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Determinants of Nonprofit Board Size and Composition The Case of Spanish Foundations
Abstract and Figures
Recently, many empirical studies have shed light on the determinants of boards of directors. Our aim in this paper goes far from the corporate setting. We explain how nonprofits boards are structured. As opposed to corporations’ goals, the objectives of nonprofits are non-lucrative. They can not disburse profits to their contributors, but the role played by their boards of trustees in monitoring and advising managers is analogous to that of boards of directors. Using a sample of Spanish foundations, we show that nonprofit board determinants, such as organizational complexity and financing structure, are mostly similar to those of corporate boards. Nonprofit age, however, illustrates the different nature of these organizations and their voluntary boards.
... However, large boards with more outside directors may also experience increased transaction costs due to co-ordination and free-rider problems (Jensen, 1993) and greater difficulty accessing insider knowledge (Adams & Ferreira, 2007). As a result, the precise size and composition of any given board of directors is likely to reflect Cardiff Business School, Cardiff University, Email: AndrewsR4@cardiff.ac.uk a organizational characteristics that have a bearing on the agency problems confronted by the board, especially the degree of concentrated ownership, organizational complexity and potential growth opportunities (de Andrés-Alonso et al., 2009). These arguments seem likely to apply to local SOEs. ...
... Although the empirical literature dealing with board composition is currently silent on the determinants of SOE board size and composition, private and nonprofit sector research largely confirms that the concentration of ownership among fewer principals is associated with smaller boards and more independent directors (e.g. Bathala & Rao, 1995;de Andrés-Alonso et al., 2009;Kieschnick & Moussawi, 2004;Pfeffer, 1973). For that reason, the following assertions are posited: ...
... However, several nonprofit studies have indicated that complexity tends to be associated with larger boards and more independent directors (e.g. Cornforth & Simpson, 2002;de Andrés-Alonso et al., 2009;Pfeffer, 1973). Hence, the next propositions are: ...
Local State-Owned Enterprises (SOEs) play an increasingly important role in the delivery of key public services to citizens across the world. Because they operate at arms' length from their parent organizations, arrangements for the effective governance of local SOEs are a major concern for public administration researchers and policy-makers alike. In many countries, local SOEs are supervised by boards of directors responsible for managing and monitoring service provision. Agency theory suggests that the size and composition of these boards is likely to be influenced by the ownership structure, organizational complexity, and growth opportunities. Using seemingly unrelated regressions to analyse the size and composition of local SOE boards in England, this study finds that large, minority public-owned, not-for-profit SOEs and those with more public sector partners have larger boards of directors, and that older, majority public-owned, and not-for-profit SOEs have more politicians on the board. The theoretical and practical implications of these findings for the governance, accountability and performance of local SOEs are discussed.
... Faced with different ownership characteristics, Hansmann (1996) argues that COOPs and NGOs can vary in their operational setup, market segments served, and board governance model (see also Ory and Lemzeri 2012). Moreover, because of the ownership differences, various board governance model characteristics such as those relating to the size and composition of the board can produce different performance effects when applied in COOPs as compared with NGOs (de Andrés-Alonso et al. 2009). Thus, in this study, we compare COOPs with NGOs in terms of their board governance model and financial and social performance. ...
... In contrast to COOPs, NGOs are ownerless and often run by an appointed board of directors who normally gain reputation from their involvement (de Andrés-Alonso et al. 2009;Fama and Jensen 1983b). Surplus earnings from NGOs' operations are reinvested and not paid out as dividends to any class of stakeholders (Périlleux et al. 2012). ...
... In the context of COOPs, the board is presumed to monitor management on behalf of members (Labie and Périlleux 2008). For NGOs, the board protects the interests of stakeholders like founders, donors, clients, beneficiaries, and society at large, and they are responsible for attaining the organization's goals and maintaining an efficient usage of resources (de Andrés-Alonso et al. 2009). ...
Corporate governance remains fundamental to ensuring the social mission alongside the financial sustainability of microfinance institutions. One primary governance issue relates to the legal form used to perform microfinance activities. The sector deploys various forms including Banks, Non-Bank Financial Institutions, Cooperatives and NGOs, but each of them has unique features that lead to different orders of priorities and to distinct structures and mechanisms to pursue such a dual objective. This study compares the board governance model and the performance of cooperative organizations (COOPs) with nongovernmental organizations (NGOs) involved in microfinance. Using data on 352 rated microfinance institutions, the test results show that, compared to NGOs, COOPs have larger boards and a higher number of board meetings. However, NGOs have a greater percentage of international board members. The test on performance reveals that, whereas COOPs are more cost-efficient and charge lower interest rates, NGOs generally perform better in terms of social performance. However, the two organizational types do not perform differently in terms of profitability.
