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

Abstract

This paper wishes to problematize the foundations of production governance and offer an analytical perspective on the interrelation between agents' preferences, strategic choice and the public sphere (defined by impacts of choices on "publics" who do not have an input in strategic choice, and by contextual conditions). The value is in the idea of preferences being social in nature and in the application both to the internal stakeholders of the organisation and its impacts on people outside. Using the concept of "strategic failure" we suggest that social preferences reflected in deliberative social praxis can reduce false beliefs and increase individual wellbeing. From this approach, the paper offers a taxonomy of production organizations, based on social preferences about two variables: (i) the governance form (i.e. ownership and control rights) (ii) other strategic decisions that characterize the management of a company at a more operational level, once its fundamental legal form has been chosen. Each dimension (governance and strategic decisions processes) is then categorised alongside two basic preferences: towards inclusion or exclusion of "publics" that have no substantial access to decision power about these variables. 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 and organizational forms is addressed through examples and regional experiences.