A Review of Models for Measuring Organizational Effectiveness Among For‐Profit and Nonprofit Organizations

Induced by unprecedented growth, invasion of for‐profit organizations in the nonprofit domain, and high‐profile cases of mismanagement in the nonprofit sector, a recent surge in the literature suggests ample opportunities for research to compare the organizational effectiveness of for‐profit and nonprofit organizations. This article presents a literature review of nonprofit organizational effectiveness from which four models of organizational effectiveness are selected. These models are discussed and analyzed because they apply to both for‐profit and nonprofit organizations.     

Which Leadership Constructs Are Important for Predicting Job Satisfaction,Affective Commitment,and Perceived Job Performance in Profit versus Nonprofit Organizations?

As an integrative research effort, the present study critically analyzed the relative importance of six leadership constructs—(1) transformational, (2) transactional, (3) laissez‐faire, (4) consideration, (5) initiating structure, and (6) leader‐member exchange (LMX)—as predicting indicators of leadership effectiveness in the for‐profit versus the nonprofit sector. Based on data from seven samples from the for‐profit and nonprofit sectors, the unique effects of the six leadership constructs were tested on three criteria of leadership effectiveness on the individual level: job satisfaction, affective commitment, and perceived job performance. The results for the for‐profit samples revealed that LMX was the most important aspect for explaining variance in job satisfaction, and initiating structure was most important for commitment. In the nonprofit samples, LMX was the most important aspect of job satisfaction and transformational leadership for commitment. In both for‐profit and nonprofit organizations, initiating structure had the strongest unique impact on perceived job performance. We discuss implications for current leadership research and practical implications.     

Human capital inflow in nonprofits: Entry‐level employees’ sector shift

Although recruitment and retention of qualified employees are some of the biggest challenges in the nonprofit sector, nonprofit organizations must maintain human capital inflow due to its significant impacts on organizational success. Through person‐organization value fit, this paper explores the factors that influence labor shifts from the public or for‐profit sector into the nonprofit sector in the South Korean context. Specifically, the effects on the likelihood of employees switching to the nonprofit sector from the perspective of eight job satisfaction measures and three education–job match measures are investigated. Two groups of employees (those whose career started in the for‐profit sector and those starting in the public sector) are compared. Results indicate that there is substantial variation between the two groups. In particular, intrinsic job satisfaction has completely different effects on those working in the for‐profit sector than on those working in the public sector regarding their likelihood of having experienced an intersectoral shift into nonprofits. The more public employees are satisfied with intrinsic job rewards, especially job reputation, the more likely they are to move to nonprofits. These results suggest that when employees in the public sector are satisfied with intrinsic rewards they tend to pursue greater intrinsic satisfaction in the nonprofit sector. This paper also reports that education–job match is only significant for those whose first job was in the for‐profit sector.     

Pathways to sector selection: A conceptual framework for social enterprises

As hybrid organizations with financial and social objectives, social enterprises must balance competing logics for governance, stakeholders, and outcomes when considering organizational design and structure. The existing legal landscape for organizations exacerbates this dilemma by forcing social enterprises to incorporate as either a nonprofit or for‐profit organization. This research examines the entity formation process for social enterprises by presenting sector choice as an interaction among four factors: equity financing, organizational lineage, human capital, and funding environment. Using a qualitative comparative case analysis, this research demonstrates that contingent factors drive sector choice when legal incentives and institutional pressures are unclear. For those choosing nonprofit forms, the status of the parent organization—the organizational lineage—is determinative. For those operating in the for‐profit context, human capital is predictive. The resulting conceptual framework contributes to existing organizational theory on hybrid organizations by presenting the sector selection process as independent of the motives or legal incentives typically associated with sector choice. This research concludes with a discussion on the advantages of delaying the formal sector declaration process.     

Nonprofit management practices and work processes to promote gender diversity

Nonprofit organizations have long provided an important space for women to establish roles in public life. Using establishment‐level data on for‐profit and nonprofit organizations, we show that the proportions of women in full‐time and mission‐critical positions are higher in nonprofits. In contrast, for‐profit businesses have more women in part‐time jobs and in jobs that are peripheral to the organizational purpose. We also demonstrate that the greater proportions of women in full‐time and mission‐critical positions in nonprofits are due to the use of inclusive work processes and transparent human resource management practices. Our findings provide evidence to pursue the aspects of nonprofit organizations that expand opportunities for working women.     