... Researchers have recently questioned whether there really is an optimal model of board governance in relation to board composition and size. In other words, their studies have suggested that there is no perfect fit, i.e. no "one size does not fit all" (Andres-Alonso et al., 2008). It has become clear that there is no single model that would be appropriate to all the different business entities, especially family businesses (Corbetta and Salvato, 2004). ...
... To have effective family business governance, it is necessary to separate the family from the business (Fahed-Sreih, 2007). In fact, studies have shown that the ideal size and composition of any board of directors are the result of a continuous and progressive adjustment to the needs of the business (Andres- Alonso et al., 2008). For instance, in one study on publicly traded companies in the USA, it was found that the determinants of the size and composition of corporate boards are a trade-off among the information, board members or directors brought to the board and the coordination costs and free-rider problems involved in their additions to the board (Lehn et al., 2009). ...
... As an example, in a study of boards in non-profit organisations, it has been found that board composition changes as the firm moves through its life cycle, and that the independence of a board (outsider representation) is negatively related to the organisation's growth opportunities (Andres-Alonso et al., 2008). The main task for all boards of directors is to ally business strategies with stockholder interests; hence, the board plays an important role in successfully formulating and applying a company's competitive strategy (Brenes et al., 2008). ...
... Researchers have recently questioned whether there really is an optimal model of board governance in relation to board composition and size. In other words, their studies have suggested that there is no perfect fit, i.e. no "one size does not fit all" (Andres-Alonso et al., 2008). It has become clear that there is no single model that would be appropriate to all the different business entities, especially family businesses (Corbetta and Salvato, 2004). ...
... To have effective family business governance, it is necessary to separate the family from the business (Fahed-Sreih, 2007). In fact, studies have shown that the ideal size and composition of any board of directors are the result of a continuous and progressive adjustment to the needs of the business (Andres- Alonso et al., 2008). For instance, in one study on publicly traded companies in the USA, it was found that the determinants of the size and composition of corporate boards are a trade-off among the information, board members or directors brought to the board and the coordination costs and free-rider problems involved in their additions to the board (Lehn et al., 2009). ...
... As an example, in a study of boards in non-profit organisations, it has been found that board composition changes as the firm moves through its life cycle, and that the independence of a board (outsider representation) is negatively related to the organisation's growth opportunities (Andres-Alonso et al., 2008). The main task for all boards of directors is to ally business strategies with stockholder interests; hence, the board plays an important role in successfully formulating and applying a company's competitive strategy (Brenes et al., 2008). ...
... This paper examines the influence of Portuguese Foundations' characteristics on their voluntary disclosure process. We selected the Foundations that are part of the Portuguese third sector because they are considered as having the strictest external supervision and governance (Andrés-Alonso et al. 2009). Our study contributes to the literature in two different ways. ...
... In NPOs, the board's main goal is to protect the interests of the main stakeholders (founders, donors, beneficiaries and society), as well as, at the same time, manage all assets and resources to accomplish the mission. The Board Structure in NPOs has been analyzed in numerous studies (Taylor et al. 1991;Bradshaw et al. 1992;Fletcher 1992;Wood 1992;Kearns 1995;Brudney and Nobbie 2002;Cornforth 2002;Cornforth and Simpson 2002;Callen et al. 2003;Babío Arcay and Muiño Vázquez 2005;Prybil 2006;Andrés-Alonso et al. 2009;Brickley et al. 2010). The size of the organization may be the most important factor affecting choices of organizational structure, such as Board Structure (Cornforth and Simpson 2002). ...
... Studies on NPOs usually measure size by the total assets (Ho and Shun Wong 2001; Gordon et al. 2002;Behn et al. 2010), the natural log of total revenues (Saxton et al. 2012) or income (Cornforth and Simpson 2002;Andrés-Alonso et al. 2009). We used total assets because in Portuguese Foundations the revenues may not be a good proxy for size, given that despite having small revenues they can undertake relevant projects. ...
The aim of this paper is to examine the influence of Portuguese Foundation’s characteristics on their annual report disclosure practices. Data were collected from 142 Foundations in Portugal, which represents 50.9% of the Portuguese foundational sector. Supported by a Structural Equation Model (SEM), this study evaluates cause–effect relationship between Voluntary Disclosure, Board Structure, Organizations’ Characteristics and the existence of Auditing. Findings reveal that Organizations’ Characteristics influence the forms of Auditing, and on its turn, Auditing has a positive indirect impact on Voluntary Disclosure. Contrary to expectations, Board Structure does not affect Voluntary Disclosure. This paper fills a void in the literature by examining the impact of Foundations’ characteristics on their voluntary disclosure of financial and non-financial information. © 2017 International Society for Third-Sector Research and The Johns Hopkins University
... La edad de la organización se relaciona con la madurez y experiencia que esta tiene en el sector. Cuando una ONGD se constituye, sus fundadores suelen ocupar puestos directivos en la entidad aunque no siempre cuenten con experiencia previa en este tipo de trabajo (Andrés-Alonso et al., 2009). En este sentido, la función de asesoramiento que puede desarrollar un órgano de gobierno grande y dotado de conocimientos específicos del sector puede resultar especialmente útil. ...
