Becoming business-like: the determinants of NGOs? marketization turning into social enterprises in Poland
Keywords:marketization, NGOs, social enterprises, business-like approach
Research background: NGOs face an increasing expectation to be more business-like. They are becoming involved in selling services by performing a commercial activity, which, in turn, is a basic condition for creating social enterprises. The changes related to this approach are an essential condition for their survival and a significant reason for developing their new form as social enterprises. On the other hand, there is no lack of critical opinions related primarily to mission volatility. Currently, a discussion is taking place in the literature on factors that may affect NGOs? marketization; these, however, have not been empirically verified yet. The identified research gap constituted a major challenge for the author.
Purpose of the article: The purpose of this paper is to verify whether conducting a business activity influences the entrepreneurial way of NGOs? operation, and to indicate the factors that have a significant impact on their marketization.
Methods: On the basis of a representative national survey of 3,800 NGOs, including 412 social enterprises in Poland. a one-factor analysis of variance (ANOVA) and a stepwise backward regression analysis were carried out.
Findings & Value added: The analysis of the results confirms that there are significant differences between NGOs operating as social enterprises and NGOs not performing a business activity. In contrast with the existing literature, this study indicates that social enterprises have less diversified revenue sources and use a more or less democratic governance model. Moreover, Polish social enterprises less frequently adjust their policy direction to donors? interests. The factors significantly affecting NGOs? marketization include action strategies for several years, activity in favor of external benefit takers, close business cooperation, lack of permanent financing sources, and regular activity combined with flexible working time.
Amagoh, F. (2015). Improving the credibility and effectiveness of non-governmental organizations. Progress in Development Studies, 15(3). doi: 10.1177%2F1464993415578979.
Apostu, D. C. (2013). Non-governmental organization leadership and development. A review of the literature. Manager, 17.
Barr, A., Fafchamps, M., & Owens, T. (2005). The governance of non-governmental organizations in Uganda. World Development, 33(4). doi: 10.1016/j.worlddev.2004.09.010.
Bruce, I., & Chew, C. (2011). Debate: the marketization of the voluntary sector. Public Money and Management, 31(3). doi: 10.1080/09540962.2011.573216.
Çalışkan, K., & Callon, M. (2009). Economization, part 1: shifting attention from the economy towards processes of economization. Economy and Society, 38(3). doi: 10.1080/03085140903020580.
Carmin, J. (2010). NGO capacity and environmental governance in Central and Eastern Europe. Acta Politica, 45(1-2). doi: 10.1057/ap.2009.21.
Carnochan, S., Samples, M., Myers, M., & Austin, M. J. (2014). Performance measurement challenges in nonprofit human service organizations. Nonprofit and Voluntary Sector Quarterly, 43. doi: 10.1177/0899764013508009.
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). doi: 10.1093/jopart/mun025.
Chan, Y., & Walmsley, R.P. (1997). Learning and understanding the Kruskal-Wallis One-way analysis-of-variance by-ranks test for differences among three or more independent groups. Phys Ther, 77. doi: 10.1093/ptj/77.12.1755.
Coule, T. M. (2015). Nonprofit governance and accountability: Broadening the theoretical perspective. Nonprofit and Voluntary Sector Quarterly, 44. doi: 10.1177/0899764013503906.
Dahan, N. M., Doh, J. P., Oetzel, J., & Yaziji, M. (2010). Corporate-NGO collaboration: co-creating new business models for developing markets. Long Range Planning, 43(2). doi: 10.1016/j.lrp.2009.11.003.
Dart, R. (2004). The legitimacy of social enterprise. Nonprofit Management and Leadership, 14(4). doi: 10.1002/nml.43.
Ebrahim, A. (2003). Accountability in practice: mechanisms for NGOs. World Development, 31. doi: 10.1016/S0305-750X(03)00014-7.
Eikenberry, A. M. (2009). Refusing the market: a democratic discourse for voluntary and nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 38. doi: 10.1177/0899764009333686.
Eikenberry, A. M., & Kluever, J. D. (2004). The marketization of the nonprofit sector: civil society at risk? Public Administration Review, 64(2). doi: 10.1111/j.1540-6210.2004.00355.