Gender,Occupation, and Promotion to Management in the Nonprofit Sector

Although one can assume the work values within nonprofit organizations promote gender equality in promotion decisions, there is preliminary evidence that in the nonprofit sector women are underrepresented in higher management positions. Whereas the mechanisms resulting in underrepresentation of women in management have been studied extensively in for‐profit organizations, little is known about these mechanisms in nonprofit organizations. Is gender in nonprofit organizations—even given the underlying values of these organizations—an impediment to attaining a management position? This article presents a case study of employment patterns within the Dutch section of the humanitarian INGO Médecins Sans Frontières and focuses particularly on the effects of gender and occupation on transitions to management. The case study organization represents a “critical case” because the nature of this organization's work environment can be expected to result in a relatively high percentage of women in management. Employee records (N = 2,247) were analyzed using event history models. We found that women made the transition to management less rapidly than men, even when controlling for factors like age, previous work experience, and nationality. However, gender differences were completely explained by occupation. Those employees in female‐dominated occupations (in this case, medical personnel such as nurses) had a lower promotion‐to‐management rate than those in male‐dominated occupations (in this case, nonmedical personnel such as financial officers), irrespective of their gender. This case study highlights the importance to nonprofit management research of studying the effects of occupational sex segregation on promotion.     

The nonprofit leadership deficit: A case for more optimism

Recent headlines claim that a looming nonprofit leadership crisis will soon be precipitated by retiring baby boomers. Analysis of baby boom demographics, using national census data on the age distribution and other demographic characteristics of top leaders by sector, confirms the aging nonprofit workforce. However, the issue of whether the aging workforce portends a nonprofit leadership crisis, when analyzed within a theoretical framework of supply and demand in the market for nonprofit executives, reveals flaws in most commentaries about the leadership crisis. Workings of the labor market and nonprofit organizations themselves suggest trends that could be expected to affect labor supply and demand and mitigate a leadership deficit. Reasonable—and likely—market and organizational adjustments, including higher executive pay, increased labor force participation of older workers, skill acquisition of younger workers, possible consolidation of nonprofit organizations, board and volunteer skill sharing, and even venture philanthropy, can be expected to moderate the shock of baby boom retirements, much in the way that schools, job markets, and housing markets have accommodated the movement of this “bulging” generation through earlier decades of their lives.     

MARKET VENTURES, MORAL LOGICS, AND AMBIGUITY: Crafting a New Organizational Form in Post-Socialist China

How do institutional entrepreneurs craft new organizational forms under unstable conditions, especially when all of the relevant organizational models have serious liabilities in terms of legitimacy? Previous literature argues that emergent organizational models must adopt existing organizational elements in order to solve three problems: (1) gaining access to resources, (2) exploiting previous competencies, and (3) demonstrating legitimacy to salient audiences. Yet, these three distinct needs often require very different organizational elements associated with diverse, contradictory moral logics. This article, which examines the case of for‐profit ventures started by Chinese state organizations in the 1990s, reveals one strategy that entrepreneurs can use to solve this problem—to deliberately increase ambiguity about the organization's central characteristics and its underlying moral logic. This strategy makes it possible for new organizations to solve the problems of resources, competency, and legitimacy by simultaneously adopting (and adapting) contradictory organizational elements.     

Gendered,Invisible Work in Non‐profit Social Service Organizations: Implications for Worker Health and Safety

Nonprofit organizations (NPOs) play an important role in the provision of health and social services. In Canada the nonprofit sector includes 7.5 million volunteers and employs over 1.6 million paid workers. The sector is overwhelmingly female‐dominated — women make up over 80 per cent of workers in these nonprofit services. Work performed by women has traditionally been undervalued and invisible. It has often been considered safe by researchers, employers, policymakers and sometimes even workers themselves. Although there is some indication that jobs in the restructuring social services sector can be characterized by constant demand, high stress and violence, research into the working conditions and health hazards of these types of jobs has not been a priority. Using data from a qualitative study examining work in NPOs, we trace the ways that work performed in these workplaces is both gendered and invisible. We identify three types of invisible labour. ‘Background work’ facilitates and supports more visible and recognized organizational activities. Certain organizational language obscures the full spectrum of work that takes place in the organizations and the risks it may involve. ‘Empathy work’ includes the relationship building, counselling and crisis intervention that comprise key components of social service delivery. ‘Emotional labour’ involves the management of client emotions and workers' own emotions in the process of working with clients and delivering care under conditions of scarcity and contraction. The invisibility of these activities means that much of the day‐to‐day work done in the organizations, while particularly important in the context of social service restructuring, is taken‐for‐granted and undervalued by organizational outsiders. As a result, many of the hazards present in the jobs are hidden from view and workers' health may be compromised. We argue that the invisibility and taken‐for‐grantedness of certain types of work in NPOs is reflected in, and constitutive of, particular exclusions and shortcomings of current occupational health and safety systems designed to protect the health of workers.     

