Firms, Markets, and the Work Ethic

In this paper, we develop a new theory of the firm where the market is primarily an incentive system whereas the firm is an intrinsic motivation device. The firm is more efficient than the market when asset specificity and subjective risk are sufficiently high because it provides balanced incentives, fosters intrinsic motivation, and economizes on risk. An efficient firm is unambiguously the more ethical institution in the sense that the component of production effort due to intrinsic motivation and the agent's rents in exchange for commitment are higher. The exception is when the market approximates the first best.authority, conscientiousness, incentives, markets, multi-tasking, ownership, theory of the firm, work ethic

Components of Ethical Leadership and Their Importance in Sustaining Organizations Over the Long Term

This article identifies components of ethical leadership and then aligns them with the style of leadership that includes them. The importance of such an article comes at a time when ethical practices or lack thereof seems to be increasingly prevalent in many organizations’ execution of their business practices. These organizations quite often have an ethics statement outlining required behavior of employees and tout their commitment to employees, society, and the customer, yet we continue to see major infractions of these codes of ethics. All this comes at a high financial cost to organizations. In order to avoid such fines, and damage to brand equity we propose ethical components which must permeate the organization to ensure appropriate behavior which neither breaks legal requirements, disengages the employee, or alienates the customer

Commercialization of Traditional Knowledge Based Technologies by Small Entrepreneurs: An Exploration of Strategic and Policy Options

The paper is based on the case study of an entrepreneur who has invested his career in developing a new product based on traditional knowledge. Using this case we highlight the issues faced by a small entrepreneur in the commercialization of traditional knowledge based technologies in pharmaceuticals industry. The framework developed by Teece is used to analyze the strategic options available to the entrepreneur in a weak appropriability regime. We also analyze a hypothetical scenario of strategic options available to the entrepreneur if the appropriability regime was strong. Since traditional knowledge based entrepreneurial activities have significant scope in India, it is important to explore the policy and strategic options that are available to us. In the context of the case study, the concluding part of the paper reviews these options and the associated implications for the holders of traditional knowledge.

Trust conceptualized as a corporate knowledge asset

To most individuals, "trust" can be viewed as a knowledge corporate asset that may add, or rest, value to the company. The role of knowledge in achieving a competitive advantage is becoming and increasingly important management issue in all business and non-business sectors. As such, our Throughput Modeling approach indicates how six different trust behaviors can be guided, how trust decision making can be improved and made defensible, and how special problems facing individuals can be dealt with via decision-making pathways leading to an action

Constructing meaning in the service of power : an analysis of the typical modes of ideology in accounting textbooks

This paper provides an analysis of the typical modes of ideology in introductory financial accounting textbooks and training materials. Drawing on Thompson's (1990) schema concerning the typical linguistic modes through which ideology operates, this research suggests that the operation of ideology is apparent within educational accounting texts, with particular strategies being more evident than others: in particular, the strategies of universalization, narrativization, rationalization and naturalization. Given the predominantly technical nature of introductory financial accounting textbooks and training manuals, the modes of ideology identified in the texts were often quite subtle; more specifically, the ideological characteristics displayed in each of the six texts analysed were often expressions of implicit or taken-for-granted assumptions

Values Generation: Turning Values into Wealth

Much of management behavior is focused on increasing benefits (usually thought of — in terms of Utilitarian ethics — as maximizing utility). Good, in terms of what increases benefits; thus, what is preferred by business is defined as the ability to motivate individuals in a way that increases desired outcomes (or that enhances organizational performance). This talent (referred to as the art of persuasion or the art of management) is valued because it facilitates achieving the desired results. Managers with such persuasive or motivational skills are highly regarded because of their ability to increase personal wealth, improve performance, and contribute to increasing stakeholder satisfaction. However, as was made clear by Aristotle’s socio-economic ethics, a leader’s ability to generate higher levels of excellence is based on a character trait defined by Aristotle as magnanimous. Developing such a character is important because it is the key to enabling a person to get more of what he or she wants out of life and with such a character a manager/leader is able to motivate an organization to have improved performance. This article highlights the dynamics that are connected with how such characters contribute to enhancing organizational performance, how an individual obtains such character traits, and why such characters contribute to the prosperity of other individuals and of society

Socially Responsible Investment in General Equilibrium

Socially responsible investment in analyzed in a general equilibrium context. This is important in order to understand the ultimate consequences of SRI on the decisions of economic agents. Building on models by Brock (1982) and Merton (1987), SRI is modelled as the choice to voluntarily give up investment in stocks and bonds issues by a firm producing an externality. The model is used to analyze the utility costs of SRI to the responsible investor and the impact on the price of the stock issued by the firm which is responsible for the externality. The results shed light on the factors which may magnify or reduce the impact of SRI, among which are crucial the wealth commended in relative terms by the responsible agents and the diversification possibilities offered by the firms which are excluded from the investment opportunity set. A set of firms targeted by SRI may be seriously affected by SRI only if the responsible investors command a large portion of overall wealth; moreover the same firms are more likely to be hit by SRI behavior if they do not represent important diversification instruments. Firms with unique characteristics from the point of view of overall diversification are less likely to be the target of SRI.General equilibrium, Redistributive effects, Public goods

Complexity and Endogenous Instability

The global financial crisis proved the critical impact of the gap between individual rationality and group rationality. This gap is not supposed to arise in a Neoclassical world, but it frequently arises in a world as complex as ours. The paper explores how endogenous instability might arise due to such a gap, and what behavioral rules might help to mitigate its impact.fallacy of composition, empathy, n-person prisoner’s dilemma games, n-person zero-sum games, symmetry, the golden rule.

Communitarian perspectives on social enterprise

Concepts of social enterprise have been debated repeatedly, and continue to cause confusion. In this paper, a meta-theoretical framework is developed through discussion of individualist and communitarian philosophy. Philosophers from both traditions build social theories that emphasise either consensus (a unitarist outlook) or diversity (a pluralist outlook). The various discourses in corporate governance reflect these assumptions and create four distinct approaches that impact on the relationship between capital and labour. In rejecting the traditional discourse of private enterprise, social enterprises have adopted other approaches to tackle social exclusion, each derived from different underlying beliefs about the purpose of enterprise and the nature of governance. The theoretical framework offers a way to understand the diversity found within the sector, including the newly constituted Community Interest Company (CIC).</p