... Las entidades más grandes desarrollan, por definición, un mayor volumen de actividades que las pequeñas, se introducen en más segmentos geográficos y utilizan técnicas de gestión y financieras más complejas (Boone, Field, Karpoff & Raheja, 2007). Muchos autores muestran cómo el tamaño de la organización se refleja en un número más elevado de funciones a desempeñar por el órgano de gobierno (Andrés-Alonso et al., 2009;Ostrower & Stone, 2010) y, por consiguiente, en la necesidad de incrementar el tamaño del consejo para ejercerlas de forma efectiva (Andrés-Alonso et al., 2009;Cornforth & Simpson, 2002). Las necesidades de información y asesoramiento del equipo directivo aumentan a medida que el tamaño y la complejidad de la organización son más elevados (Klein, 1998). ...
... Las entidades más grandes desarrollan, por definición, un mayor volumen de actividades que las pequeñas, se introducen en más segmentos geográficos y utilizan técnicas de gestión y financieras más complejas (Boone, Field, Karpoff & Raheja, 2007). Muchos autores muestran cómo el tamaño de la organización se refleja en un número más elevado de funciones a desempeñar por el órgano de gobierno (Andrés-Alonso et al., 2009;Ostrower & Stone, 2010) y, por consiguiente, en la necesidad de incrementar el tamaño del consejo para ejercerlas de forma efectiva (Andrés-Alonso et al., 2009;Cornforth & Simpson, 2002). Las necesidades de información y asesoramiento del equipo directivo aumentan a medida que el tamaño y la complejidad de la organización son más elevados (Klein, 1998). ...
Esta investigación analiza la configuración del consejo de las 59 ONGD miembros de la Coordinadora esta- tal (CONGDE) que publican en sus webs el curriculum vitae de sus consejeros así como el efecto que tiene su idiosincrasia sobre la configuración del órgano de gobierno. Las características de la organización marcan, por una parte, sus necesidades asesoras y supervisoras y, por otra, su capacidad para atraer consejeros especial- mente implicados y capacitados. Los resultados muestran cómo las entidades más jóvenes, las fundaciones y las entidades no religiosas están haciendo un esfuerzo por configurar sus órganos de gobierno de forma óptima y, por el contrario, las entidades más grandes parecen estar desaprovechando su capacidad para atraer consejeros valio- sos y desperdiciando, por tanto, la posibilidad de configurar un consejo que les ayude en la consecución de sus fines organizativos.
This research analyses the composition of the boards of the 59 DNGOs that are members of the Spanish National Platform (CONGDE) and publish their directors’ CVs on their websites, as well as the effect of their particular characteristics on the board’s makeup. The characteristics of the organization influence its advi- sory and supervisory needs, on the one hand, and, on the other hand, its ability to attract highly committed and able directors. The results show that foundations and younger or non-religious organizations are making an effort to shape their boards optimally. In contrast, larger entities seem not to be taking advantage of their ability to attract valuable directors and are therefore wasting the opportunity to form a board which will help them to attain their organizational goals.
... Governance, a key theme in research on nonprofit organisations, is often explored at an organisational level of analysis (Andres-Alonso et al., 2008;Blair, 1995;Cornforth and Edwards, 1998). Focussing on the organisational level has led scholars to conceptualise governance as primarily concerned with the board's role and function (Andres-Alonso et al., 2008;Ferkins et al., 2009). ...
... Governance, a key theme in research on nonprofit organisations, is often explored at an organisational level of analysis (Andres-Alonso et al., 2008;Blair, 1995;Cornforth and Edwards, 1998). Focussing on the organisational level has led scholars to conceptualise governance as primarily concerned with the board's role and function (Andres-Alonso et al., 2008;Ferkins et al., 2009). This view is understandable, given the central role boards play in nonprofit organisations; however, Andres-Alonso et al. (2008) and Ostrower and Stone (2010) highlighted the problem with this narrow approach to understanding nonprofit organisations and demonstrated how research from outside the nonprofit sector can advance our understanding of managing within the sector. ...
... Focussing on the organisational level has led scholars to conceptualise governance as primarily concerned with the board's role and function (Andres-Alonso et al., 2008;Ferkins et al., 2009). This view is understandable, given the central role boards play in nonprofit organisations; however, Andres-Alonso et al. (2008) and Ostrower and Stone (2010) highlighted the problem with this narrow approach to understanding nonprofit organisations and demonstrated how research from outside the nonprofit sector can advance our understanding of managing within the sector. This extends this argument by suggesting that the concept and nature of governance itself overly constrains our understanding of nonprofit organisations. ...