Transformational leadership and follower proactivity in a volunteer workforce

This study explored how transformational leaders can enhance volunteers’ proactive behavior in an all‐volunteer nonprofit organization. Based on Parker, Bindl, and Strauss’s model of motivation, it was hypothesized that role breadth self‐efficacy, work values (self‐direction/stimulation and universalism/benevolence), and positive affect would mediate the transformational leadership—proactive behavior relationship. Data came from 141 volunteers in Brazilian chapters of an international not‐for‐profit organization. The model was tested using structural equation modeling, with mediation hypotheses tested by estimating the indirect effects using bias‐corrected intervals. Comparative fit index (.97) and standardized root mean square residual (.05) fit statistics indicate the model is plausible. These findings contribute to the understanding of the role that leaders play in increasing followers’ proactive behavior in volunteer organizations.     

Collaborations with faith‐based social service coalitions

Based on the first national survey of faith‐based social service coalitions in the United States, this article presents data on the degree to which these nonprofit organizations collaborate with other specific organizational types, as well as the range and intensity of these collaborations. In general, faith‐based coalitions tend to collaborate most frequently with other faith‐based agencies, a pattern especially characteristic of the more religiously expressive ones. However, collaboration with non‐faith‐based organizations is also quite common. Based on seven organizational characteristics, we are able to predict which faith‐based coalitions are most likely to collaborate with different types of organizations: coalitions that have more explicitly religious policies and practices with reference to clients and staffs are less likely to participate in intense collaborations with some types of secular organizations, and consistently less likely to do so with all types of governmental agencies.     

Common Agency in Nonprofit Advocacy Organizations

Most theories of nonprofit organizations and nonprofit leadership recognize the multitude of stakeholders—including board members, donors and volunteers, funders, the media, and policy makers—that organizational leaders must contend with in doing their work. For nonprofits engaged in advocacy, demands from stakeholders may be even more challenging to meet. Although stakeholder theory recognizes the effect of various groups on an organization, it does not explain how leaders manage the preferences of their often‐competing stakeholders while they make choices for the organization. This study develops a common agency framework, evaluating the roles of three groups crucial to nonprofit advocacy organizations: the organization's board of directors, elected officials, and donors/members. The common agency framework is then illustrated with interviews with leaders of nonprofit advocacy organizations in California. Findings suggest that the leaders of these groups have a significant amount of discretion in guiding their organizations’ activities and operations.     

Organization and Management in the Third Sector: Toward a Cross‐Cultural Research Agenda

Third sector organizations in the industrialized and the developing world—and particularly the subset of third sector organizations known as development nongovernmental organizations (NGOs)—are becoming more culturally diverse in internal staff composition, management styles, and working environments. Although cultural issues have been largely absent from the nonprofit and the NGO research literatures, the organizational implications of societal culture and organizational culture are widely debated within other research fields. This article proposes a closer engagement between third sector management research and the wider study of cross‐cultural organizational issues within anthropology, development studies, and management theory. It argues that such an exchange is necessary if third sector organizational research agendas are to include changing organizational landscapes effectively, and the article concludes with some ideas for future research.     

Corporate Volunteering: Benefits and Challenges for Nonprofits

In the frame of corporate social responsibility, corporate volunteering is almost exclusively studied from the point of view of companies, while the perspectives of nonprofit organizations are neglected. Hence, this article focuses on the perspective of managers of nonprofit organizations on volunteer partnership projects with for‐profit companies. In the center of this article lie nonprofit managers' strategy and motivation for participating in corporate volunteering, conception of corporate volunteer activities, and the often‐cited win‐win‐win aspect. Key findings suggest that a majority of the questioned nonprofits lack strategic behavior and management tools for undertaking volunteer partnership projects with companies. Nevertheless, corporate volunteering is widely perceived as an opportunity and a promising method of raising donations for nonprofit organizations. This article suggests that the key to successful future cooperation between nonprofits and profit‐oriented organizations lies in the processes of internal evaluation and subsequent strategy development.     

Managerial Control and Strategy in Nonprofit Organizations: Doing the Right Things for the Wrong Reasons?

This article presents the second stage of a study that engages with the debate that has occurred within the nonprofit literature about the propensity and relative merits of nonprofit organizations adopting for‐profit approaches to management. Specifically, this qualitative investigation examines the ways in which nonprofit organizations use management control when implementing their chosen strategies. Although this topic has been the subject of considerable attention in the management accounting research, it has rarely been explored within a nonprofit context. This is surprising not only because of the considerable social and economic impact of this sector, but also because of the apparent trend toward sectoral convergence in many structural and processual respects, including strategic behaviors and approaches to control. Based on interviews with CEOs and senior executives in thirty‐two Australian nonprofit organizations, we find that the relationship between strategy and control in nonprofit organizations is similar to that in for‐profit organizations, but quite different reasons underlie nonprofit organizations' exercising of management control.     

