A socioeconomic theory of organization

Date of Completion

January 2002


Business Administration, Management|Economics, Theory




Economic models of firms assume profit motivated behavior. The model presented here offers a broader view in which firms may be motivated by an interest in the welfare of their workers or the welfare of nonmember groups including but not limited to the environment, community or citizen action groups. The firm may also have commitments to specific beliefs which direct the activities the firm undertakes without regard to profitability. The social firm thus constructed is contrasted with simple constrained profit maximizing firms which may undertake apparently other-regarding behaviors but do so only out of necessity. The level of contributions to either members or nonmembers is then used to infer the ethical system underlying those choices. ^ Following the theoretical model, a case study of the coffee industry is provided as background information for the application of the model to coffee fincas in Latin and South America. Campesino farmers are shown to offer shade grown coffee in amounts beyond the ability of the National Audubon Society or other special interest groups to mandate through boycotts or bans. This is evidence of caring. ^