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Men journey together with a view to particular advantage and by way of providing some particular thing needed for the purpose of life, and similarly the political association seems to have come together originally. . . for the sake of the general advantage it brings. Aristotle1 Unless the number of individuals in a group is quite small, or unless there is coercion, . . .rational, self-interested individuals will not act to achieve their common or group interest. In other words, even if all. . . would gain if, as a group, they acted to achieve their common interest or. | CHAPTER 5 The Logic of Group Behavior In Business and Elsewhere Men journey together with a view to particular advantage and by way of providing some particular thing needed for the purpose of life and similarly the political association seems to have come together originally. . .for the sake of the general advantage it brings. Aristotle1 Unless the number of individuals in a group is quite small or unless there is coercion . . .rational self-interested individuals will not act to achieve their common or group interest. In other words even if all. . . would gain if as a group they acted to achieve their common interest or objective they will still not voluntarily act to achieve that common or group interest. Mancur Olson2 Ĩn earlier chapters we introduced the usefulness of markets. However as is evident inside firms not all human interactions are through markets. People often act cooperatively in groups or as the case may be in firms. In this chapter our central purpose is to explore how and under what conditions people can organize their behavior into voluntary cooperative associations groups and firms in which all work together for the attainment of some common objective say greater environmental cleanliness the development of a club atmosphere or the maximization of firm profits. The focus of our attention is on the viability of groups like families cliques communes clubs unions and professional associations and societies as well as firms in which individual participation is voluntary to cohere and pursue the common interests of the members. We consider two dominant and conflicting theories of group behavior. They are the common interest theory and the economic theory of group behavior. The former is based on the proposition that a group is an organic whole identified by the common interest shared by its individual members. Its basic thesis is that all groups even very large ones are organized to pursue the common interest of the group members. Taking this .
