sociology and political science investigates the kinds of social institution that reproduce whatever habits, dispositions or modes of reasoning are involved in acts of trust: this work develops theoriesofsocialcapital. A recurring question in these literatures is whether a society which organizes its economic life through markets is capable of reproducing the trust on which those markets depend. In this paper, we look at these themes in relation to the writings of three eighteenth-century philosopher-economists: David Hume, Adam Smith, and Antonio Genovesi. (shrink)

Ethics researchers advise managers of organizations to link rewards and punishments to ethical and unethical behavior, respectively. We build on prior research maintaining that organizations operate at Kohlbergs stages of moral reasoning, and explain how the over-reliance on rewards and punishments encourages employees to operate at Kohlbergs lowest stages of moral reasoning. We advocate designing organizations as ethical communities and relying on different assumptions about employees in order to foster ethical reasoning at higher levels. Characteristics associated with ethical communities are (...) identified and AES Corporation and Semco S/A serve as examples of corporations exhibiting the design characteristics and assumptions of ethical organizations. (shrink)

This study introduces the concept of deviant behavior in a moderated-mediation framework of incentives and organizational justice perception. The proposed relationships in the theoretical framework were tested with a sample of 311 academics, using simple random sampling, via causal models and structural equation modeling. The findings suggest that incentives might boost the apparent performance, but not necessarily the intended performance. The results confirm that employees’ affection for incentives has direct, indirect, and conditional indirect effects on their deviant behavior likelihood. The (...) relationship between employee deviant behavior likelihood and affection for incentives was moderated by organizational justice perception and partially mediated by reward expectancy, thus having significant contributions toward the extant literature of deviant behavior and incentives. The findings have important implications for managers, academicians, and policy makers for mitigating adverse behavior in professional employees through proper use of incentives. (shrink)

In the midst of greed, corruption, the economic crash and the general disillusionment of business, current conceptions of leadership, organizational values, and authenticity are being questioned. In this article, we fill a prior research gap by directly exploring the intersection of these three concepts. We begin by delving into the relationship between individual values and organizational values. This analysis reveals that the “value fit” approach to creating authenticity is limited, and also indicates that a deeper exploration of the nature of (...) values and the role of leadership is necessary. More specifically, we propose that organizational values should be viewed as an opportunity for ongoing conversations about who we are and how we connect. Through this type of dialogue which we define as “value through conversation”, we can create what we call poetic organizations. A typology of four interconnected values each of which forms a foundation for the critical questioning and inquiry that might be found in poetic organizations is developed. We suggest that this conceptualization offers a new and dynamic approach for thinking about the relationships between leadership, values, and authenticity and has important implications for both research and practice. (shrink)

Early in this century, most empirically oriented psychologists believed that all motivation was based in the physiology of a set of non-nervous system tissue needs. The theories of that era reflected this belief and used it in an attempt to explain an increasing number of phenomena. It was not until the 1950s that it became irrefutably clear that much of human motivation is based not in these drives, but rather in a set of innate psychological needs. Their physiological basis is (...) less understood; and as concepts, these needs lend themselves more easily to psycho logical than to physiological theorizing. The convergence of evidence from a variety of scholarly efforts suggests that there are three such needs: self-determination, competence, and interpersonal relatedness. This book is primarily about self-determination and competence (with particular emphasis on the former), and about the processes and structures that relate to these needs. The need for interpersonal relat edness, while no less important, remains to be explored, and the findings from those explorations will need to be integrated with the present theory to develop a broad, organismic theory of human motivation. Thus far, we have articulated self-determination theory, which is offered as a working theory-a theory in the making. To stimulate the research that will allow it to evolve further, we have stated self-determination theory in the form of minitheories that relate to more circumscribed domains, and we have developed paradigms for testing predictions from the various minitheories. (shrink)

Abstract Orthodox decision theory presupposes that agency is invested in individuals. An opposing literature allows team agency to be invested in teams whose members use distinctive modes of team reasoning. This paper offers a new conceptual framework, inspired by David Lewis's analysis of common reasons for belief, within which team reasoning can be represented. It shows how individuals can independently endorse a principle of team reasoning which prescribes acting as a team member conditional on assurance that others have endorsed the (...) same principle. It argues that there can be such assurance even when no individual has an obligation to act on team reasoning. *This paper originated in a lecture that I gave at a Colloquium on Collective Intentions at Erasmus University Rotterdam. I thank participants, and particularly Govert den Hartogh, for comments. The analysis presented in this paper is an offshoot of a larger project, which uses David Lewis's work as the starting point for a reconstruction of the foundations of game theory. That project is joint work with Robin Cubitt. The specific idea of using this approach to analyse team reasoning grew out of a discussion with Michael Bratman. My work was supported by the Leverhulme Trust. (shrink)

We-thinking theories allow groups to deliberate as agents. They have been introduced into the economic domain for both theoretical and empirical reasons. Among the few scholars who have proposed formal approaches to illustrate how we-thinking arises, Bacharach offers one of the most developed theories from the game theoretic point of view. He presents a number of intuitions, not always mutually consistent and not fully developed. In this article, I propose a way to complete Bacharach’s theory, generalizing the interdependence hypothesis and (...) building on his intuition about vacillation. It is a simple model of vacillation between the I and we-modes of reasoning, as a way in which we-thinking can come to mind in the face of a decision problem. The vacillation model makes we-reasoning more easily usable in game theory. (shrink)

This paper examines the relationship between CEO incentives and strong and weak corporate social performance. Using the KLD database we find that incentives have no significant relationship with strong social performance. Salary and long-term incentives have a positive association with weak social performance.

