Inclusive and Exclusive Social Preferences: A Deweyan Framework to Explain Governance Heterogeneity

Abstract

We suggest that the pragmatist theory of public interest has implications for the contraposition between self-regarding and other-regarding preferences in economics. We re-consider this distinction and replace some of the existing categories with the idea of inclusive and exclusive social preferences over both organizational and strategic decision-making domains. The value is in the idea of both exclusive and inclusive preferences being social in nature and in the application both to the internal organization and its impacts on people outside. Our framework explains governance heterogeneity by contrasting exclusive and inclusive social preferences in cooperatives, social enterprises, as well as traditional corporations. A discussion of the evolution of social preferences is addressed through examples and regional experiences. We argue that the social preferences perspective contributes to understand the cause of strategic failure in the development of localities and regions.