Public Organization Review

, Volume 7, Issue 1, pp 41–55 | Cite as

The Property Rights Approach to Nonprofit Organization: The Role of Intrinsic Motivation

  • Vladislav Valentinov


The standard property rights approach to nonprofit organization claims that attenuation of property rights in the form of nondistribution constraint stimulates managerial shirking in nonprofit firms and thereby makes them less efficient than for-profit firms. This paper argues that this view neglects the important role played by intrinsic motivation in nonprofit organization. Intrinsically motivated stakeholders provide resources to nonprofit firms and thereby facilitate their economic survival. However, intrinsic motivation is subject to the crowding-out effect, i.e., the danger of being displaced by the use of extrinsic (monetary and administrative) incentives. The property rights structure in nonprofit organization is designed to minimize the crowding-out effect by dampening monetary and administrative incentives through nondistribution constraint and self-governance orientation, respectively. This facilitates not only economic survival of nonprofit firms but also maximization of utility of their intrinsically motivated stakeholders.

Key words

Attenuation of property rights Intrinsic motivation Crowding-out effect Pecuniary utility Nonpecuniary utility 



This research has been supported by Marie Curie Incoming International Fellowship of the Sixth Framework Program of the European Community (Contract No. MIF1-CT-2005-514036). The views expressed in this publication are those of the author only. The European Commission is not liable for any use that may be made of the information contained in this publication.


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Copyright information

© Springer Science+Business Media, LLC 2006

Authors and Affiliations

  1. 1.Institute of Agricultural Development in Central and Eastern EuropeHalle (Saale)Germany

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