The theoretical foundations of nonprofit competition: a resource-advantage theory approach

Competition in the nonprofit sector has dramatically intensified in the past two decades because of (1) the increased number of nonprofit organizations (NPOs), (2) the decline and diffusion of governmental support, and (3) the entry of for-profit companies into markets that traditionally have been the domain of nonprofits. In an attempt to enhance the understanding of nonprofit competition, the authors apply resource-advantage (R-A) theory, a dynamic theory of competition adapted from the for-profit business literature, to commercial nonprofits and explain how commercial nonprofits can leverage their various resources to successfully compete and deliver social value. Contributing to the understanding of nonprofit competition and the challenge that NPOs face in balancing mission and money, this paper provides a foundation for a theory of nonprofit competition that can guide future research in the area and help NPO managers as they maneuver in today’s increasingly competitive environment.     

Developing a Marketing Strategy for Nonprofit Organizations: An Exploratory Study

Nonprofit organizations have grown tremendously in the last three decades. With this growth has come a greater interest from the nonprofit sector in the importance of marketing. Nonprofits did not apply marketing techniques until 1960–1970, but it is now a well accepted practice. Traditional marketing strategies do not work for nonprofit organizations, and this study proposes the development of a new marketing strategy specifically for this sector. Through the use of interviews and surveys, the authors examine issues of marketing strategy that are distinct for nonprofits. Unlike previous studies, this study examines these issues from the viewpoint of the nonprofit organization. The perception of marketing is different in nonprofit organizations, and the strategic implications of this finding are discussed.     

Academic achievement by graduates from for-profit and nonprofit institutions: Evidence from CPA exam performance

This study shows that graduates from nonprofit educational institutions outperform graduates from for-profit institutions on the four sections of the certified public accountant (CPA) exam. Specifically, it (1) documents univariate differences in CPA exam scores, score distributions, pass rates, and time to complete the CPA exam; (2) investigates the differences in a multivariate context; and (3) examines the robustness of the results to various levels of control for student differences.     

The Founding of a Nonprofit Organization as a Teaching/Learning Experience: A Case Study in Service Learning

ABSTRACT

The present case study describes how the founding, by faculty, of a nonprofit organization has aided marketing instructors (and instructors other disciplines) in teaching students to understand and apply marketing (and other business) theories in a “real-world” environment. To that end, the case study is organized as follows. First, it offers a short discussion on the pros and cons of working with for-profit versus nonprofit organizations to add value to the learning experience for students. Second, it describes the benefits and drawbacks instructors and/or students have experienced from starting their own nonprofit organization as a teaching or learning tool to help translate marketing theory into marketing application.     

Market Orientation of Riding Schools: A Comparison of For Profit and Nonprofit Organizations Using Structural Equation Modeling

For profit and nonprofit service providers compete in different areas of economy. Market orientation is a widely acknowledged concept that influences the performance of both for-profit companies and nonprofit organizations. Nevertheless, the different underlying attitudes and motivations of voluntary or professional managers may influence the market orientation of an organization. An empirical study was conducted for investigating the influence of different attitudes toward market orientation. Groups of non- and for-profit managers are compared using the example of German riding schools. Overall, 244 volunteer and professional managers answered the survey. A structural path model was evaluated using the software SmartPLS 3. Results show that attitudes and motivations exert influence differently in the non- and the for-profit contexts. The economic situation was found to have an influence solely on the satisfaction reported by professional managers but not on the satisfaction reported by volunteers. Implications for future research on nonprofit market orientation can be drawn from the findings.     

Online Media,Market Orientation,and Financial Performance in Nonprofits

The combination of social, political, and economic changes causing simultaneously decreasing funding and increasing demand for services is driving nonprofit managers to engage in proactive marketing in a for-profit model, including the use of online media. This research extends the MARKOR model of market orientation to examine the relationship between market orientation practices, as reflected in the utilization of online media, and their effects on the financial viability of nonprofit organizations (NPOs). The Wayback Machine website (http://waybackmachine.org) provided a unique ability to track site content over time, for comparison with each organization's financial indicators at corresponding points in time. The results of this study confirm the positive relationship between higher market orientation via online media presence and improved financial viability for the sampled group of NPOs. This study provides a simple, actionable, and free measure that NPOs can use to assess their current and planned online media.     

