New-institutional economics hypothesizes imperfect rationality, self-seeking preferences,monetary-related needs, and opportunism as fundamental features of human behaviour.Consistently, new-institutionalist models of governance highlight the efficiency andtransaction costs minimizing features of control rights and governance. Differently, needstheory of governance, as here presented, hypothesizes imperfect rationality, multiple needs,and reciprocity, in which case opportunism is reduced to an exception to individualbehaviour. Consistently, it presents a theory that links production governance with thewellbeing of those partaking in production. Building on Maslow’s human psychology, thegovernance model suggested in this paper is aimed at evidencing the self-actualizationpotential of control rights, organizational structures and practices. The application ofMaslow’s theory to the institutional structure of organizations suggests that the deepestorganizational layers (control rights and governance) broadly correspond to the most basicneeds in Maslow’s theory (survival, security and belonging), while the outer layers(managerial models and employment relations) correspond to the fulfilment of the highestneeds (self-esteem and self-actualization). Cooperative firms are used as an illustration ofgovernance solutions consistent with needs theory in human psychology.
Key words: new-institutional economics; opportunism; governance; needs theory; humanpsychology; self-fulfillment; cooperative firms; inclusive governance.
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3. Governance, employment and human resource management
