Design for Values in Institutions

Abstract

In this chapter, I examine the relationship between institutions and moral or ethical values (I use the terms interchangeably) and, in particular, the manner and extent to which such values are or, at least, ought to be part and parcel of the design of institutions. By institutions I mean organizations and systems of organizations. So a single business corporation is an institution in this sense, and so is a market-based industry comprised of corporations. When designing-in-values to institutions, three dimensions of institutions can be considered, namely, function, structure, and culture. Moreover, there are different (possibly crosscutting) levels: the macro-level (e.g., the industry as a whole), mezzo-level (e.g., a single organization), and the microlevel (e.g., an anti-corruption system within an organization). Further, there are at least six main sources of motivation to be accommodated, and potentially utilized, in the design process. These are formal sanctions (within a framework of enforced rules), economic incentives (especially within a competitive market), desire for status and reputation, desire for control over one’s own destiny and (in some cases) power over others, moral motivations, and a miscellaneous assemblage of psychosocial factors, e.g., status quo bias, overconfidence, desire to conform, and irrational desires. To illustrate and facilitate understanding of designing-in-value to institutions, I will discuss different features of a variety of quite diverse contemporary institutions. The institutions and design features in question are (respectively) (1) the design and construction of an entire organizational system from the ground up, namely, a compulsory retirement income system (a hybrid public/private sector institution); (2) the redesign and renovation of an anti-corruption system for existing police organizations (public sector institution); (3) the design and construction of a reputational index for organizations competing in a market as one element of a broad-based cultural-change process for the industries in question; and (4) the redesign of disclosure requirements for credit card pricing mechanisms.