passed with enough surplus left for B so that the maintained reputation is
worthwhile, and then we could not wish to apply the unambiguous and not
very productive calculus based scheme. Some measure of ambiguity is worth
tolerating if there is a corresponding gain in the arrangement's efficiency. The
Appendix near the end of the chapter contains an explicit illustration of this point.
Seemingly outside the scope of economic theory are notions such as the following: a strong corporate culture increases the degree to which individuals internalize the common good of the organization. But one can approach this notion
within an economic framework on the supposition that control in the organization will be based on adherence to the culture. An easy approach is to view this
form of control as a simple screen. Somewhat less direct would be a story in
which individuals are happier in situations in which they will be evaluated by
criteria that leave little to chance--where they have relatively greater control of
their own destinies. This could be a primitive taste, or one induced from risk
aversion to capricious evaluation. In either case, if adherence to the culture
provides an evaluation criterion that is predictable in application, it can provide
an economic bond to the organization.
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Questia, a part of Gale, Cengage Learning. www.questia.com
Book title: Firms, Organizations and Contracts:A Reader in Industrial Organization.
Contributors: Peter J. Buckley - Editor, Jonathan Michie - Editor.
Publisher: Oxford University Press.
Place of publication: Oxford.
Publication year: 1996.
Page number: 274.
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