Purpose
– The purpose of this paper is to introduce the concept of organisational control and both its importance and utility for understanding nonprofit organisations.
Design/methodology/approach
– This paper uses a critical realist (CR) methodology to discuss the concept of control and its utility to research on governance of nonprofit organisations.
Findings
– The current study offers a conceptual framework that presents a holistic view of control, relevant for analysing nonprofit organisations, and a methodological lens (CR) through which this framework can be implemented.
Research limitations/implications
– This paper suggests that studies of governance should consider different levels of analysis, as suggested by examining the concept of control using a CR framework. This notion has yet to be tested empirically and a framework for examining governance from a CR perspective of control is suggested. Context is highly relevant to understanding control, and thus, this model requires testing in a wide diversity of nonprofit sectors, sizes of organisations and time periods.
Originality/value
– The literature on organisational control provides useful insights to advance our understanding of nonprofit organisations beyond the notion of governance, and this paper proposes both conceptual and methodological underpinnings to facilitate future research.
... The convergence of these growth factors will create an environmental context in which nonprofit institutions' capacity-building initiatives are concerned [30]. The structure of values and norms that develop outside the organizational environment will support and influence the nonprofit organization's internal conditions related to the sense of justice, fairness, and equality embedded in a community [32]. ...
... result, local inequalities in power and authority relations allowed the program's benefits to be captured by nontarget groups as elite groups who enjoyed these facilities due to the proximity of nepotism [17] [30]. ...
... Beside the composition of the board -members who are territorially and socio-demographically representative of the local community -also its size can have an impact on the ability of a nonprofit to act in the interest of the territory. On this point, previous studies provided mixed results (De Andrés-Alonso et al., 2009;Jaskyte, 2018). On one hand, larger boards tend to have more knowledge and skills at their disposition and a variety of perspectives on the issues to answer to, and are believed to facilitate debate and discussion regarding the organization's goals, objectives, and strategies capable to meet the needs of the community (Callen et al., 2010). ...
... This means that, when board members are resident in the local community, a small size of the board is better able to find solutions that are responsive to the local needs. The greater knowledge that usually characterizes larger boards (Callen et al., 2010) is ensured by the fact that board members live in the same geographic locale and thus share with the community the problems that urge to be solved, avoiding the criticalities deriving from coordinating the activities inside large groups (Alexander et al., 2001;De Andrés-Alonso et al., 2009;Jaskyte, 2018). ...
A sound governance fosters the capacity of a nonprofit to meet the needs of the community by allowing local stakeholders to be represented on boards and to participate in decision-making through different mechanisms. This study explores the possible combinations of these mechanisms that lead to a high capability of acting for the community (substantive representation). To achieve this aim, a fuzzy set Qualitative Comparative Analysis is developed to analyze a group of grant-making foundations located in Italy. The results show that a high involvement of community representatives in organizational activities, a board that is largely rooted in the territory because of the residence of board members and a strong perception that the nonprofit is a legitimate representative of the community are necessary conditions associated with high levels of substantive representation.
... The importance of building trust Fraud among NPOs may be rising [7]. The literature shows that NPOs have reasons and opportunities to misreport in order to deceive interested parties [34] by adopting a position of suspicion and concealment of information [81]. In the early 2000s, several cases of financial fraud were revealed [82], as well as mismanagement in the third sector, that have challenged the notion of trust inherent in NPOs [7]. ...
... In addition, the increasing complexity and competitiveness between NPOs over the resources required [94] generates a greater responsibility in their actions and a necessary credibility that has to surround all their activities [94]. Thus, they need to have transparent systems and internal management controls that ensure that the funds they receive are maintained and managed in a prudent and responsive way [7,30,48,50,81]. ...
The purpose of this article is to present a framework to understand transparency in the
third sector and then to explore the main research streams regarding the disclosure of information and accountability by conducting a systematic literature review on the antecedents and dimensionsof the transparency of information disclosed by non-profit organizations (NPOs). The essential questions of this work are addressed from an international perspective. In particular, we explore three research questions: (1) why should NPOs disclose transparent information to stakeholders? (2) Why do not all NPOs disclose transparent information? (3) What means do NPOs use to disclose transparent information? Our results highlight the lack of transparency legislation in the third
sector, leading NPOs to adopt the voluntary disclosure of information policies to improve the perceived credibility of these entities by their stakeholders. In conclusion, our study highlights the importance of developing a systematic body of knowledge regarding the situation of transparent, voluntary information disclosure in the sector. Moreover, the Sustainable Development Goals promulgated by the United Nations place a high value on transparency for the accountability of institutions. To achieve sustainable development, both peace and the governance of institutions are needed. Reducing corruption and promoting transparency are among the goals which should be reached to achieve social sustainability
... Med ensidig menas här att litteraturen tenderar till att fokusera på en eller högst två strategier åt taget för att främja oberoende. Till exempel studerar forskare hur egenintjänade pengar främjar oberoende (Biberson & François, 1999;Laidler-Kylander et al., 2007;Lie & Baines, 2007;Ostrander, 2007;Khieng & Dahles, 2015) eller analyserar relationen mellan storleken på styrelsen och grader av oberoende (de Andrés-Alonso, Azofra-Palenzuela, & Romero-Merino, 2009). Dessa organisatoriska strategier är dock sällan studerade inom en och samma studie eller i relation till andra organisatoriska strategier. ...
