Advertisement

Serve or Conserve: Mission, Strategy, and Multi-Level Nonprofit Change During the Great Recession

  • Aaron Horvath
  • Christof Brandtner
  • Walter W. Powell
Original paper

Abstract

Change is frequently afoot in the nonprofit sector, both in the wider institutional environment in which nonprofits operate and within the organizations themselves. Environmental transformations—funding sources, supply and demand for collective goods, and administrative norms—create the circumstances in which organizations operate. Internally, change involves the alteration of goals, practices, and personnel. To explore how multiple aspects of change intersect across levels, we ask how organizations’ practices influence their experience of and reaction to changes in the environment. Turning open systems theories inside out, we argue that internal planning, routines, and missions give rise to organizational mindsets that imbue evolving environmental circumstances with meaning. We illustrate our argument using a unique longitudinal dataset of 196 representative 501(c)(3) public charities in the San Francisco Bay Area from 2005 to 2015 to assess both accelerators and obstacles of change. Empirically, we investigate predictors of organizational insolvency and the ability to serve constituents in the wake of the Great Recession. We find that strategic planning decreases the likelihood of insolvency whereas an orientation toward the needy increases spending. We conclude with our contributions to understanding of multi-level organizational change and nonprofit strategy.

Keywords

Organizational change Great Recession Strategic outlook Poverty mindset Insolvency Resilience 

Notes

Compliance with Ethical Standards

Conflicts of interest

The authors declare they have no conflicts of interest.

