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.     

How does a board of directors influence within‐ and cross‐sector nonprofit collaboration?

Board members play a significant, yet largely unexamined, role in nonprofit collaboration. Processes, such as finding prospective partners, creating common ground with a partner, and establishing appropriate collaborative governance implicate nonprofit board members. In contrast to the scholarship of the role of interlocking directorates as potential networks for nonprofit collaboration, this paper examines the role of board members' social and human capital on nonprofit collaboration with other nonprofits, businesses, and government agencies. Drawing on online survey data from 636 nonprofit organizations, this paper finds that board social capital—but not board human capital—is positively related to the presence and number of within‐sector and cross‐sector nonprofit collaboration. However, board human capital enhances nonprofit‐government collaboration, when board social capital is also high. The results provide a novel perspective in nonprofit collaboration and board management research.     

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.     

Past work experience and organizational assimilation in nonprofit organizations

This study compares seven dimensions of organizational assimilation (OA)—familiarity with coworkers, familiarity with supervisors, recognition, acculturation, involvement, job competency, and role negotiation—into nonprofit, for‐profit, and governmental organizations incorporating the role of similarity of past work experience (magnitude of transition [MoT]). An online survey of 294 employee newcomers (tenures of 3 months or less) revealed differences in OA between those entering nonprofits and those entering for‐profit, and governmental organizations. Compared to newcomers entering for‐profit and governmental organizations, nonprofit newcomers reported higher levels of job competency, involvement, acculturation, and role negotiation. Interactions between organization type and MoT from past work to current roles were examined for effects on OA. When MoT was low, nonprofit newcomers were higher on acculturation and involvement than for‐profit newcomers; governmental newcomers with high MoT were significantly higher on role negotiation than for‐profit newcomers. Theoretical and practical implications for nonprofit organizational management, trainers, and nonprofit newcomers are discussed.     

Organizational Identity in Nonprofit Organizations: Strategic and Structural Implications

Organizational identity is what is central, distinctive, and enduring about an organization. This article argues that clarity and consensus about organizational identity are essential elements in setting successful long‐term strategy and making structural choices in a nonprofit organization. Four classes of nonprofit organization are examined here: grantmaking foundations, federated fundraising organizations, nonprofit academic centers, and social enterprises. In each case, alternative identities are described and the implications of each identity for organizational strategy and structure are analyzed. The article suggests that examination of identity should become an integral part of organizational development for nonprofit organizations and a subject for continued research.     

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.     

What is in a theme? Professionalization in nonprofit and nongovernmental organizations research

This study examines 1,418 articles in three leading journals in the field of nonprofit organization studies from 1990 to 2010. Using topic modeling to detect dominant themes, we were able to trace the development of the academic research on nonprofit and nongovernmental organizations over two decades. We found remarkable changes with regard to an increasing use of professional, managerialist terminology such as that used in for‐profit organizations. This is significant given the potential of the research agenda to influence developments in the nonprofit sector.     

The Institutional and Technical Structuring of Nonprofit Ventures: Case Study of a U.S. Hybrid Organization Caught Between Two Fields

This paper engages the concept of the organizational field to explore the status of a growing set of organizations referred to as social enterprises, nonprofit ventures, and social purpose businesses. The argument is developed through an ethnographic case study of a nonprofit hybrid organization (in the United States) that is training welfare recipients in their own in-house businesses. First, this paper provides an overview of the commercial trends in the nonprofit sector and the rise of social purpose enterprises. Then, employing key concepts from neo-institutional theory, the author proposes framing nonprofit-business hybrids as organizations positioned in two different organizational fields—each necessitating different internal organizational technologies—to elucidate the structural tensions that can emerge inside these new hybrid models. Internal organizational tensions identified in the case study are highlighted. Finally, the proposed use of organizational field theory developed from the case analysis is discussed in terms of social enterprise more generally.

Wage Inequality and Performance in Nonprofit and For‐Profit Organizations

This article examines the effects of several forms of wage inequality on service quality and employee effort. We suggest that two popular theories, tournament and fair wage/equity, are not necessarily competing. Each theory accurately describes aspects of employee behavior, but because of sectoral differences in organizational objectives and employee attitudes, tournament theory's predictions are relatively stronger in the for‐profit sector, while fair wage/equity theory's predictions are relatively stronger in the nonprofit sector. Using an employer–employee matched data set of nursing homes linked to a federal regulatory database and a resident survey, we found that ownership moderates the relationship between wage inequality and service quality. Although wage inequality positively affects service quality in the for‐profit sector, the reverse is true among nonprofit organizations. We also found that overall wage inequality in the workplace has a more pronounced influence on employee discretionary effort than does the employee's place in the distribution of wages.     

