The Economics of Values-Based Organizations ─ An Introduction

This book looks at the governance of values-based organizations (VBOs), 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.

Luigino Bruni is a Full Professor at LUMSA University, Rome, Italy

Alessandra Smerilli is an Associate Professor, at PFSE-Auxilium University, Rome, Italy