Defining the Content of Sustainability Reports in Nonprofit Organizations: Do Stakeholders Really Matter?

The aim of the article is to investigate the role of stakeholder engagement and participation in nonprofit organizations’ sustainability reporting, according to the literature on third sector and stakeholder theory. To verify the levels of involvement, the authors conducted an empirical survey, using content analysis, on a sample of 54 sustainability reports of nonprofit organizations included in the Global Reporting Initiative database as of September 1, 2012. In order to strengthen the results obtained from the content analysis, the authors shared their findings with the organizations of the sample. The survey showed that there were some criticisms regarding stakeholder participation in the targeted research field. These are considered in the conclusions. Questions for the future included whether stakeholder engagement is moving from being simply a way to consult and influence stakeholders to being an effective instrument for involving them in nonprofit organizations’ reporting and decision-making processes, through mutual commitment.     

Why Nonprofits Are Easier to Endorse on Social Media: The Roles of Warmth and Brand Symbolism

Brands often seek endorsements by consumers on social media (e.g., likes on Facebook). But is this marketing strategy feasible for all brands? To answer this question, this research investigates in seven studies the processes that underlie consumers' intention to endorse brands on social media. We suggest that consumers aim to signal their identity by endorsing brands online. Based on the Brands as Intentional Agents Framework and related research in (social) cognition and consumer behavior, we argue that consumers on social media primarily want to emphasize their warmth rather than their competence. Experimental studies 1, 2, and 3 distinguish between nonprofit and for-profit brands and show that brand warmth (and not competence) mediates the effect of brand type (nonprofit vs. for-profit) on consumers' intentions to endorse brands and branded content on social media. Experiment 4 demonstrates that this process is moderated by brand symbolism (moderated mediation). A high level of brand symbolism increases the positive effect of warmth on consumers' intention to endorse brands online, but only for for-profit brands. The fifth experiment shows that these effects are conditional upon the public vs. private distinction in consumer behavior: consumers prefer to publicly affiliate with nonprofit (vs. for-profit) brands but with regard to private affiliations, there is no difference between both types of brands. In experiment 6, the causal role of warmth (vs. competence) is further examined. Finally, we demonstrate that perceptions of brands' warmth and not competence reduce the efforts that brands need to make to achieve consumers' endorsements on their real brand pages on Facebook.     

Nonprofit Organizations in Mexico: A Preliminary Study on Knowledge Creation From the Beneficiaries’ Perspectives

ABSTRACT

The purpose of this study is to assess knowledge-creation activities by nonprofit organizations in Mexico from the beneficiaries’ perspectives. The ontological shift Socialization, Externalization, Combination, Interiorization (SECI) model and nonparametric tests were applied to a sample of 429 beneficiaries of 89 nonprofit organizations. The results found socialization was the most important and externalization was the least important aspect of the four types of dynamic knowledge interaction, suggesting an imbalance in knowledge creation, specifically in the conversion from tacit to explicit knowledge, which implies a problem, failure, or explicit barrier between the nonprofit organizations and their beneficiaries. The results further suggest weak links between age and externalization activities, gender and combination activities, and educational attainment and socialization activities. In sum, nonprofit organizations should consider beneficiaries’ individual characteristics when developing activities, disseminating materials, and communicating with the public. The study contributes to our understanding of tacit and explicit knowledge-creation activities by nonprofit organizations in Mexico.     

The Conceptualization of Nonprofit Marketing Orientation: A Critical Reflection and Contributions Toward Closing the Practice–Theory Gap

In this article three generations of research addressing the marketing construct in nonprofit organizations are critically analyzed: (a) market orientation in nonprofit organizations, (b) societal orientation, and (c) research contributions aiming to close the existing practice–theory gap on this topic. A qualitative study among 24 nonprofit marketers is conducted in Canada and Germany to develop a construct labeled nonprofit marketing orientation. It includes the dimensions of brand orientation, supporters’ orientation, commercial orientation, and service orientation. Furthermore, the authors describe the nomological net of nonprofit marketing orientation to present interconstruct relationships and to inform future research.     

