Performance, innovation, and change in non-profit organizations : a mixed-method analysis on the individual and the organizational level

Abstract

Non-profit organizations (NPOs) matter: They provide important services and goods (Glavin, 2011), and they are a major contributor to the labor market (Salamon & Newhouse, 2019) and GDP (McKeever & Gaddy, 2016). However, despite some traction over the last years, NPOs are still by far not as often addressed in research as other sectors of the economy (see Figure 2). In particular, there is not sufficient knowledge available on what drives perfor-mance, innovation, and change in the non-profit sector. Performance and innovation are vital for success on the project and on the organizational level (Amabile, 1988; Howell & Shea, 2001), while organizational change is occurring more frequently than before (Conner, 1993), but NPOs seem to act somewhat differently upon it (DiMaggio & Anheier, 1990). Results from research on for-profit organizations are frequently generalized to the non-profit sector without adequately checking their validity in this divergent context (van der Heijden, 2006b). But NPOs are different. For example, they focus much more on their mission (Salamon, Sokolowski, & List, 2003), diverge from businesses in multiple organizational features (Horak & Heimerl, 2002), and have to pay attention to different stakeholders than businesses do (Bruce, 1995). To address the need for further research on NPOs, this dissertation focuses on factors that affect performance, innovation, and change in NPOs. In order to do so, three research pa-pers were developed as part of this dissertation. By answering their respective research ques-tions, each of these papers contributes to the body of literature on the theories they rely on as well as to the discussion within their respective research streams. To start with, Research Paper I assesses on an individual level which personal factors affect the individual performance and innovativeness of managers in the non-profit sector. Through analyzing interviews with knowledgeable informants it develops a model linking attitudes, norms, and perceived control of managers with their intentions and actions. The paper thus connects the model with the theory of planned behavior (Ajzen, 1985). Accordingly, it contrib-utes to the literature on behavioral intentions in determining a list of personal factors that affect the intention of managers in NPOs to perform well or to bring innovation to their organization. Learning more about these factors is potentially relevant for managers themselves as well as for hiring and promotion decisions in the sector. Their stakeholders’ openness to change matters importantly for managers who want to in-crease performance or introduce innovation. Research Paper II thus shifts the attention to the organizational level and analyzes antecedents to openness to change for stakeholders in the non-profit sector. It relies on a sample of more than 2,000 stakeholders as well as on bounded ra-tionality theory (Simon, 1947, 1955) to assess how familiarity with the status quo, power to influence change, for-profit work experience, and satisfaction with the status quo affect the openness to change of stakeholders. The paper hence explains how these factors matter for the limits to rational decision-making. Based on bounded rationality theory, these limits may in turn determine the degree to which stakeholders are open to changes. The findings from this paper are in particular relevant for practitioners who seek to increase the chances of success for change projects. Finally, as Research Paper II finds that satisfaction of stakeholders with the status quo mat-ters for changes in NPOs, Research Paper III takes a closer look at satisfaction levels that non-profit stakeholders report. Employing the same sample of over 2,000 stakeholders, the paper shows how prospect theory (Kahneman & Tversky, 1979, 1984) can explain differences be-tween business and non-profit stakeholders in their reported satisfaction as well as how national cultures affect these differences between the two types of organizations. The third paper thus extends previous application of prospect theory to the non-profit sector and in cross-cultural settings. Moreover, the paper’s findings are not only important for managers in NPOs but also for their business counterparts who become increasingly interested in the opinion of their wider stakeholder network (Business Roundtable, 2019). This dissertation consists of two main parts with multiple subchapters. Part A provides an overview over the dissertation, the theories it relies on, the data it uses, the research paper it includes, and the implications it has. Part B comprises the three research papers at full-length.