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Conventions, culture, and commitment
Published online by Cambridge University Press: 05 June 2012
Corporate culture … accomplishes just what the principle should – it gives hierarchical inferiors an idea ex ante how the organization will “react” to circumstances as they arise – in a very strong sense, it gives identity to the organization.
Kreps (1984)Barnard (1938) argues that encouraging cooperation is a central role of management; however, he does not claim that cooperation is inevitable:
It is readily believed that organized effort is normally successful, that failure of organization is abnormal. This illusion from some points of view is even useful. … But in fact, successful cooperation in or by formal organizations is the abnormal, not the normal, condition. … most cooperation fails in the attempt, or dies in infancy, or is short-lived. … Failure to cooperate, failure of cooperation, failure of organization, disorganization, disintegration … are characteristic facts of human history. This is hardly disputable. (4–5)
But why shouldn't the evolution of cooperation be inevitable? As long as the relationship is guaranteed to be long term, and the participants have a shared expectation of reciprocated cooperation, then cooperation should be sustainable as a long-run equilibrium by rational, self-interested players.
Unfortunately, even when the conditions for cooperation are fulfilled, cooperation is not a unique, determinate outcome of long-term social interaction. The folk theorem proves that, in any repeated Prisoners' Dilemma game, there are an infinite number of outcomes that are sustainable as longrun equilibria by rational, self-interested actors.
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