Using Video to Build an Organization's Identity and Brand: A Content Analysis of Nonprofit Organizations' YouTube Videos

Organizational scholarship has increasingly focused its attention to how nonprofit, for-profit, and government agencies develop their unique organizational identity through their strategic communication efforts. As social media continues to become more prominent in communication campaigns due to the high levels of public usage and public involvement with organizations on social media sites, it is important to examine these social media messages as they relate to organizational identity. YouTube videos increasingly are being used by organizations to educate and inform just as much as they are to entertain. Through a content analysis of the most viewed videos on the top 100 official nonprofit YouTube channels, this study found that nonprofit organizations primarily use their YouTube videos to inform and educate viewers about their missions, programs, and services. While the videos also occasionally discuss the organizations' advocacy, volunteering, and fundraising efforts, nonprofit organizations were not living up to their potential in terms of engagement through direct appeals for involvement. Additionally, the organizations were more likely to use outsiders' words and stories to build the videos' narratives rather than using internal stakeholders. The benchmark numbers provided by this study reiterate key rules that are stressed in practitioner-oriented work on video production for branding and identity-building efforts.     

The impact of professionalization and partnerships on nonprofit productivity

ABSTRACT

This research evaluates the influence of professionalization and partnering with firms on nonprofit productivity. Professionalization is measured in terms of the ratio of paid employees to volunteers, and productivity is measured through the ratio of total assets to number of beneficiaries, and the ratio of total revenues to number of paid employees and volunteers. Empirical analysis combines a survey to a representative sample of Spanish nonprofits, with information available from public sources. Results confirm the existence of a ‘U-shaped’ relationship between professionalization and nonprofits’ capability to reach more beneficiaries with lower assets; a positive effect of professionalization on revenue generation capability; and a positive effect of partnerships with businesses on the nonprofit’s asset-per-beneficiary ratio. Discussion sheds light on the on-going debate about the implications of professionalization and partnering with firms for the capacity of nonprofit organizations to attract resources and to extend their reach in a more efficient way.     

The decision to advertise nonprofit accreditation status

Nonprofits seek accreditation to bolster their reputation and signal their worthiness to funders. The Better Business Bureau accredits nonprofits who pass 20 standards of accountability. Accredited organizations have the option to pay for the right to advertise their accredited status. At issue is why some organizations pay to advertise and other organizations do not. Utilizing a sample of 495 nonprofit organizations accredited by the Better Business Bureau, we find that nonprofits that pay to advertise the seal are larger, more profitable, have higher visibility, and are more likely to hire professional fundraisers. The results should be of interest to stakeholders and fundraisers interested in the adoption of methods to signal the accountability of nonprofit organizations.     

Princes and Paupers: Network Ties and Financial Contributions Among Nonprofit Arts Organizations

ABSTRACT

In the United States, nonprofit organizations are the primary vehicle through which wealthy patrons nurture arts and culture. They provide support for theatres, orchestras, operas, and ballet troupes of all sizes, as well as museums, galleries, zoos, and public radio and television stations. The survival of this subsector is dependent on the ability of individuals and foundations to raise and funnel money to the almost 7,000 nonprofit arts and cultural organizations in the United States. Nonprofit arts organizations have historically fared well during periods of financial constraint, in part because they have not depended heavily upon government subsidies. But another explanation for this stable funding picture may be the networks of overlapping board member and interpersonal ties of collegiality and friendship which characterizes the world of nonprofit arts organizations.

We began our research with the idea that network position, particularly as measured by network centrality, is an important resource for nonprofit arts organizations. We hypothesized that the more central an arts organization is in the entire network of for-profit and nonprofit arts organizations in the community, the greater will be the level of support it can generate from local donors. We also hypothesized that the more wealthy a nonprofit arts organization, the more central it is likely to be in the entire network of for-profit and nonprofit organizations.

