Stakeholder theories of the non-profit sector: One cut at the economic literature

This article examines and organises the economic literature dealing with non-profit institutions using the concept of ‘stakeholders’. In general, the literature identifies conflicts between various groups of stakeholders and then proceeds in two very different directions. The first is supportive of the non-profit sector, suggesting that non-profit organisations resolve those conflicts more effectively than other types of institutions. This provides a positive theory of the non-profit sector, explaining that non-profit institutions evolve when they are more effective in providing a particular good or service than other possible institutional arrangements. The second direction is more critical of the non-profit sector, suggesting that those conflicts will persist in non-profit institutions and will require some kind of resolution, including perhaps government intervention. Of course, a stakeholder approach to non-profit theory focuses on conflict and ignores some other views of the sector.