Examining the influence of organizational characteristics on nonprofit commercialization

Abstract

A growing body of literature discusses the (dis)advantages of nonprofit organizations becoming commercial by engaging in the sale of organizational services and products. However, when explaining this phenomenon, scholars tend to focus on resource uncertainty, thereby disregarding the organizational ability to commercialize. Complementing resource dependency theory with insights from contingency theory, this study presents arguments drawn from a comparative case study of six sociocultural nonprofits in Belgium. We find that, when resource uncertainty is similar, organizational differences in terms of commercial income can be explained by differences in (a) organizational origins, (b) professional capacity, and (c) types of tasks. We conclude that organizational characteristics can either enable or disable the ability of nonprofits to commercialize and consequently their ability to self‐sustain in an increasing challenging resource environment.

Commercialization and nonprofit donations: A meta‐analytic assessment and extension

“…The findings from this study also speak to the limitation of solely using either resource dependence or principal‐agent theory to understand nonprofit commercialization. However, the findings echo Suykens, De Rynck, and Verschuere's (2019) perspective that “organizational characteristics can either enable or disable the ability of nonprofits to commercialize and consequently their ability to self‐sustain in an increasing challenging resource environment” (p. 339). By integrating insights from resource dependence and contingency theory, Suykens et al (2019) find that the variation in nonprofit commercialization depends on whether nonprofits emerge out of market‐friendly environments, whether nonprofits have sufficient professional capacity, and whether nonprofits are service‐oriented.…”

“…However, there are some moderators that may explain the variation but have not been extensively examined in the scholarly literature and are not examined in this meta‐analysis. For example, as mentioned early, Suykens et al's (2019) findings regarding factors that contribute to the differences in nonprofit commercialization are not tested in this meta‐analysis. They find that organizational origins, professional capacity, and types of tasks explain the differences in nonprofit commercialization.…”

“…However, the findings echo Suykens, De Rynck, and Verschuere's (2019) perspective that "organizational characteristics can either enable or disable the ability of nonprofits to commercialize and consequently their ability to self-sustain in an increasing challenging resource environment" (p. 339). By integrating insights from resource dependence and contingency theory, Suykens et al (2019) find that the variation in nonprofit commercialization depends on whether nonprofits emerge out of market-friendly environments, whether nonprofits have sufficient professional capacity, and whether nonprofits are service-oriented. Although this meta-analysis lacks data to test whether Suykens et al's (2019) findings apply to the relationship between commercialization and donations, the findings of this meta-analysis on mission-related commercial revenue and subsector differences demonstrate the potential of cognitive theory, combined with resource dependence theory, to improve our understanding of the relationships between commercialization and donations.…”

Examining the Extent and Coherence of Nonprofit Hybridization Toward the Market in a Post-corporatist Welfare State

“…2 Accordingly, we define commercial revenue as the organizational income resulting from the profitable sale of nonprofit services and goods (cf. Dart, 2004a; Suykens et al, 2019a; Tuckman, 1998), thereby also excluding both reimbursement and membership fees, as these aim to limit financial loss or achieve breakeven rather than to generate a profit.…”

Nonprofit Commercialization

“…Finally, in addition to the organizational environment, organizational characteristics are equally important to take into account when explaining the variation in the extent to which NPOs commercialize (Suykens et al 2019a). Indeed, organizational characteristics such as size, task, and origins arguably influence the organizational ability or will to commercialize.…”