Values and Governance Systems

P.H.M. Ruys, J.R. van den Brink, R. Semenov

Research output: Working paperDiscussion paperOther research output

Abstract

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.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages22
Volume1999-66
Publication statusPublished - 1999

Publication series

NameCentER Discussion Paper
Volume1999-66

Keywords

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

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