Keywords: Marketization; Commercialization; Becoming business-like; Social enterprise; Czech Republic
All over the world, nonprofit organizations (NPOs) are increasingly turning to commercial activities. The commercialization involves a growing market orientation and entrepreneurial activism (Nicholls & Cho 2006; Sharir & Lerner 2006; Weerawardena, McDonald & Mort 2010). The diversity of the manifestations of the commercialization process is reflected in a host of definitional approaches (LeRoux 2005). Salamon (1993) referred to commercialization as the “marketization of welfare”; Weisbrod (1988) understood it in terms of the increasing tendency of nonprofits to develop new enterprises, charge fees, and produce goods for sale. According to Tuckman (2000), commercialization occurs when NPOs “decide to produce goods and services with the explicit intent of earning a profit”. “Marketization” is a related term used to refer to NPOs becoming “more market driven, client driven, self-sufficient, commercial, or businesslike” (McKay et al. 2011).
NPOs that seek to solve social problems through market-based solutions are often referred to as social enterprises (e.g., Kerlin 2013); social enterprises are usually understood as undertaking commercial activities (Maier et al. 2014). The question is whether the commercialization may have good (c.f. Brinckerhoff 2000; Salamon 2002; Valentinov 2008; Froehlich 1999) or bad (c.f. Weisbrod 1988; ibid 2004; James 2000; Eikenberry & Kluver 2004; Young 2003; Phills & Chang 2005) consequences. We have referred to this question as “social (or) enterprise”. Until now, however, neither side has received definitive empirical support.
According to the resource dependency theory, NPOs use commercial income as a replacement for lost government grants and private revenues (Crimmins & Keil 1983; Eikenberry & Kluver 2004; Young 2003; McKay et al. 2011). However, nonprofit scholars have provided little empirical evidence for or against this thesis. Kerlin & Pollak (2011), favoring institutional theory (Meyer & Rowan 1977; Scott 1995), showed that there is little evidence that the increase in commercial revenues between 1982 and 2002 was associated with declines in government grants and private contributions. This perspective suggests that the survival of an NPO requires that it conforms to the institutional environment in which it exists (Kerlin & Pollak 2011).
A systematic literature review (c.f. Maier et al. 2014) shows that scholars dealing with this issue build largely on Anglo-Saxon literature, which is not perfectly suited to a transitional context. The poster shows how the situation in the Czech Republic fits into the conventional debate. We focus on the overall trends and figures of the Czech nonprofit sector, emphasizing the role of commercial revenues. Taking into account the considerable heterogeneity of the nonprofit sector, we concentrate on civic associations, providers of public services, and foundation entities. Thanks to unique resource data based on a specific request for data from an annual statistical survey of NPOs using the NI 1-01 (a) questionnaire (Vaceková & Prouzová 2014), we can evaluate the structure of revenues as a whole as well as their development per unit.
Most of the currently available empirical research on commercialization has sought to clarify three dimensions: (a) reasons for NPOs becoming business-like, (b) organizational structures and processes in NPOs undergoing such changes, and (c) effects of becoming business-like (Maier et al. 2014). A recent examination of the commercial activities of NPOs in the Czech Republic and Slovakia (c.f. Svidroňová & Vaceková 2012; Vaceková & Svidroňová 2014) revealed that over 75% of Czech and 87% of Slovak NPOs used some form of commercial activities, even in the early years of their existence (Vaceková 2014). The poster presents these findings, which strongly indicate the need for deeper insight into the issue. Furthermore, it creates a space for discussing critical implications and making suggestions for further research into the examined issue in a transitional context.