Evans, B., Richmond, T., & Shields, J. (2005). Structuring neoliberal governance: the nonprofit sector, emerging new modes of control and the marketisation of service delivery. Policy and Society, 24(1). doi: 10.1016/S1449-4035(05)70050-3.
Fowler, A. (1997). Striking a balance: a guide to enhancing the effectiveness of NGOs in international development. London: Earthscan.
Froelich, K. A. (1999). Diversification of revenue strategies: evolving resource dependence in nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 28(3). doi: 10.1177/0899764099283002.
Frumkin, P., & Keating, E. K. (2011). Diversification reconsidered: the risks and rewards of revenue concentration. Journal of Social Entrepreneurship, 2(2). doi: 10.1080/19420676.2011.614630.
Gamage, J., Weerahandi, S. (1998). Size performance of some tests in one-way anova. Communications in Statistics - Simulation and Computation, 27(3), doi: 10.1080/03610919808813500.
Geobey, S., & Weber, O., (2013). Lessons in operationalizing social finance: the case of Vancouver City Savings Credit Union. Journal of Sustainable Finance & Investment, 3(2). doi: 10.1080/20430795.2013.776259.
Guo, B. (2006). Charity for profit? Exploring factors associated with the commercialization of human service nonprofits. Nonprofit and Voluntary Sector Quarterly, 35(1). doi: 10.1177/0899764001302010.
Hager, M. (2001). Financial vulnerability among arts organizations: a test of the Tuckman-Chang measures. Nonprofit and Voluntary Sector Quarterly, 30(2). doi: 10.1177/0899764005282482.
Hahn, T., & Pinkse, J. (2014). Private environmental governance through cross-sector partnerships: tensions between competition and effectiveness. Organization & Environment, 27(2). doi: 10.1177/1086026614530996.
Hall, K., Alcock, P., & Millar, R. (2012). Start up and sustainability: marketisation and the social enterprise investment fund in England. Journal of Social Policy, 41(4). doi: 10.1017/S0047279412000347.
Han, J. (2017). Social marketisation and policy influence of third sector organisations: evidence from the UK. Voluntas, International Journal of Voluntary and Nonprofit Organizations, 28(3). doi: 10.1007/s11266-017-9853-1.
Hwang, H., & Powell, W. W. (2009). The rationalization of charity: the influences of professionalism in the nonprofit sector. Administrative Science Quarterly, 54(2). doi: 10.2189/asqu.2009.54.2.268.
King, D. (2017). Becoming business-like: governing the nonprofit professional. Nonprofit and Voluntary Sector Quarterly, 46(2). doi: 10.1177/08997640 16663321.
Larose, D. T. (2008). Methods and models of data mining. Warszawa: PWN. doi: 10.1002/0471756482.
LeRoux, K. M. (2005). What drives nonprofit entrepreneurship? A look at budget trends of metro Detroit social service agencies. American Review of Public Administration, 35. doi: 10.1177%2F0275074005278813.
Leung, S., Mo, P., Ling, H., Chandra, Y., & Sum Ho, S. (2019). Enhancing the competitiveness and sustainability of social enterprises in Hong Kong: a three-dimensional analysis. China Journal of Accounting Research 12(2). doi: 10.1016/j.cjar.2019.03.002.
Lindenberg, M. (2001). Are we at the cutting edge or the blunt edge? Improving NGO organizational performance with private and public sector strategic management frameworks. Nonprofit Management and Leadership, 11(3). doi: 10.1002/nml.11302.
Maier, F., Meyer, M., & Steinbereithner, M. (2016). Nonprofit organizations becoming business-like a systematic review. Nonprofit and Voluntary Sector Quarterly, 45(1). doi: 10.1177%2F0899764014561796.
Malska, W. (2016). The use of Levene's test and Brown-Forsythe test in studies of homogeneity of variance, Edukacja – Technika – Informatyka, 4(18). doi: 10.15584/eti.2016.4.48.
Marcinkevičiūtė, L., & Žukovskis, J. (2016). Factors shaping management style of a manager: a case study of kaunas district non-governmental organisations. Economics, 2.