References

  1. Allison, G. T. (1969). Conceptual models and the Cuban missile crisis. American Political Science Review, 63(3), 689–718.CrossRefGoogle Scholar
  2. Backman, E. V., & Rathgeb-Smith, S. (2000). Healthy organizations, unhealthy communities? Nonprofit Management and Leadership, 10(4), 355–373.CrossRefGoogle Scholar
  3. Brandtner, C., Horvath, A., Powell, W. W. (2017). From iron cage to glass house: Rationalization, receptivity, and intercalation in the nonprofit sector, 2005–2015. Unpublished manuscript.Google Scholar
  4. Brest, P., & Harvey, H. (2008). Money well spent: A strategic plan for smart philanthropy. New York: Bloomberg Press.Google Scholar
  5. Bromley, P., Hwang, H., & Powell, W. W. (2012). Decoupling revisited: Common Pressures, divergent strategies in the U.S. nonprofit sector. Management (France), 15(5), 468–501.Google Scholar
  6. Brown, M. S., McKeever, B., Dietz, N., Koulish, J., & Pollak, T. (2013). The impact of the Great Recession on the number of charities. Washington: The Urban Institute.Google Scholar
  7. Burns, T., & Stalker, G. M. (1961). The management of innovation. London: Tavistock.Google Scholar
  8. Capron, L., & Mitchell, W. (2012). Build, borrow, or buy: Solving the growth dilemma. Boston, MA: Harvard Business School Press.Google Scholar
  9. Carroll, D. A., & Stater, K. J. (2009). Revenue diversification in nonprofit organizations: Does it lead to financial stability? Journal of Public Administration Research and Theory, 19(4), 947–966.CrossRefGoogle Scholar
  10. Casciaro, T., & Piskorski, M. J. (2005). Power imbalance, mutual dependence, and constraint absorption: A closer look at resource dependency theory. Administrative Science Quarterly, 50, 167–199.CrossRefGoogle Scholar
  11. Child, C. (2010). Wither the turn? The ambiguous nature of nonprofits’ commercial revenue. Social Forces, 89(1), 145–161.CrossRefGoogle Scholar
  12. Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail. Boston, MA: Harvard Business School Press.Google Scholar
  13. Cohen, M. (2007). Reading Dewey: Reflections on the study of routine. Organization Studies, 28(5), 773–786.CrossRefGoogle Scholar
  14. Cyert, R. M. & March, J. G. (1992). A summary of basic concepts. In A behavioral theory of the firm (2nd ed.) (pp. 114–27). Hoboken: Wiley-Blackwell.Google Scholar
  15. Davis, G. F., & Cobb, J. A. (2010). Resource dependence theory: Past and future. Research in the Sociology of Organizations, 28, 21–42.CrossRefGoogle Scholar
  16. Desmond, M. (2016). Evicted: Poverty and profit in the American city. New York: Broadway Books.Google Scholar
  17. DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.CrossRefGoogle Scholar
  18. Eikenberry, A. M., & Kluver, J. D. (2004). The marketization of the nonprofit sector: Civil society at risk? Public Administration Review, 64(2), 132–140.CrossRefGoogle Scholar
  19. Emirbayer, M., & Mische, A. (1998). What is agency? American Journal of Sociology, 103(4), 962–1023.CrossRefGoogle Scholar
  20. Feldman, M. S., & Pentland, B. T. (2003). Reconceptualizing Organizational Routines as source of flexibility and change. Administrative Science Quarterly, 48(1), 94–118.CrossRefGoogle Scholar
  21. Forbes, D. P. (1998). Measuring the unmeasurable: Empirical Studies of nonprofit organization effectiveness from 1977 to 1997. Nonprofit and Voluntary Sector Quarterly, 27(2), 183–202.CrossRefGoogle Scholar
  22. Frank, D. J., Hironaka, A., & Schofer, E. (2000). The nation-state and the natural environment over the twentieth century. American Sociological Review, 65(1), 96–116.CrossRefGoogle Scholar
  23. Froelich, K. A. (1999). Diversification of revenue strategies: Evolving resource dependence in nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 28(3), 246–268.CrossRefGoogle Scholar
  24. Frumkin, P. (2002). On being nonprofit. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  25. Gangl, M. (2010). Causal inference in sociological research. Annual Review of Sociology, 36, 21–47.CrossRefGoogle Scholar
  26. Hallett, T. (2010). The myth incarnate: Recoupling processes, turmoil, and inhabited institutions in an urban elementary school. American Sociological Review, 75(1), 52–74.CrossRefGoogle Scholar
  27. Hannan, M. T., & Freeman, J. (1989). Organizational ecology. Cambridge, MA: Harvard University Press.Google Scholar
