The nonprofit sector has often been defined based on the non-distribution constraint, meaning that this sector contains organizations that do not distribute profits among shareholders (Hansmann 1987). However, this non-distribution constraint also applies to many organizations that are labeled as public organizations. Similarly, alternative designations such as social profit, non-governmental or third sector have been proposed and discussed, nevertheless with the same limitation that not a single or simple set of criteria can unambiguously definethis large group of organizations.
Moreover, the continuing trend of organizational hybridization has made sector boundarieseven vaguer (Chen 2010; Strauß & Nentwich 2013; Willems 2016). For example,over the past decades public administrations have increasingly relied on theservices of nonprofit organizations to assure public value creation (Johnston 2014;Koliba, Mills & Zia 2011; Vangen, Hayes & Cornforth 2015). A common example is the evolution of the development aid non-governmental sector that originallygrew from the need to independently address a gap left open due to governmentand market failures (Frumkin 2002). However, this sector of ‘non-governmental’organizations (NGOs) has become a major partner in international aid programs.This has on the one hand the aim of better integrating various efforts; on theother hand, it has made the sector more dependent on government funding and regulations.
Similarly, the boundary between organizations traditionally labeled as ‘nonprofit’ and ‘profit’ has also been fading given the trend ofshared value creation, which combines social and economic goals in a singleorganization and/or collaboration (Babiak 2009; Porter & Kramer 2011). Examples are the plethora of partnering initiatives between grassroots and corporationsin the context of corporate social responsibility (CSR), and the emergence of social enterprises that balance social and economic goals in their organizationalmission (Sanzo et al 2014). Likewise, for completeness,the third boundary, between profit and public organizations, has also been fadingin the context of New Public Management (NPM) where publicly owned companiesand long-term public-private partnerships (PPPs) are set up for a better combination of public and economic goals (Saz-Carranza & Longo 2012; Selsky & Parker 2005; Torchia, Calabrò, & Mornera 2015). In sum, in addition to the vague boundaries that exist for the three-fold classification of profit,public and nonprofit organizations, these boundaries seem to fade even more due to increased organizational hybridization.
Despite the fact that a broad range of benefits of organizational hybridization and fading sector boundaries have been discussed,little is known about the potential side-effects or negative consequences of the lost independence of the non-profit/non-governmental sector (Guo & Acar2005). Therefore, the research aim of this study is the exploration of potential side-effects from cross-sector dependence. In particular, we look how cross-sector dependence is perceived among an organization’s stakeholders. Hence, our overall research question is: What are the reputational effects among nonprofit stakeholders of cross-sector dependencies?
Our empirical analyses consist of three online experiments(Experiment 1: US sample, n = 207; Experiment 2: German sample, n = 140;Experiment 3: UK sample, n = 289). In each experiment we test among potentialbeneficiaries and/or donors the (willingness to) support an organization with asocial goal.
F1a - Behavioral and Experimental Public Administration: Citizen-State Interactions