Marciszewska, A. (2014). Profesionalization of non-profit organizations management. Organizations andManagement, 4.
Martens, K. (2002). Mission impossible? Defining nongovernmental organizations. Voluntas, International Journal of Voluntary and Nonprofit Organizations, 13(3). doi:10.1023/A: 1020341526691.
McCrum-Gardner, E. (2008). Which is the correct statistical test to use? British Journal of Oral and Maxillofacial Surgery, 46. doi: 10.1016/j.bjoms.2007. 09.002.
Mikołajczak, P. (2017a). Sources and instruments of financial support for social enterprises. Poznań: UEP.
Mikołajczak, P. (2017b). Importance of funding sources to the scale of activity of social enterprises. Finanse, Rynki Finansowe, Ubezpieczenia, 4(88). doi: 10.18276/frfu.2017.88/2-14.
Mikołajczak, P. (2018a). Sources of funding and revenues of social enterprises in Poland in comparison to selected European countries and world-wide, Safe Bank, 2(71). doi: 10.26.354/bb.188.8.131.528.
Mikołajczak, P. (2018b). The impact of the diversification of revenues on NGOs’ commercialization: evidence from Poland. Equilibrium. Quarterly Journal of Economics and Economic Policy, 13(4). doi: 10.24136/eq.2018.037.
Mircioiu, C., & Atkinson, J. A. (2017). Comparison of parametric and non-parametric methods applied to a Likert scale. Pharmacy, 5(26). doi: 10.3390/ pharmacy5020026.
Reilly, T. (2016). Are social enterprises viable models for funding nonprofits? Human service organizations management. Leadership and Governance, 4(4). doi: 10.1080/23303131.2016.1165047.
Rondinelli, D. A., & London, T. (2003). How corporations and environmental groups cooperate: assessing cross-sector alliances and collaborations. Academy of Management Executive, 17(1). doi: 10.5465/ame.2003.9474812.
Salamon, L. M. (1987). Of market failure, voluntary failure, and third-party government: the theory of government nonprofit relations in the modern welfare state. Journal of Voluntary Action & Research, 16. doi: 10.1177/08997 6408701600104.
Simpson, M., & Cheney, G. (2007). Marketization, participation, and communication within New Zealand retirement villages: a critical-rhetorical and discursive analysis. Discourse & Communication, 1(2). doi: 10.1177/1750481307076006.
Stankiewicz, J., & Seiler, B. (2013). The professionalization of nongovernmental organizations as a factor of their success. Zarządzanie i Finanse, 4(2).
Sanders, M. L. (2015). Being nonprofit-like in a market economy: understanding the mission- market tension in nonprofit organizing. Nonprofit and Voluntary Sector Quarterly, 44. doi: 10.1177/0899764013508606.
Sanders, M. L., & McClellan, J. G. (2014). Being business-like while pursuing a social mission: acknowledging the inherent tensions in US nonprofit organizing. Organization, 21(1). doi: 10.1177/1350508412464894.
Vacekova, G., Valentinov, V., & Nemec, J. (2017). Rethinking non-profit commercialization: the case of the Czech Republic. Voluntas, International Journal of Voluntary and Nonprofit Organizations, 28(5). doi:10.1007/s11266-016-9772-6.
Wry, T., & York, J. G. (2017). An identity-based approach to social enterprise. Academy of Management Review, 42(3). doi: 10.5465/amr.2013.0506.
Yazıcı, K., Uslu, S., & Arık, S. (2016). The investigation of the social entrepreneurship characteristics of social studies pre-service teachers. Cogent Education, 3(1). doi: 10.1080/2331186X.2016.1141455.
Yaziji, M., & Doh, J. (2009). NGOs and corporations: conflict and collaboration. Cambridge University Press. doi: 10.1017/CBO9780511626708.
Young, D., & Salamon, L. M. (2002). Commercialization, social ventures, and for-profit competition. In L. M. Salamon (Ed.). The state of nonprofit America, Washington DC: Brookings Institution.
Zielińska, A. (2011). Management strategies for non-governmental organizations. Master of Business Administration, 4.