... Tidigare forskning har tenderat att fokusera på en eller högst två strategier åt taget. Till exempel studerar forskare hur egenintjänade pengar främjar oberoende (Biberson & François, 1999;Laidler-Kylander et al., 2007;Lie & Baines, 2007;Ostrander, 2007;Khieng & Dahles, 2015) eller analyserar relationen mellan storleken på styrelsen och grader av oberoende (de Andrés-Alonso, Azofra-Palenzuela, & Romero-Merino, 2009). Dessa organisatoriska strategier är dock sällan studerade inom en och samma studie eller i relation till andra organisatoriska strategier. ...
Syftet med denna studie är att bidra med kunskap om hur en ideell organisation använder vetenskap för att framstå som oberoende. Tidigare forskning har uppmärksammat hur oberoende är ett fundamentalt värde för ideella organisationer och hur ideella organisationer kan bli oberoende. I denna studie granskas en ideell organisations arbete med att framstå som oberoende med hjälp av vetenskap. Enligt tidigare litteratur lyfts vetenskap fram som en central aspekt att betona för att signalera oberoende. Det empiriska materialet utgörs av en fallstudie av Centralförbundet för alkohol- och narkotikaupplysning (CAN) och hur organisationen använder vetenskap i strukturer, processer och ideologier under perioden 1902-2015. Studiens forskningsfrågor rör hur CAN organiserar sig för att framställa sig som oberoende och vilken betydelse vetenskap har för organisatoriska åtgärder i form av strukturer, processer och ideologier samt varför och för vem det är viktigt att CAN framstår som oberoende. En sammanfattning av resultaten visar för det första att CAN använder flera olika strategier samtidigt för att främja bilden av sig själv som oberoende. Organisationen använder även andra strategier än ekonomiska och de som rör en nära relation mellan stat och civilsamhälle. En tolkning av studiens empiriska och analytiska resultat är att även om det kan vara viktigt för CAN att framstå som oberoende för att kunna genomföra sitt uppdrag, är det antagligen än viktigare för andra aktörer i CAN:s närhet att organisationen framstår som oberoende.
... It can be noted that Hospital A and C board members exceed the maximum of 12. Denis (2001) argued that large board membership may hinder effective decision-making and lengthen the processes as well as reduce the commitment level of board members. On the other hand, other studies argue that a large board size offers better performance as diverse expertise provides insight for critical decisions (de Andrés-Alonso et al., 2009). Thus, empirical literature provides a mixed impact of the size of the board on the effectiveness of decision-making. ...
Health institutions in developing countries need to be transparent and accountable to attain universal health coverage and effective institutions as mandated by Sustainable Development Goals (SDG) 3 (target 3.8) and SDG 16 (target 16.6), respectively. This study seeks to achieve two objectives: 1) to examine financial, performance, and political or democratic accountability at the teaching hospitals in Ghana toward achieving good hospital governance; 2) to examine event and process transparency practices in the teaching hospitals. A comparative case methodology was employed with data from structured questionnaires administered to hospital administrators. The study revealed only one of the four teaching hospitals understudy is accountable in terms of financial, political/democratic, and performance accountability. Also, the same teaching hospital was found to practice both process and event transparency, establishing the correspondence between accountability and transparency. The study concludes that most of the teaching hospitals in Ghana have challenges with accountability and transparency at varying intensities. Thus, efforts to ensure accountability and transparency are recommended for quality healthcare delivery and good hospital governance.
... Despite calls to enhance board diversity and inclusion, the composition of boards in the United States (racial and ethnic membership, gender balance, and professional background-we know little yet about socioeconomic status) has remained relatively unchanged over the past two decades (BoardSource, 2017). Mission, organizational size, and board prestige are reported to relate to both racial/ethnic and gender composition (Ostrower & Stone, 2006), and board size and composition are related to organizational attributes, such as funding, financial structure, organizational life stage, and the form(s) of representation undertaken by the nonprofit (Andres-Alonso et al., 2009;Guo & Musso, 2007). There is a correlation between chief executive demographics and board members' race, ethnicity, and gender distribution; and minorities are somewhat better represented among boards of smaller, less-prestigious nonprofits that serve a higher percentage of minorities than is the case overall (BoardSource, 2017;Ostrower, 2007). ...
