Harvey S. James

Bio: Harvey S. James is an academic researcher from University of Missouri. The author has contributed to research in topics: Prisoner's dilemma & Organizational structure. The author has an hindex of 26, co-authored 153 publications receiving 3492 citations. Previous affiliations of Harvey S. James include University of Hartford.

Owner as Manager, Extended Horizons and the Family Firm

Abstract: Previous work on firm ownership structure suggests that organizations in which ownership and control are combined may be undervalued relative to the market investment rule because decision makers h...

The Trust Paradox: A Survey of Economic Inquiries Into the Nature of Trust and Trustworthiness

Abstract: This paper examines the concepts of trust and trustworthiness in the context of a one-sided variation of the prisoner's dilemma, and it evaluates four different categories of solutions to the PD problem: changing player preferences, enforcing explicit contracts, establishing implicit contracts, and repeating the interaction of the players. Because these solutions rely on the creation of incentives to induce cooperation, this paper articulates a paradox of trust in that if one trusts another because there are incentives for the other to be trustworthy, then the vulnerability to exploitation is removed which gives trust its very meaning. The paper explores the implications of trust when understood to exist at two levels -- one in which there are incentives to trust, and the other in which appropriate incentives are absent.

The trust paradox: a survey of economic inquiries into the nature of trust and trustworthiness

Abstract: This paper examines the concepts of trust and trustworthiness in the context of a one-sided variation of the prisoner’s dilemma, and it evaluates four different categories of solutions to the PD problem: changing player preferences, enforcing explicit contracts, establishing implicit contracts, and repeating the interaction of the players. Because these solutions rely on the creation of incentives to induce cooperation, this paper articulates a paradox of trust in that if one trusts another, because there are incentives for the other to be trustworthy, then the vulnerability to exploitation is removed which gives trust its very meaning. The paper explores the implications of trust when understood to exist at two levels—one in which there are incentives to trust, and the other in which appropriate incentives are absent.

What Can the Family Contribute to Business? Examining Contractual Relationships:

Abstract: The degree to which the family dominates as a form of business organization depends in part on whether a business’s operations favor the implicit informal personal relationships of families or the explicit, formal, impersonal contractual relationships, characteristic of market-oriented organizations. In some situations family identity, trust, personal ties, and the monitoring functions that family relationships provide promote greater incentives for success than explicit, formal contracts. In other cases, formal relationships can provide a more effective means of linking workers within the firm, even when the workers are family members.

Reinforcing ethical decision making through organizational structure

Abstract: In this paper I examine how the constituent elements of a firm's organizational structure affect the ethical behavior of workers. The formal features of organizations I examine are the compensation practices, performance and evaluation systems, and decision-making assignments. I argue that the formal organizational structure, which is distinguished from corporate culture, is necessary, though not sufficient, in solving ethical problems within firms. At best the formal structure should not undermine the ethical actions of workers. When combined with a strong culture, however, the organizational structure may be sufficient in promoting ethical conduct. While helpful, ethics training and corporate codes are neither necessary nor sufficient in promoting ethical behavior within firms.

Founding-Family Ownership and Firm Performance: Evidence from the S&P 500

Abstract: We investigate the relation between founding-family ownership and firm performance. We find that family ownership is both prevalent and substantial; families are present in one-third of the S&P 500 and account for 18 percent of outstanding equity. Contrary to our conjecture, we find family firms perform better than nonfamily firms. Additional analysis reveals that the relation between family holdings and firm performance is nonlinear and that when family members serve as CEO, performance is better than with outside CEOs. Overall, our results are inconsistent with the hypothesis that minority shareholders are adversely affected by family ownership, suggesting that family ownership is an effective organizational structure. FOUNDING-FAMILYOWNERSHIPAND CONTROL in public U.S. firms is commonly perceived as a less efficient, or at the very least, a less profitable ownership structure than dispersed ownership. Fama and Jensen (1983) note that combining ownership and control allows concentrated shareholders to exchange profits for private rents. Demsetz (1983) argues that such owners may choose nonpecuniary consumption and thereby draw scarce resources away from profitable projects. Shleifer and Vishny (1997) observe that the large premiums associated with superiorvoting shares or control rights provide evidence that controlling shareholders seek to extract private benefits from the firm. More generally, firms with large, undiversified owners such as founding families may forgo maximum profits because they are unable to separate their financial preferences with those of outside owners.1 Families also often limit executive management positions to family

Economic growth and income inequality

Abstract: We investigate whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997), with negative results. We then investigate the evolution of income inequality over the same period and its correlation with growth. The dominating feature is inequality convergence across countries. This convergence has been significantly faster amongst developed countries. Growth does not appear to influence the evolution of inequality over time. Outline

The Economic Institutions of Capitalism

Abstract: The 2008 crash has left all the established economic doctrines - equilibrium models, real business cycles, disequilibria models - in disarray. Part of the problem is due to Smith’s "veil of ignorance": individuals unknowingly pursue society’s interest and, as a result, have no clue as to the macroeconomic effects of their actions: witness the Keynes and Leontief multipliers, the concept of value added, fiat money, Engel’s law and technical progress, to name but a few of the macrofoundations of microeconomics. A good viewpoint to take bearings anew lies in comparing the post-Great Depression institutions with those emerging from Thatcher and Reagan’s economic policies: deregulation, exogenous vs. endoge- nous money, shadow banking vs. Volcker’s Rule. Very simply, the banks, whose lending determined deposits after Roosevelt, and were a public service became private enterprises whose deposits determine lending. These underlay the great moderation preceding 2006, and the subsequent crash.