From Mass Flourishing to Vested Interests: A Conceptual Model for the Evolution of Organizational Institutions

Abstract:

Human flourishing requires the ability to operate from intrinsic motivation. The extent to which that can happen depends largely on how one’s surrounding institutions support a sense of autonomy, connectedness, and competence. I argue that the systematical prevalence of such conditions within an institution requires experiencing (i) exploration of the new in the emergence of the institution, and/or (ii) positive impact of its work on beneficiaries. The former is associated with the early phases of organizational evolution. The latter could be the source of flourishing in more established institutions, but hierarchies of power typically block it. Those with power are distanced from experiencing the impact of the institution on beneficiaries, structurally leading to priming through extrinsic motivations and vested interests. This leads to the need to further control those on the frontline who could experience the impact, which inhibits flourishing on their part as well.

Keywords::

• human flourishing
• institutional evolution
• organizational evolution
• self-determination theory

JEL Classification Codes::

• B52
• P10
• Z10

Notes

¹ These are the organizations and institutions through which formally and informally organized collective action occurs. From Geoffrey M. Hodgson’s (2006, 2015) definition of institutions as integrated systems of rules that structure social interaction, this excludes, for example, unorganized customs and habits. For John R. Commons (1931), organized going concerns include “the family, the corporation, the trade association, the trade union, the reserve system, [and] the state.” These are the institutions that aim to influence other institutions. Another characteristic is that they can be conceived as entities in the sense that an individual can regard him/herself as belonging into them.

² For example, Vittorio Loreto et al. (2016) call the former novelties and the latter innovations.

³ Conditions for flourishing can also be formed randomly for parts of an organization. This typically happens due to a psychologically strong enough individual — often a “hero boss” — being able to create an organizational bubble for their team that begins to manifest Type 1 or Type 2 conditions. Notably, such an individual would have needed to be exposed to conditions of flourishing in another context (Menges et al. 2016).

⁴ The argument is not that all new firms are in the business of creating circumstances of flourishing for the people involved, but conversely that the circumstances of flourishing are by necessity (to a degree) present as a new organization emerges into existence from nonexistence. In principle, market capitalism is particularly primed for such circumstances, as resources for new endeavors are created by individuals from their own initiative, not just given to them through, for example, a bureaucratic process.

⁵ Timeline and forces affecting evolution of each individual organizational and institutional context are naturally unique

⁶ However, this requirement is also likely to have a certain evolutionary dependency: a startup — having nothing else but its original idea — has less potential to push unnecessary things to the recipients than an established corporation might have through, for example, technology lock-ins (Unruh 2000), lobbying, or a big marketing budget.

⁷ While many firms can maneuver with minimal hierarchies in high growth phases (or when small enough to know everyone), needs of external validation and de facto status hierarchies tend to emerge (at latest) as Type 1 flourishing diminishes.

Additional information

Notes on contributors

Lauri Pietinalho

Lauri Pietinalho is a doctoral candidate in the Department of Industrial Engineering and Management at Aalto University (Finland). He wishes to thank Liikesivistysrahasto (the Foundation for Economic Education) for supporting this research effort.