An international, interdisciplinary team of researchers has developed a comprehensive proposal for reshaping economic performance and sustainability, focusing on cooperation and ethical behaviour as pivotal elements for economic prosperity. Led by Associate Professor Jan Pfister from the University of Turku in Finland, this team has introduced a forward-thinking strategy in performance management. Their publication in Qualitative Research in Accounting & Management details the “prosocial market economy,” a model that integrates cooperation, ethical behaviour, and sustainability into organisational operations.
This research, funded by the Research Council of Finland, challenges the traditional economic focus on self-interest and short-term gains. It presents a case for organisations that cultivate prosocial behaviours that emphasise teamwork and collective welfare as having a greater propensity for long-term success. The model posits ethical responsibility as crucial for achieving peak performance and enduring sustainability, offering a new blueprint for success that demonstrates why organisations emphasising cooperation and ethical conduct tend to surpass those driven solely by self-interest.
Drawing on evolutionary theory and insights from Nobel Prize-winning economist Elinor Ostrom, the researchers advocate integrating the core design principles of prosocial groups into performance measurement and management practices. This approach fosters economic success and highlights the role of sustainability: envisioning companies that achieve economic prosperity while positively contributing to environmental sustainability and societal welfare.
Associate Professor Pfister explains the significance of this model against the backdrop of global challenges such as climate change, inequality, and resource depletion. He suggests that the prosocial market economy offers an alternative to traditional frameworks focused on short-term profits, providing a system where business success and ethical responsibility coexist. This enables companies to navigate complex requirements while ensuring long-term viability and fostering positive social impacts.
The research represents a collaborative effort involving experts from various fields and institutions across Finland, the United Kingdom, the USA, and the United Arab Emirates. This collaboration underscores the importance of integrating behavioural science with management studies to foster a more sustainable and cooperative economic system.
From theory to practice, the prosocial market economy offers practical tools for organisations across industries. It equips business leaders with principles to design prosocial teams and promote collective success. According to Pfister, the research clarifies why and how prosocial groups prioritise shared success over individual gain and outperform groups driven purely by self-interest. This has profound implications for performance measurement, management, and how organisational behaviour is cultivated to nurture a sustainable future.
Amid increasing pressure from consumers, policymakers, and investors to embrace sustainable practices, this research moves beyond the conventional Environmental, Social, and Governance (ESG) debate. It focuses on transforming organisational cultures from within, embedding sustainability and cooperation into core values. This inside-out approach helps businesses foster genuine, lasting sustainability, avoiding greenwashing and the superficial compliance often associated with ESG measures.
Ultimately, the prosocial market economy lays out a route for organisations to be economically successful and environmentally responsible. It establishes a viable framework for the future of sustainable economic development, offering a pathway that aligns ethical responsibility with business success. This innovative approach promises to help companies address complex global demands while ensuring long-term viability and positive social impact.
More information: Jan Pfister et al, Performance management in the prosocial market economy: a new paradigm for economic performance and sustainability, Qualitative Research in Accounting & Management. DOI: 10.1108/QRAM-02-2024-0031
Journal information: Qualitative Research in Accounting & Management Provided by University of Turku