Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84980
Authors: 
Fischer, Sven
Goerg, Sebastian J.
Hamann, Hanjo
Year of Publication: 
2013
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2013/4
Abstract: 
How do barely incentivized norms impact incentive-rich environments? We take social enterprise legislation as a case in point. It establishes rules on behalf of constituencies that have no institutionalized means of enforcing them. By relying primarily on managers' other-regarding concerns whilst leaving corporate incentive structures unaltered, how effective can such legislation be? This question is vital for the ongoing debate about social enterprise forms, as recently introduced in several US states and in British Columbia, Canada. We ran a laboratory experiment with a framing likened to German corporate law which traditionally includes social standards. Our results show that a stakeholder provision, as found in both Germany and the US, cannot overcome material incentives. However, even absent incentives the stakeholder norm does not foster other regarding behavior but slightly inhibits it instead. Our experiment thus illustrates the paramount importance of taking into account both incentives and framing effects when designing institutions. We tentatively discuss potential policy implications for social enterprise legislation and the stakeholder debate.
Subjects: 
experiment
stakeholder value
social enterprise
benefit corporation
corporate law
JEL: 
D01
A12
M52
D03
L21
M14
Document Type: 
Working Paper

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