Using a select set of literature, this chapter reviews the progress in the line of research focusing on nonprofit income diversity and issues of financial health. General consensus exists on the diversity of revenue dependence across nonprofit fields, revealing heavy dependence on commercial revenue by some, on private contributions by others and diversified sources by others. We also address recent developments in theory building and testing that help explain these patterns. Although the literature on revenue diversification reveal mixed results, the general pattern shows a positive association between diversification and financial stability. However, close attention to the composition of an income portfolio is needed. Conversely, revenue concentration is generally associated with financial growth, albeit tempered by an increasing recognition of the limits of persistently concentrated revenue portfolios. We conclude by addressing the merits and gaps in current research, including the quality of current data, its access, scope and specificity.
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Cyril F. Chang, Howard P. Tuckman and Grace L. Chikoto-Schultz
Perspectives on Digital Globalisation
Patrizio Bianchi and Sandrine Labory
Ermanno C. Tortia and Vladislav Valentinov
We bring the theory of the for-profit firm to bear on the economics of nonprofit organization by re-examining the literature on the delineation of organizational boundaries and the determination of cost-effective governance mechanisms. This is enabled by explicit consideration of nonprofit firms’ mission orientation as nonprofits engage in activities that may be related or unrelated to their core missions. Decisions on both organizational boundaries and governance are made differently for these two activity types. Based on the re-examination of governance in nonprofits, in the second part of the chapter, we propose a new framework of analysis in which market, hierarchy and collective action represent the three fundamental coordination mechanisms that define the space of entrepreneurial action. While nonprofits do not exclude market and hierarchy to achieve coordination, they represent the organizational form nearest to collective action as dominant coordination mechanism.
Young-Myon Lee and Bruce E. Kaufman
Patrizio Bianchi and Sandrine Labory
This introductory chapter to the book reviews global trends in markets, focusing on globalisation and digitalisation. It is argued that the global economy seems to have entered a new phase after the financial crisis, whereby flows of goods no longer exponentially rise while data flows boom. This new phase can therefore be called ‘digital globalisation’, spurred by the fourth industrial revolution, the meaning and implications this book aims at analysing, especially regarding industry and industrial policy.
Bruce A. Seaman and Dennis R. Young
In Jun, Peter Sheldon and Kang-Sung Lee
This chapter explains how and why chaebols founded Korea’s first national employer association, the Korea Employers Federation (KEF) in 1970, despite facing little threat from unions or pro-employee government intervention. It then explores the KEF’s changing roles in responding to chaebols’ expectations up to 2010. As chaebols grew and moved into new industries, their main industrial relations interests were maintaining low labour costs and unimpeded workplace control. In this, they had government support until Korea’s democratization in 1987. Needing little collective leadership, they instead sought increasing technical expertise from KEF staff. With democratization, chaebols received much less government support. Industrial relations now included independent unionism and militancy, rising wages, and legislative support for collective bargaining and individual employee rights. Chaebols now wanted KEF representation, which became significant for lobbying governments, negotiating with peak unions and within the Tripartite Commission. Nonetheless, its lack of authority over chaebols limited its strategies.
Seung-Hyeob Lee and David Lewin
This chapter analyzes the diverse institutional arrangements of public sector employment relations in Korea – in particular, unionization, bargaining structure, and key issues. Korean labor has little voice despite the government changing hands multiple times. A look at the status of the Korean Teachers and Education Workers Union (KTU) and the Korean Government Employees’ Union (KGEU) demonstrate the difficulties public sector unions face in claiming their share of voice within a two-tier bargaining system. Public sector workers, employees and unions have largely been silenced by the unilateral institutionalization of restrictive laws and practices like the registration approval system and prohibitions on collective action for teachers and civil servants. The author argues that to take their place at the table, public sector organizations must learn how to acknowledge economic realities and court public opinion in their strategies and tactics.
Eleanor Brown and Al Slivinski
We provide an overview of theoretical research on markets in which for-profit and nonprofit firms compete. We discuss how specific notions of altruism – whether it is scarce, whether it is pure or warm-glow – affect outcomes in such markets. Since the nonprofit organizational form carries with it both advantages and disadvantages relative to for-profits, research devoted to explaining the conditions under which the two can coexist is discussed, and we then move on to show the kinds of predictions of firm behavior that are made by models in which such coexistence can occur. The chapter concludes with a discussion of where research on these questions seems to be headed, and the possible implications of the recent development of hybrid forms allowing firms to incorporate as for-profit with a declared social mission.
Patricia Hughes and William Luksetich
In Chapter 9 we focus on the modeling of nonprofit behavior starting with the structural components of model design that frame the organization’s behavior, followed by the theoretical issues associated with the choice of organizational form. We then consider the empirical evidence to reveal the goals of nonprofit organizations in specific industries and how the observed behavior of organizations corresponds to the various theories of nonprofit organizations posited in the literature. Theory predicts a bias towards higher quality provision by nonprofits that are organized for the public benefit and adhere to the non-distribution constraint. There is empirical evidence of systematic differences in the behavior of nonprofit and for-profit organizations in mixed industries consistent with these predictions. While there are some common characteristics that define specific industries, identifying the underlying goals of the organizations is not possible.