The literature on nonprofit governance and boards has grown substantially during the past 50 years as researchers from a variety of disciplines and fields have studied governance systems and processes to examine how they are organized, the practices they employ, and their relations with and impacts on nonprofits. This essay offers a domain-based narrative review of the research on the governance of nonprofit organizations and how it has developed over these 50 years. Building on literature reviews and a Delphi study, we summarize the progression of nonprofit governance research, employ a multi-dimensional framework to summarize and assess the state of the field, and offer recommendations for future study. We find the increasingly multinational and multicultural literature of the field has become more rich, nuanced, and increasingly inclusive of contingency, complexity, paradox, and the diverse theoretical perspectives that will enhance our understanding of nonprofit governance.
... This paper contributes to agency and resource dependency theories first by linking them to board diversity in MFIs. Both theories advocate that a greater diversity of directors is essential for improving firm performance (Alonso et al., 2009). The study found similar evidence for microfinance institutions. ...
... This paper contributes to agency and resource dependency theories first by linking them to board diversity in MFIs. Both theories advocate that a greater diversity of directors is essential for improving firm performance (Alonso et al., 2009). The study found similar evidence for microfinance institutions. ...
... The founding board chair is a central actor who finances the organization from his own resources and works as a volunteer to sustain its activities (Andersson, 2019;De Andrés-Alonso et al., 2009). Several authors explain that founding board chairs are highly motivated persons who are committed to the achievement of the organization's mission (Laurett & Ferreira, 2018). ...
Governance is a challenging task in nonprofit organizations. Previous research has focused on established and professionalized nonprofit entities but ignored the governance configurations of newly founded nonprofit organizations. As mentioned by many scholars, these newly founded nonprofits face the liability of newness and are under from pressure of internal and external stakeholders. To fill this research gap, this paper examines the different governance models of the newly founded nonprofit organizations. More precisely, an exploratory study was conducted based on a sample of twenty-four new nonprofit social service organizations in the Sahel region of Tunisia. The findings reveal that there are four main governance models based on the relative power of founding board members and external funders. Researchers can use this typology to determine the different configurations of power distribution in the newly founded nonprofit social service organizations. Also, practitioners can benefit from this typology to determine the specific factors that may affect internal decision-making in these organizations. In contrast to previous studies, this research shows the value of taking a broad view of governance that does not focus solely on the board. In addition, this article sheds light on the possible governance challenges facing nonprofit founding board chairs by highlighting the conflicts that may arise between them, external funders, and the other founding board members.
... Thus, stakeholders have increased their demands of NPOs, asking for greater transparency to guarantee the appropriate use of resources [1,21]. As a result, the pressures of society have increased in recent decades [53] and societal concerns exist about the appropriate allocation of resources [54]. ...
One of the most complex challenges currently faced by non-profit organizations (NPOs) is demonstrating that they manage resources with the highest levels of efficiency and excellence, and do not deviate from the accomplishment of their mission. Transparency and good governance are highly valuable issues for the survival of these organizations. However, empirical studies and models to measure these concepts are scarce and lack consensus. The objective of this article is to develop a uniform procedure for measuring the levels of transparency and good governance in NPOs, validated by experts, that integrates the most important contributions. The main proposals are supported by lists of indicators whose compliance they try to verify. Finally, we considered the experts’ preferences to obtain the indicator weights by means of the Best–Worst Method and Minimum Cost Consensus model. The result of our work is the development of a list of indicators, which integrates the existing battery of Spanish indicators. We contribute, with this work, to improving the credibility of the third sector from the perspective of donors, users, public administrations, and society. This is an essential issue for the survival of these NPOs.
... Despite the existence of some other mechanisms (e.g., relevant donors, regulation, debt), most articles on NPO governance identify the board as the main governance mechanism of such organizations. This is because the board is the responsible party for both protecting the interests of founders, donors, beneficiaries, and society in general, and leading the NPO to the achievement of its mission by demonstrating ability and integrity in the fulfillment of its roles (Andrés-Alonso, Azofra-Palenzuela, & Romero-Merino, 2009;Callen, Klein, & Tinkelman, 2003;O'Regan & Oster, 2002). Furthermore, in the nonprofit sphere, the board generally has a more active role in governance than in the for-profit field (Coombes et al., 2011;O'Regan & Oster, 2005). ...
Prior literature on nonprofit organizations (NPOs) has focused on the effect of board composition on organizational efficiency. However, this research is focused on presenting an analysis of the relationship between the financial vulnerability of NPOs and their boards. Although studies of for‐profit organizations have confirmed this relationship both theoretically and empirically, it is a novel one in the literature regarding nonprofit entities. We apply a multitheoretical approach to explain the dual role of the board (providing both advice and monitoring operations) and a multidimensional model of financial vulnerability. To this end, we use an original hand‐collected database of 64 NPOs from Spain and 800 board members. Contrary to our expectations, our results do not support the existence of a significant relationship between board composition (in terms of board structure and directors’ experience and education) and the financial vulnerability of NPOs.
