Generalized Trust and Sustainable Coexistence between Socially Responsible Firms and Non Profit Organizations

In this paper, we focus on a specific component of economically relevant trust, i.e. on what we call institutionally produced generalized trust, defined as the amount of widespread trust (which is a public good for the economic system as a whole) endogenously and continuously generated by the interaction of two types of private organizations operating in the economy: for-profit firms and non-profit organizations. Through an evolutionary model with a trust accumulation equation and two replicator equations (capturing the evolution of economic organizations over time) we show that: (1) the fixed point where all the four sub-types of private organizations considered in the model are simultaneously present can be attractive only if virtuous for-profit (i.e. socially responsible) firms and virtuous non-profit (i.e. trustworthy mission-oriented) organizations generate a negative externality on the other organizations of the same type; (2) the fixed point where the level of trust is very low and no socially responsible firms neither trustworthy organizations are present can be attractive: this social configuration recalls what some prominent social scientists depict as a trend currently occurring in the United States;(3) a socio-economic scenario where four pure population fixed points are simultaneously attractive exists.