Exploring a model of servant leadership,empowerment, and commitment in nonprofit organizations

This study examined a model of servant leadership's relationship to organizational commitment through structural and psychological empowerment, focusing on leader–follower dyads in a nonprofit organization. Survey data was collected from 128 employees of a nonprofit organization in a northeastern U.S. city. After model re‐specification, a well‐fitting model emerged, indicating that structural empowerment mediates the relationship between servant leadership and organizational commitment. Moreover, the model suggests that structural empowerment's effect on organizational commitment is both direct and indirect—the latter occurring through the meaning dimension of psychological empowerment. This study provides initial support for structural empowerment being a mechanism through which servant leadership impacts organizational commitment in nonprofits. In addition, the role of meaningful work is highlighted as an antecedent to organizational commitment for nonprofit employees. Servant leaders are suggested to create structurally empowering working environments, which support employees' stronger commitment to the organization.     

To profit or not to profit: Women entrepreneurs in India

Entrepreneurial activity attracts certain kinds of individuals, whether it is to promote a social cause in the nonprofit sector or profit in the for‐profit sector. This article looks at the behavior of women entrepreneurs in India in both the for‐profit and nonprofit sectors to test for potential differences and similarities. We chose two groups of entrepreneurial women who founded and led relatively similar‐size organizations in the same city and who provided services primarily to women and children. Our findings show that while all nonprofit entrepreneurs receive a high payoff from promoting social causes, there is no single unifying payoff for for‐profit entrepreneurs. Family background and support, however, play an important role for both sets of entrepreneurs. We find that experience in the sector, social class, caste, and education in?uence entrepreneurial behavior and that this in?uence differs by sector.     

Toward the Importance of Nonprofit Brand Equity

Various brand evaluation approaches assess the value and equity of for‐profit brands; accordant approaches for nonprofit brands, however, have been limited, and there is disagreement on what makes up a strong brand in the nonprofit sector. In response, this article provides insights into the conceptualization and operationalization of stakeholder‐based nonprofit brand equity and derives an initial measurement index. We conceptualize nonprofit brand equity as having three dimensions—nonprofit brand awareness, nonprofit brand trust, and nonprofit brand commitment—thereby empirically investigating trust in nonprofit brand equity building for the first time. The methodological procedure for building the index is based on partial least squares path modeling, and we draw on a sample of forty brands (N = 3,617 brand evaluations) identified as some of the best‐known nonprofit brands in Germany. Applying the index yields some of the strongest German nonprofit brands; for example, German Red Cross has by far the highest value of brand equity, followed by Aktion Mensch and UNICEF. The nonprofit brand equity index provides the basis for nonprofit managers to compare their brands’ performance over time and develop accordant branding strategies; it can be also used by organizations from other countries.     

Strengthening Resource Mobilization Chains: Developing the Social Media Competencies of Community and Voluntary Organizations in New Zealand

There is potential for nonprofit organizations to increase effectiveness by mobilizing social media to help achieve goals. However, the sector is only just becoming aware of the possibilities for social media and lags behind other sectors in its use. We report a New Zealand initiative to enhance the capability of nonprofit organizations through action research that has implications for nonprofit organizations elsewhere. Borrowing from resource mobilization theory, we introduce the concept of resource mobilization chains to explain the requirements for and obstacles to taking advantage of social media. A survey and two in-depth case studies found that nonprofit organizations demonstrated extremely limited familiarity with and use of social media. Participants were enthusiastic about the potential of mobilizing social media to achieve organizational goals, but struggled to take concrete steps to implement their aspirations. Lack of resources was a key obstacle identified in both survey and case study research.     

Factors Attracting Individuals to Nonprofit Management over Public and Private Sector Management

Little research has sought to identify the distinct advantages that nonprofits offer employees, particularly managers. Drawing upon Weisbrod's theory of managerial sorting (1988), we test a series of hypotheses about the differences among nonprofit, public, and for‐profit organizations that may explain the preference of managers to work in one sector over the other. We use pooled cross‐sectional data from the General Social Survey to test managerial sorting. We find many similarities in the perceptions of managers in the nonprofit and public sectors as compared to the for‐profit sector. However, when we examine the sorting of managers into nonprofit versus public sector jobs, we find differences in work environment. Compared to those working in the public sector, managers in nonprofits report greater freedom in deciding how to carry out their job functions, more control over their work schedules, and greater opportunities for pay increases. We conclude with a discussion of the implications of these findings for the practice of nonprofit management.