Using an extensive database of almost 3,000 directors in the Louisville, Kentucky area, and special computer-based network analysis software packages, we were able to calculate the precise centralities of local arts organizations within a network of 149 organizations, corporations, and umbrella funding agencies. In order to determine the local financial support, we collected the 1990 IRS (Internal Revenue Service) Form 990 returns for nineteen of the twenty-five organizations (76%) we identified as active in the Louisville area. After determining organizational centrality, we did a bi-variate analysis between the centrality of an individual arts organization and total organizational wealth. What we found was that centrality is strongly associated with level of contributions and weakly associated with overall wealth. We believe that nonprofit arts organizations can take deliberate steps to maximize this resource by being aware of the other organizational (and social) ties of prospective directors.     

The impact of online financial disclosure and donations in nonprofits

Decreased public confidence and trust in the nonprofit sector has fueled increased calls for transparency. In response, federal regulators and watchdog organizations have recommended that nonprofits voluntarily disclose their financial information on their own public websites. Despite the potential benefits of enhanced public confidence and trust, improved donor decision making, and increased donations, many nonprofit organizations have not adopted the recommended disclosure practices. We investigate the disclosure practices of 3,217 nonprofits and find that voluntary web disclosure of the IRS Form 990 is strongly correlated to donations, independent of other variables such as age, size, and fundraising expenditures. Further, fundraising is also clearly related to the performance indicators shown in the 990 disclosures, particularly the program ratio of program expenditures to total expenditures. This is true on a general level and when specifically compared to other nonprofits within particular sectors. As a result, nonprofits should seriously consider voluntarily posting their Form 990 results on their websites when it reflects favorably and strive to improve their financial performance if online disclosure would reflect poorly on the organization.     

Do Nonprofit Hospitals Exercise Market Power?

Several theories of nonprofit hospitals behavior predict that nonprofit hospitals behave in the consumer interest and thus do not exercise market power. If these theories are correct, then antitrust enforcement of hospital mergers should be restricted only to those markets in which a nonprofit hospital cannot offset anticompetitive behavior by for-profit hospitals. In this paper, we examine the relationship between price and market concentration among nonprofit hospitals in California in 1993. We find that nonprofit hospitals set higher prices in more concentrated markets. This result suggests that antitrust enforcement should challenge those mergers of nonprofit hospitals that create market power without creating offsetting efficiencies.     

Small Business–Nonprofit Collaboration: Locally Owned Businesses Want to Take Their Relationships With Community-Based NPOs to the Next Level

This two-part, mixed-methods study explored how and why small businesses engage in both philanthropic and transactional partnerships with community-based nonprofits (NPOs), and what business owners expect from their nonprofit partners. Findings from focus groups and a survey indicate that U.S. small businesses (a) are interested in a higher representation on nonprofit boards; (b) are more likely to support NPOs that focus on the local community’s needs; and (c) seek long-term, committed partnerships with NPOs to jointly address communal issues rather than one-time contributions or sponsorships. The study adds to the literature on nonprofit–business collaboration by applying the concepts of integrative (Austin, 2000) and communal (Cho & Kelly, 2014) relationships in the context of locally owned businesses and community-based NPOs rather than more commonly studied large corporations and national/international nonprofits. These findings also offer practical recommendations for the leadership of community nonprofits interested in enhancing their relationships with small businesses.     

The Impact of Revenue Sources on Marketing Behavior: Examining Web‐Promotion and Place‐Marketing in Nonprofit Organizations

To overcome failure to generate profits from the goods they produce, nonprofit organizations have unique methods to generate and sustain capital flows resulting in distinct exchange relationships. This leads scholars to argue that nonprofit marketing strategies should differ as well. Given the lack of empirical work that investigates this possibility, this article explores how the uniqueness of the nonprofit funding environment shapes the ways in which nonprofits use business principles to market their products and services, asking if the resource acquisition process is the primary mechanism that predicts business‐like marketing behavior. Findings indicate that both the resource acquisition process and institutional relationships are influential in predicting business‐like marketing behavior.