Trust, repute and the role of non-profit enterprise |
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Authors: | Andreas Ortmann Mark Schlesinger |
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Institution: | (1) Department of Economics, Bowdoin College, 04011 Brunswick, Maine;(2) Yale University, New Haven, Connecticut |
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Abstract: | This article examines the trust hypothesis: the claim that asymmetric information can explain the existence of non-profit
enterprise in certain markets. We argue that this hypothesis, in order to be viable, has to meet three challenges: ‘reputational
ubiquity’, ‘incentive compatibility’ and ‘adulteration’. Drawing on modern agency theory, we conclude that the trust hypothesis
stands on shaky ground. It can be sustained only under particular conditions that have been neither carefully described in
theory nor subject to empirical assessment. The available evidence, patchy and inadequate as it is, seems to suggests that
there are some ownership-related differences in aspects of organisational performance connected with asymmetric information.
However, there is little evidence that this relates to trustper se or provides a rationale for the existence of non-profit ownership in these industries. We conclude with a plea for substantial
research on consumer expectations and provider motivations.
Visiting Associate Professor at Rutgers University, New Brunswick, New Jersey. |
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