Couched in positive agency theory, it is shown that the straight-commission compensation system (SCCS) creates a conflict of interest between the agent''s and the client''s self-interests. Based on this, it is hypothesized that the SCCS will encourage agents to intend to act unethically towards their clients. Two hundred and forty five insurance agents in the U.S. were surveyed, with 59% responding. The results suggest that the SCCS does not significantly affect agents'' ethical intentions, positively or negatively. This lack of empirical (...) evidence may be due to the unique nature of the sample. Indeed, the company which enabled this sample appears to have found a practical solution to temper the potential negative effects of the SCCS in its commitment to selective hiring and marketing products which benefit both the client and the agent. (shrink)

Contemporary economic thought presumes that individuals in a society always act according to their self-interest or private economic incentives, while important ethical motivations for action, such as a concern for others and public interest, are largely ignored. This paper is based on my experience of teaching an undergraduate course that highlighted the divergence between economic incentives and ethical motives for action in present-day life and business. Teaching tools such as lectures, case and group discussions were employed to address important ethical (...) dilemmas of individuals and managers in contemporary societies. Readings underscored the evolving relationship of business ethics and economic incentives, and the relevance of ancient ethical principles (e.g., Ethics of Interdependence, and Ethics of Prudence and Self-Development) to present-day business ethics. The course emphasized the imminent need in contemporary societies to reduce the divergence between economic incentives and ethical motives for action, and called for a greater understanding of business ethics today, given the complex ethical concerns that managers confront in the current global environment. (shrink)

Executive compensation has long been a prominent topic in the management literature. A main question that is also given substantial attention in the business ethics literature—even more so in the wake of the recent financial crisis—is whether increasing levels of executive compensation can be justified from an ethical point of view. Also, the relationship of executive compensation to instances of unethical behavior or outcomes has received considerable attention. The purpose of this paper is to explore the social, ecological, and existential (...) costs of economic incentives, by discussing how relying on increasing levels of executive compensation may have an adverse effect on managerial performance in a broad sense. Specifically, we argue that one-dimensional economic incentives may destroy existential, social, and systemic values that influence the manager’s commitment to ensure responsible business conduct, and have negative spillover effects that may reduce the manager’s performance. There are well-documented findings that demonstrate that reliance on sources of extrinsic motivation (such as economic incentives) may displace intrinsic motivation. Our perspective is a holistic one, in the sense that we will explore the influence of sources of extrinsic motivation on the manager’s intrinsic commitment to different types of values. We will in particular investigate how it may influence the manager’s ethical reflection and behavior or lack thereof. (shrink)

:A common justification offered for unequal pay is that it encourages socially beneficial productivity. G. A. Cohen famously criticizes this argument for not questioning the behaviour and attitudes that make those incentives necessary. I defend the communal status of incentives against Cohen's challenge. I argue that Cohen's criticism fails to appreciate two different contexts in which we might grant incentives. We might grant unequal payment to someone because they demand it. However, unequal payment might be an offer instead. I claim (...) that incentives as offers promote the ideal of society as a cooperative venture for mutual advantage. (shrink)

The recent financial crisis has prompted questioning of our basic ideas about capitalism and the role of business in society. As scholars are calling for “responsible leadership” to become more of the norm, organizations are being pushed to enact new values, such as “responsibility” and “sustainability,” and pay more attention to the effects of their actions on their stakeholders. The purpose of this study is to open up a line of research in business ethics on the concept of “ authenticity (...) ” as it can be applied in modern organizational life and more specifically to think through some of the foundational questions about the logic of values. We shall argue that the idea of simply “acting on one’s values” or “being true to oneself” is at best a starting point for thinking about authenticity. We develop the idea of the poetic self as a project of seeking to live authentically. We see being authentic as an ongoing process of conversation that not only starts with perceived values but also involves one’s history, relationships with others, and aspirations. Authenticity entails acting on these values for individuals and organizations and thus also becomes a necessary starting point for ethics. After all, if there is no motivation to justify one’s actions either to oneself or to others, then as Sartre has suggested, morality simply does not come into play. We argue that the idea of responsible leadership can be enriched with this more nuanced idea of the self and authenticity. (shrink)

In this study, we explore the role of Chief Executive Officers’ incentives, split between monetary and non-monetary, in relation to corporate social responsibility. We base our analysis on a sample of 597 US firms over the period 2005–2009. We find that both monetary and non-monetary incentives have an effect on CSR decisions. Specifically, monetary incentives designed to align the CEO’s and shareholders’ interests have a negative effect on CSR and non-monetary incentives have a positive effect on CSR. The study has (...) important implications for the design of executive remuneration plans, as we show that there are many levers that can affect the CEO’s decisions with regard to CSR. Our evidence also confirms the prominent role of the CEO in relation to CSR decisions, while also recognizing the complexity of factors affecting CSR. Finally, we propose a research design that takes into account endogeneity issues arising when examining compensation variables. (shrink)

Readers of this book are sure to view the ethics of incentives in a new light.

Includes a translator’s preface, note on the text, and suggestions for further reading.