The Nonprofit Catallaxy: An Austrian Economics Perspective on the Nonprofit Sector

This paper examines the nonprofit sector from the perspective of the Austrian school of economic thought. In contrast to the traditional market failure approach, the Austrian school locates the role of the nonprofit sector in the facilitation of the spontaneous order and the utilization of local dispersed knowledge about the societal needs through a Hayekian “discovery procedure.” Another contribution of the Austrian school is in calling attention to the “calculation challenge” faced by the nonprofit sector, i.e., the reduced role of monetary signals as the informational basis for decision making. The calculation challenge brings up the important issue of societal feedback mechanisms operating in the nonprofit sector. It is shown that, in the nonprofit sector context, this challenge takes the form of the accountability problem.     

On the origin of rules: Between exchange and self-sufficiency

The paper addresses the question of whether the socio-economic rules of a market economy can be explained as the result of contractual exchange among rational individuals. It proceeds by re-examining the logical relationship between the concepts of exchange and self-sufficiency. The basic difference between these concepts is found to be the extent to which individuals are relieved from producing the goods they consume. With self-sufficiency being defined by the impossibility of this relief, the emergence and observation of socio-economic rules are more appropriately characterized as collective self-sufficiency rather than exchange, because rules must be observed by each individual rather than by “specialized suppliers of social order.”     

Alcohol expectancies in relation to personality and aggression among juvenile delinquents in Northern Russia

The relationships between alcohol expectancies, level of alcohol use, alcohol-related problems, aggression, and personality factors in 198 Russian male juvenile delinquents were assessed. A clustering procedure was used in order to establish main patterns of alcohol expectancies, yielding three major clusters. Level of alcohol use, alcohol-related problems, aggression, and personality factors were compared across the identified clusters. It was established that juvenile delinquents with a high level of positive alcohol expectancies and aggression represented a risk-group for higher involvement in drinking behavior as well as problem drinking, which in turn are related to specific personality traits. Implications of these findings for alcohol prevention among the youth are discussed.     

The meaning of non-profit mission breadth: A constitutional economics perspective

Given the non-profit management imperative of formulating optimally broad mission statements, this paper explores the meaning and the determinants of non-profit mission breadth. By adopting a constitutional economics perspective, the paper argues that mission breadth is ultimately determined by the trade-off between costs of collective decision-making in non-profit organizations and transaction costs of creating and maintaining these organizations. Developing optimally broad missions is shown to result in minimizing the sum of these costs, thus leading to an expansion of the non-profit sector and to an improvement of its problem-solving potential.     

The meaning of nonprofit advocacy: An ordonomic perspective

Orthodox economic theories of the nonprofit sector are focused on its service delivery role but have little to say about nonprofit advocacy. This study explains nonprofit advocacy by building upon the ordonomic approach, a recently developed strand of institutional economics that explores the interdependencies between institutions and ideas. From the ordonomic perspective, the evolution of a modern society occurs through an ongoing realignment between institutions and ideas. The meaning of nonprofit advocacy is shown to be in contributing to this realignment. This leads to a new understanding of the service delivery role of the nonprofit sector. This role is shown to have a compensatory character in that it is intended to maintain a reasonable quality of human life before the time-consuming ideational and institutional adjustments actually take place.     

Rethinking Nonprofit Commercialization: The Case of the Czech Republic

Some nonprofit economists tend to see nonprofit commercialization as a moral dilemma because commercial activities may secure organizational survival at the cost of undermining the mission orientation. The present paper argues that this type of moral framing of the commercialization debate is hardly adequate for the transitional context of the Czech nonprofit sector which is still struggling to develop its distinct institutional identity. Given that financial independence is part of this identity, commercial activities help nonprofits to emancipate themselves from the state that used to be paternalistic in the past. On this basis, the paper underscores the institutional nature of the commercialization phenomenon in the Czech Republic. Commercialization decisions of Czech nonprofit managers are shown to be heavily influenced by the current institutional and regulatory environment that explicitly promotes nonprofit self-financing initiatives. If nonprofit commercialization is understood as an institutional phenomenon, then its moral significance is best captured in terms of institutional ethics rather than individual ethics of nonprofit managers which seems to be predominant in the Anglo-Saxon literature. After presenting the recent empirical findings on self-financing, the paper concludes by stressing the interrelation between the semantic and ethical aspects of the commercialization concept.     

Nondistribution Constraint and Managerial Discretion: Disentangling the Relationship

The paper questions the viewpoint of the property rights theorists that nondistribution constraint makes nonprofit firms particularly prone to managerial shirking. The possibility that utility maximized by nonprofit managers corresponds to their firms’ missions is justified by the inability of the real-world price system to ensure the perfect match between profit maximization and utility maximization. The imperfection of this match means that some consumers’ preferences cannot be gratified through the price system and therefore require nonprofit organization. The possibility of managerial on-the-job consumption in nonprofit firms is shown to be insufficient for inferring inefficiency of their property rights structure.This research has been supported by Marie Curie Incoming International Fellowship of the Sixth Framework Program of the European Community (Contact No. M1F1-CT-2005-514036). The views expressed in this publication are those of the author only. The European Commission is not liable for any use that may be made of the information contained in this publication.     

We Must Preach what Should Be Practiced

There is some merit in what a majority does in statistics, but this is not enough for statistical science, which is developed by individuals.     

Comparison of Localisation Motives for R&;D Investment of Multinational Enterprises in the New and Old EU Member Regions

The issue of localisation motives is one of the key topics in attracting and motivating MNEs to establish or enhance their R&D activities abroad. The paper aims to compare localisation motives for R&D investment of multinational enterprises in the new and old EU member regions and to find out main localization motives differences among them. We have found out the key motives were technology/supply side factors, which strongly influence decision-making at MNEs in locating and maintaining R&D in all regions. In the more developed regions, the localisation is positively influenced also by the presence of other important/large (high-tech) companies and important universities in the region, which provide relevant services to MNEs. Localisation decisions in the new EU member regions were positively influenced particularly by presence of a quality and cheap labour force and a suitable R&D infrastructure and experience in R&D in these regions. Considerable differences between the old and new EU member states reflects their distinctive economic history, recent re-opening of their economies and consequences of the process of post-communist transition.