The Efficiency of the Non-profit Enterprise: Constitutional Ideology, Conformist Preferences and Reputation

A Social Contract Account for CSR as an Extended Model of Corporate Governance (II): Compliance, Reputation and Reciprocity

“…In this section I summarise briefly the ideas underlying the conformist preferences model Sacconi, 2002, 2005;Sacconi, 2004;Sacconi and Grimalda, 2006), before applying it to the problem raised at the end of the previous section (see Appendix 1 for the mathematical model). Let me assume that stakeholders have not only self-interested motives of preference but also ideological motives of preference, and that their accepted ideology coincides with the social contract of the firm -i.e.…”

“…However, in this essay I shall refer to my own contributions to the field (see Sacconi, 2004;Sacconi, 2002, 2005;Sacconi and Grimalda, 2006). For these references see the bibliography at the end of Part II.…”

The Constitution of the Non-Profit Enterprise: Ideals, Conformism and Reciprocity

“…First, the question of the efficiency of the nonprofit firm has been somehow neglected, although it is apparent how its constitution can help reducing transactions costs in the "market" of the demand and supply of welfare goods. This aspect has been elaborated in a different work (Sacconi, 2002). Moreover, the extension of the model to the case of incomplete information, which has been sketched in section 5.3, opens the analysis to the relevant issue of the 'external' relation of the NPE with other stakeholders than the consumers, such as donors, where reputation effects become relevant.…”

“…In a related work one of us (Sacconi 2002) suggests that a code of ethics may therefore work as the basis for introducing reputation affects in a repeated trust game between the NPE as a whole and its external consumers and stakeholder in general, which has been modelled as a game under unforeseen contingencies and incompleteness of contracts. This is in fact the typical context within which it can be expected that an institutional form of firm like the NPE is constituted, such that the firm is endowed with some authority toward the beneficiaries under the condition that it discharges some fiduciary duties toward the beneficiaries themselves.…”

“…See also note 9 on this point. 5 More about this in Sacconi (2002) 6 Harsanyi (1977) states the set of symmetrical rationality postulates from which the bargaining solution is derived, Binmore (1997) shows a symmetrical bargaining game suitable for ethical theory. See also Sacconi (1991) for a different account.…”