ABSTRACT
The organization, viewed as a nexus of contracts, then reflects the participants' ethical attitudes. In an equilibrium collection of organizations, "high organizations" must be supported by "strong ethics." The concept of ethical attitudes as presently employed refers to a set of values, besides the personal material ones, which individuals may pursue, e.g., the material well-being of the group, equality of income distribution among participants in the organization, truth telling, respect for property rights, respect for the law and adherence to contractual obligations. In view of the two-way relationship between participants' ethical attitudes and organizational structure, a principal goal of the present paper is to explore the distribution of individuals with diverse ethical attitudes across different organizations in equilibrium. when participants' ethical attitudes imply strong adherence to contractual promises, organizational structures requiring higher levels of control are more likely to emerge because the cost of controlling agents' activities is lowered and strict control is potentially productive.