... In general, the presence of stakeholders with divergent interests in non-profit organisations can make it difficult for the directors to identify the principal stakeholder to whom they are accountable (Van Puyvelde et al. 2012), as it is not always clear who the primary 'owners' are. Although the normative literature on non-profit organisations refers to 'moral ownership', which views all the different stakeholders as equally involved (Carver 1997), a stricter approach considers the donors of a non-profit organisation equivalent to the owners of corporations (De Andrés-Alonso et al. 2009). Such an approach therefore views the donors as the actual principal of the non-profit organisation and the non-profit managers as their agents (Fama and Jensen 1983). ...
The governance of non-profit organisations is complex, as these organisations are not only intended to create value for third parties but also dependent on their donors. When the donor is a for-profit firm, it may be challenging to align and balance the firm’s for-profit interests and the non-profit organisation’s social aims. The board of directors has the main responsibility for supporting and monitoring managers’ decisions so that all perspectives are considered, but doing so requires appropriate information about stakeholders’ expectations. Adopting the agency theory perspective, this study focuses on corporate governance in corporate foundations (CFs), a type of non-profit organisation with a private firm as its founder and main donor. We hypothesise that bureaucratic control and coordination mechanisms between CFs and their founder firms, which are the main donors and consequently the main stakeholders, can increase the involvement of the board of directors, thereby leading to higher organisational effectiveness. We argue that the implementation of bureaucratic control and coordination mechanisms between a CF and its founder firm can strengthen corporate governance and provide the board of directors with the information needed to be more involved; such implementation fosters organisational effectiveness because it aligns the profit-oriented objectives of the founder firm and the social-oriented objectives of the CF. By analysing data from interviews of 188 CFs from six European countries, we aim to contribute to the debate on the role of corporate governance in non-profit organisations under the agency theory perspective. We provide evidence that the implementation of coordination and bureaucratic control mechanisms between a CF and its founder firm gives the board more information and leads to higher board involvement, thereby minimising agency issues and fostering organisational effectiveness.
... Callen, Klein, and Tinkelman (2009) argued that agency theory supports the role of the BOD in monitoring costs and goals. Agency theory is frequently cited in nonprofit board governance research due to its focus on the ultimate responsibility of the BOD related to internal governance (de Andrés-Alonso, Azofra-Palenzuela, & Romero-Merino, 2009;Hillman & Dalziel, 2003). Brown (2005) stated that agency theory supports the BOD duty to obedience, which asserts the responsibility for mission and purpose. ...
... Callen, Klein, andTinkelman (2009 [2010 in ref]) argued that agency theory supports the role of the BOD in monitoring costs and goals. Agency theory is frequently cited in nonprofit board governance research due to its focus on the ultimate responsibility of the BOD related to internal governance (de Andrés-Alonso, Azofra-Palenzuela, & Romero-Merino, 2009;Hillman & Dalziel, 2003). Brown (2005) [not in ref list] stated that agency theory supports the BOD duty to obedience, which asserts the responsibility for mission and purpose. ...
This paper presents a model for nonprofit board structure that supports the responsibilities
of accountability and creativity that challenge board member governance.
Undo focus on required accountability can encourage the development of risk-adverse
boards that fail to respond to the innovation needed to solve mission-centric social
problems and that fail to keep pace with an ever-changing fiscal environment. Thus,
this paper identifies components of a board structure model that enhances nonprofit
board functionality in the current environment. This proposal includes scholarly support
for the model, and suggestions and a call for further discussion aimed at the use
and adaptation of the model in practice and in the classroom.
Keywords: ambidextrous structure; nonprofit accountability; innovation;
nonprofit board structure
Teaching Note
Melinda
... NGOs are not-for-profit organizations. NGO boards play the same role as other firms' boards, namely, controlling the managerial power and reducing organizational inefficiencies (Andrés Alonso et al., 2009). The main disadvantages of NGO boards are related to the lack of ownership. ...
This article aims to empirically verify the relationship among board activity, governance
rating scores, and the financial performance of microfinance institutions (MFIs). The
study comprises a sample of 215 MFIs rated by Planet Rating between 2003 and 2009.
The findings, obtained after controlling for endogeneity and selection biases, suggest
that board activity and governance rating scores are associated with profitability.
In addition, the study of the moderating effect of legal status reveals a significant
difference of the effect of governance rating score and CEO/Chairman duality. In view
of the results, it seems difficult to conclude definitively that the legal form of MFIs has
a moderating effect on their financial performance. The existence of a moderating
effect and thus validation of the thesis that shareholder-based MFI governance
systems would be more effective than nonprofit MFIs depends on how governance
is measured. The results are robust to other measures of financial performance and
to the functional form of board activity.
