Inclusive and Exclusive Social Preferences: A Deweyan Framework to Explain Governance Heterogeneity

Abstract

We suggest that the pragmatist theory of public interest has implications for the contraposition between self-regarding and other-regarding preferences in economics. We reconsider this distinction and replace some of the existing categories with the idea of inclusive and exclusive social preferences over both organizational and strategic decision-making domains. The value is in the idea of both exclusive and inclusive preferences being social in nature and in the application both to the internal organization and its impacts on people outside. Our framework explains governance heterogeneity by contrasting exclusive and inclusive social preferences in cooperatives, social enterprises, as well as traditional corporations. A discussion of the evolution of social preferences is addressed through examples and regional experiences. We argue that the social preferences perspective contributes to understand the cause of strategic failure in the development of localities and regions.JEL: B00, L2, L3

The social value of multi-stakeholder cooperatives: the case of the CEFF system in Italy

“…This process requires that actors are driven by social preferences towards inclusion, resulting in patterns of interaction based on the search of publics and their involvement (Sacchetti and Sugden 2011;Sacchetti 2012a), but also on reciprocating behaviours and social goals (Sacconi 2011;BenNer and Putterman 1999). Here mutuality is understood as a typology of social relations based on communicative rationality, trust and reciprocity rather than direction (Sacchetti and Sugden 2003;Zamagni 2012).…”

Why Social Enterprises are Asking to Be Multi-Stakeholder and Deliberative: An Explanation Around the Costs of Exclusion

“…In our interpretation, the issue with the prevailing economic approach relates to a cognitive bias that separates the private and public spheres of interest, creating a gap which fails to account for the public dimension of private choices, the numerous stakeholders affected, their knowledge and needs (Mintzberg, 1983;Sacchetti, 2013). This gap is reflected and reinforced by the prevailing governance system which concentrates control over strategic decisions within a restricted group, excludes specific and general needs and, not surprisingly, fails to meet them.…”

“…The underlying assumption here is the unity between processes and resulting impacts, or the fact that the process are chosen on the ground of their assumed ability to achieve desired results and avoid undesired ones, or what Sen (2002) calls comprehensive preferences (cf. Sacchetti 2013). To reinforce the dependence of impacts on governance, we start from an analysis of impacts to then underline the type of governance which may favour socially desired effects.…”

“…From the perspective of the rational decision maker, disregarding participatory decision-making can cause the persistence of power asymmetries and false beliefs about needs, opportunities and solutions in society (Dewey, 1927;Sacchetti, 2013). In terms of production outputs, it follows that exclusive governance lowers the quality of the decision-making process and creates barriers to innovation thus directly impacting on users and communities more broadly (Sacchetti, 2013).…”

“…In terms of production outputs, it follows that exclusive governance lowers the quality of the decision-making process and creates barriers to innovation thus directly impacting on users and communities more broadly (Sacchetti, 2013).…”