  28. Hansmann, H. (1987). Economic theories of nonprofit organization. In W. W. Powell (Ed.), The nonprofit sector: A research handbook. New Haven, CT: Yale University Press.Google Scholar
  29. Hwang, H., & Bromley, T. (2015). Internal and external determinants of formal plans in the nonprofit sector. International Public Management Journal, 18(4), 568–588.CrossRefGoogle Scholar
  30. Hwang, H., & Powell, W. W. (2009). The rationalization of charity: The influences of professionalism in the nonprofit sector. Administrative Science Quarterly, 54(2), 268–298.CrossRefGoogle Scholar
  31. Keele, L., & Kelly, N. J. (2006). Dynamic models for dynamic theories: The ins and outs of lagged dependent variables. Political Analysis, 14(2), 186–205.CrossRefGoogle Scholar
  32. Kelly, E., & Dobbin, F. (1998). How affirmative action became diversity management employer response to antidiscrimination law, 1961 to 1996. American Behavioral Scientist, 41(7), 960–984.CrossRefGoogle Scholar
  33. Lecy, J. D., Schmitz, H. P., & Swedlund, H. (2012). Non-governmental and not-for-profit organizational effectiveness: A modern synthesis. Voluntas, 23(2), 434–457.CrossRefGoogle Scholar
  34. Lubove, R. (1965). The professional altruist: The emergence of social work as a career, 1880–1930. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  35. Maier, F., & Meyer, M. (2011). Managerialism and beyond: Discourses of civil society organization and their governance implications. Voluntas, 22(4), 731–754.CrossRefGoogle Scholar
  36. Maier, F., Meyer, M., & Steinbereithner, M. (2016). Nonprofit organizations becoming business-like: A systematic review. Nonprofit and Voluntary Sector Quarterly, 45(1), 64–86.CrossRefGoogle Scholar
  37. March, J. G. (1981). Footnotes to organizational change. Administrative Science Quarterly, 26(4), 563–577.CrossRefGoogle Scholar
  38. March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.CrossRefGoogle Scholar
  39. Messinger, S. L. (1955). Organizational transformation: A case study of a declining social movement. American Sociological Review, 20(1), 3–10.CrossRefGoogle Scholar
  40. Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340.CrossRefGoogle Scholar
  41. Meyer, M., & Simsa, R. (2013). Entwicklungsperspektiven des Nonprofit-Sektors. In R. Simsa, M. Meyer, & C. Badelt (Eds.), Handbuch der Nonprofit-Organisation (3rd ed). Stuttgart: Schäffer-Poeschel.Google Scholar
  42. Minkoff, D. C., & Powell, W. W. (2006). Nonprofit mission: Constancy, responsiveness, or deflection? In W. W. Powell & R. Steinberg (Eds.), The nonprofit sector: A research handbook (2nd ed.). New Haven, CT: Yale University Press.Google Scholar
  43. Mintzberg, H. (1978). Patterns in strategy formation. Management Science, 24(9), 934–948.CrossRefGoogle Scholar
  44. Mintzberg, H. (1994). The rise and fall of strategic planning. New York: The Free Press.Google Scholar
  45. Mintzberg, H., Ahlstrang, B., & Lampel, J. (1998). Strategy safari: A guided tour through the wilds of strategic management. New York: The Free Press.Google Scholar
  46. Mohr, J. (1994). Soldiers, mothers, tramps, and others: Discourse roles in the 1907 New York City charity directory. Poetics, 22(4), 327–357.CrossRefGoogle Scholar
  47. Orlikowski, W. J. (2000). Using technology and constituting structures: A practice lens for studying technology in organizations. Organization Science, 11(4), 404–428.CrossRefGoogle Scholar
  48. Orlikowski, W. J., & Scott, S. V. (2008). Sociomateriality: challenging the separation of technology, work and organization. Academy of Management Annals, 2(1), 433–474.CrossRefGoogle Scholar
  49. Oster, S. M. (1995). Strategic management for nonprofit organizations. New York: Oxford University Press.Google Scholar
  50. Peek, J., & Rosengren, E. S. (2000). Collateral damage: Effects of the Japanese bank crisis on real activity in the United States. American Economic Review, 90(1), 30–45.CrossRefGoogle Scholar
  51. Perrow, C. (1967). A framework for the comparative analysis of organizations. American Sociological Review, 32(2), 194–208.CrossRefGoogle Scholar
  52. Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations. New York: Harper & Row.Google Scholar
  53. Powell, W. W., & Rerup, C. (2017). Opening the black box: The microfoundations of institutions. In R. Greenwood et al. (Eds.), Sage handbook of organizational institutionalism (2nd ed.). London: Sage.Google Scholar