Uncharted Waters: Exploring the Relationship between Strategy Processes and Management Control Systems in the Nonprofit Sector

The way in which strategy and management control combine has been the subject of much research attention, but rarely, within a nonprofit context. This is surprising, not only because of the considerable social and economic impact of this sector, but also in view of the apparent trend toward sectoral convergence in many structural and processual respects, including strategic behaviors and approaches to control. In this article, we explore the extent to which the relationship between management control and strategy, as found in for‐profit organizations, may prevail within a nonprofit context. Based on questionnaire responses from 182 Australian nonprofit organizations, we find that this relationship in nonprofit organizations is similar to that in for‐profit organizations, thereby lending support to the “convergence” argument. We reflect on the reasons for these similarities and advance an agenda for further research in this area.     

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.     

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.     

Gambling on an alternative revenue source: The impact of riverboat gambling on the charitable gambling component of nonprofit finances

This article examines the impact of casino gambling in and around Illinois on charitable gambling in that state. The research targets the impact of casino gambling on one of the vital revenue sources of many nonprofit organizations. Charitable gambling represents the most widespread form of legalized gambling in the United States. Net income from charitable gambling totaled an estimated $1.3 billion in 1997. Despite its apparent importance in providing an alternative revenue stream to nonprofit organizations, in a growing number of states charitable gambling operations must compete with an increasing number of private for‐profit gambling enterprises, including riverboat and land‐based casinos, Indian gambling operations, and pari‐mutuel wagering venues. As a result, there is interest in the extent to which forprofit gambling is crowding out charitable gambling—and in the process reducing funds (such as receipts from gambling operations) available to nonprofit organizations. The data analysis presented in this article suggests that spending on casino gambling in Illinois and in bordering areas of Indiana, Iowa, and Missouri may be displacing consumer expenditures on charitable gambling.     

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.     

Do Nonprofits Treat Their Employees Differently? Incentive Pay and Health Benefits

We examine how nonprofit, public, and for‐profit establishments vary in the provision of health benefits and insurance and performance‐based incentives using the 2002 National Organization Survey of establishments in the United States. We found that in comparison to for‐profit firms, both nonprofit and public organizations are less likely to use performance‐based incentives, although they provide their employees with better health benefits and insurance. Sectoral differences in the provision of health benefits and insurance and use of performance‐based incentives persist after controlling for correlates of sector that predict these outcomes, including establishment size, independence of establishment, market competition, establishment age, and unionization. We also found trade‐offs between the provision of health benefits and insurance and use of performance‐based incentives. Our results are generally consistent with the prediction from agency theory and also consistent with a view that public and nonprofit organizations are more concerned with the well‐being of their employees.     

An Industry Fields Approach to Isomorphism Involving Australian Nonprofit Organizations

Structural similarity or isomorphism is expected among organizations in the same organizational field. Such a field matures with increasing interaction among the organizations in it. Using a random sample of Australian organizations, this paper compares isomorphism among nonprofit organizations regardless of industry with that among organizations in the same industry regardless of legal form. The results point to isomorphism especially in the healthcare industry, regardless of legal form. This finding adds weight to earlier research that questioned the operation of the nonprofit sector as an organizational field with enough interaction to produce isomorphism.     

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.     

Promoting social innovation amidst organizational complexity: Case study evidence from the German Red Cross

Social innovation is concerned with the creation and implementation of new solutions to social problems. Although research commonly frames social innovation as the domain of small, entrepreneurial organizations, an increasing number of large and well-established nonprofit organizations have started actively launching their own innovation initiatives. Using a case study of social innovation ventures within the German Red Cross (GRC), this study identifies organizational hurdles and viable management strategies targeting the promotion of social innovation within particularly complex organizations. Based on our results, we develop a conceptual framework highlighting that promoting social innovation in established organizations requires simultaneous attention to multiple dimensions of leadership and governance. Our study thereby offers a blueprint for management strategies that can guide nonprofit leaders in their quest to promote social innovation from within their organization.     

Family involvement in small,local nongovernmental organizations

The involvement of family members in nongovernmental organizations (NGOs) has been largely overlooked in the literature on the nonprofit and voluntary sector. This study draws on the family business literature to explore the main features of family involvement and the implications for organizational survival and effectiveness. It shows that the family is an important research variable. Exploring the NGO sector in India, the article demonstrates that family involvement can significantly influence the management of human and material resources, governance, and decision making. Although there are several advantages to family involvement, a large overlap of family and organization can threaten credibility and legitimacy. Family‐based NGOs must stress their value orientation to counter negative perceptions.     

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.