Perspectives from New Institutional Economics
Edited by Claude Ménard
422 Models and measures 27. Values and governance systems Pieter H.M. Ruys, René van den Brink and Radislav Semenov* INTRODUCTION An organization is ruled by internal values. These constitute its culture and eventually determine the performance of the organization. To a large extent, however, these internal values are determined by external values, that is, the cultural values and the governance system of the society in which the organization performs. These observations are also valid for the ruling paradigm in economics, the general equilibrium model in neoclassical theory. The internal values of consumers and producers is to maximize utility and proﬁts, which is consistent with and supported by the external market rules. These neoclassical models have given an impressive description of the economy on the basis of basically one value concept, the maximization of individual utility. This force explains, among others, the internal proﬁt-maximization culture imposed on ﬁrms under neoclassical governance of society. This correspondence between the internal values of all ﬁrms and households with the external values in the society constitutes the basis of general equilibrium theory. However, there are more cultural dimensions in society than the utilitymaximizing one. When these other cultural dimensions are taken into account, the neoclassical concepts of a producer and a consumer have to be expanded. The rules governing these agents have to be designed by more sophisticated tools. Why is this relevant? Why would one want to incorporate other cultural values in governance than the neoclassical ones? The main reason is, of...
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