  54. Powell, W. W., White, D. R., Koput, K. W., & Owen-Smith, J. (2005). Network dynamics and field evolution: The growth of interorganizational collaboration in the life sciences. American Journal of Sociology, 110(4), 1132–1205.CrossRefGoogle Scholar
  55. Raisch, S., Birkinshaw, J., Probst, G., & Tushman, M. L. (2009). Organizational ambidexterity: Balancing exploitation and exploration for sustained performance. Organization Science, 20(4), 685–695.CrossRefGoogle Scholar
  56. Rangan, V. K. (2004). Lofty missions, down-to-earth plans. Harvard Business Review, 82(3), 112–119.Google Scholar
  57. Rerup, C., & Feldman, M. S. (2011). Routines as a source of change in organizational schemata: The role of trial-and-error learning. Academy of Management Journal, 54(3), 577–610.CrossRefGoogle Scholar
  58. Sahlin, K., & Wedlin, L. (2008). Circulating ideas: Imitation, translation and editing. In R. Greenwood et al. (Eds.), Sage handbook of organizational institutionalism. London: Sage Publishers.Google Scholar
  59. Scott, W. R., & Davis, G. F. (2007). Organizations and organizing: Rational, natural, and open system perspectives. New York: Prentice Hall.Google Scholar
  60. Selznick, P. (1957). Leadership in administration: A sociological interpretation. New York: Harper & Row.Google Scholar
  61. Sills, D. L. (1957). The volunteers, means and ends in a national organization. North Stratford, NH: Ayer Publishers.Google Scholar
  62. Singh, J. V., Tucker, D. J., & Meinhard, A. G. (1991). Institutional change and ecological dynamics. In W. W. Powell & P. J. DiMaggio (Eds.), The new institutionalism in organizational analysis. Chicago: University of Chicago Press.Google Scholar
  63. Skocpol, T. (2003). Diminished democracy. Norman, OK: University of Oklahoma Press.Google Scholar
  64. Stinchcombe, A. L. (1965). Social structure and organizations. In J. P. March (Ed.), Handbook of organizations. Chicago: Rand McNally.Google Scholar
  65. Stinchcombe, A. L. (1990). Information and organizations. Berkeley: University of California Press.Google Scholar
  66. Taylor, V. (1989). Social movement continuity: The Women’s Movement in Abeyance. American Sociological Review, 54(5), 761–775.CrossRefGoogle Scholar
  67. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.CrossRefGoogle Scholar
  68. Thompson, J. D. (1967). Organizations in action. New York: McGraw-Hill.Google Scholar
  69. Weber, M. (1978). Economy and society. In G. Roth & C. Wittich (Eds.), Berkeley: University of California Press.Google Scholar
  70. Weber, K., & Glynn, M. A. (2006). Making sense with institutions: Context, thought and action in Karl Weick’s theory. Organization Studies, 27(11), 1639–1660.CrossRefGoogle Scholar
  71. Weber, K., & Waeger, D. (2017). Organizations as polities: An open systems perspective. Academy of Management Annals, 11(2), 886–918.CrossRefGoogle Scholar
  72. Weick, K.E. (1993). “The Collapse of Sensemaking in Organizations: The Mann Gulch Disaster.” Administrative Science Quarterly 628–52.Google Scholar
  73. Weick, K. E. (1995). Sensemaking in organizations. Thousand Oaks, CA: Sage Publications.Google Scholar
  74. Weick, K. E., & Sutcliffe, K. (2007). Managing the unexpected: Resilient performance in and age of uncertainty (2nd ed.). San Francisco: Jossey-Bass.Google Scholar
  75. Weisbrod, B. A. (1988). The nonprofit economy. Cambridge, MA: Harvard University Press.Google Scholar
  76. Weisbrod, B. A. (1998). To profit or not to profit. New York: Cambridge University Press.CrossRefGoogle Scholar
  77. Willems, J., Boenigk, S., & Jegers, M. (2014). Seven trade-offs in measuring nonprofit performance and effectiveness. Voluntas, 25(6), 1648–1670.CrossRefGoogle Scholar
  78. Woodward, J. (1965). Industrial organization: Theory and practice. New York: Oxford University Press.Google Scholar
  79. Wry, T., Cobb, J. A., & Aldrich, H. E. (2013). More than a metaphor: Assessing the historical legacy of resource dependence and its contemporary promise as a theory of environmental complexity. The Academy of Management Annals, 7, 441–488.CrossRefGoogle Scholar
  80. Zald, M. N., & Denton, P. (1963). From evangelism to general service: The transformation of the YMCA. American Journal of Sociology, 8(2), 214–234.Google Scholar

Copyright information

© International Society for Third-Sector Research and The Johns Hopkins University 2018

Authors and Affiliations

  1. 1.Department of SociologyStanford UniversityStanfordUSA
  2. 2.Stanford UniversityStanfordUSA

Personalised recommendations