... Pfeffer and Salancik (1978, p. 145) stated that four benefits arise from fostering strong links between the board and external stakeholders-including the provision of resources (information and expertise), creation of channels of communication with important stakeholders, securing support from stakeholders in the external environment and creation of legitimacy for the entity in the external environment (Luckerath-Rovers 2013). It is assumed that the external environment affects 2 Some empirical studies report a positive association between gender diversity and financial performance (Luckerath-Rovers 2013; Andrés-Alonso et al. 2009;Adams and Ferreira 2009;Carter et al. 2003), others a negative (Shrader et al. 1997) or no relation (Ali et al. 2014;Carter et al. 2010;Rose 2007;Farrell and Hersch 2005). 3 Reddy et al. (2013) do not disclose information on the %WOB, opting to report absolute numbers. ...
Although non-profit organisations typically have high representation of females on their boards, relatively little is known about the effects of gender diversity in these organisations particularly in relation to financial management. In this archival study, resource dependency theory and agency analysis are combined to provide theoretical insight and empirical analysis of gender diversity on effective financial management in member-governed, community financial institutions. The investigation is possible due to the unique characteristics of the organisational form and region being examined—credit unions in Northern Ireland. The sector has not been subject to external regulation on board gender, yet a wide array of gender mix on boards ranging from 100 % male to 100 % female are in existence. In addition, effective financial management is crucial to their survival and their ability to meet member objectives. Boards with higher female representation exhibit superior financial management first, in respect of loan book quality in the period of austerity following the financial crisis and second when measured against return on assets.
... The size of the hospital board is said to affect the performance of the hospital. Some researchers (see de Andrés-Alonso et al., 2009) believe that larger boards are capable of delivering better performance. This is believed to be accounted for by the increased range of expertise larger boards present in reaching decisions. ...
Purpose
– The purpose of this study is to examine the effects of health-care governance and ownership structure on the performance of hospitals in Ghana.
Design/methodology/approach
– The study uses multiple regression models based on a sample of 132 hospitals in Ghana.
Findings
– The results of the study indicate that hospitals with a governing board perform better than those without a governing board. The results of this study also suggest that board characteristics and ownership structure are important in explaining the performance of hospitals in Ghana. The results further indicate that mission-based and private hospitals with effective board governance structures exhibit better performance than public hospitals.
Originality/value
– This study makes a number of new and meaningful contributions to the extant literature and the findings support managerialism, stakeholder and resource dependency theories. The findings also have important implications for the effective governance of hospitals.
... Some empirical studies have also been conducted on foundations (Eikenberry, 2006;de Andrés-Alonso et al, 2009;Brown and Guo, 2010;McGinnis Johnson, 2013;Bethmann et al, 2014), which have grown in number and significance internationally over the course of the last few decades (EFC, 2008;Anheier, 2014). ...
Nowadays, non-profit organisations (NPOs) face growing pressure to involve the community in their governing boards. Nevertheless, few empirical studies have been conducted on how they selfregulate
community engagement in their governance. With the aim of filling the research gap on this topic, this article provides new insights into community engagement in non-profit governance, considering the case of Italian bank foundations (IBFs) in which community representation on the board is required by law, and self-regulation plays a pivotal role in defining mechanisms of engagement. Applying Guo and Musso’s (2007) framework, a content analysis of IBFs’ statutes highlights that detailed attention has been paid to formal procedures and descriptive representation mechanisms, while participatory arrangements are lacking. The analysis of the IBFs’ case reveals additional mechanisms that are useful for better ensuring community representation within governance, and provides new mechanisms that could be considered by regulatory activity in NPOs where the community is on board by law.
Private foundations face persistent charges of plutocracy and secrecy, undermining their legitimacy as philanthropic organizations that contribute to the public good, yet they can respond to the criticism proactively through online accountability and Internet presence. To what extent do foundations use web‐based tools to demonstrate public accountability, how are these tools used for this purpose, and what explains foundation participation in this form of self‐regulation? We argue that managerialism, organizational fields, and stakeholder relationships will matter for online accountability and Internet presence because they capture or reflect the “publicness” of private foundations. We test our conceptual framework on two online tools—websites and social media—using a dataset of private foundations located in Washington state. We find that few private foundations have a website or a social media account, and our analysis of those tools suggests that substantive accountability is not a high priority for those that do. Our empirical models nevertheless reveal that several components of our conceptual framework are associated with multiple forms of disclosure (operational, financial, and performance) and dialogic communication, a contribution to research on nonprofit accountability that also advances the literature on the organizational behavior of foundations.
Purpose
Managerial “awareness” of supply chain management (SCM) principles is a key antecedent of SCM adoption. However, supply chain awareness (SCA) provides fertile ground for further development. The authors combine extant research with the attention-based view of the firm to further develop SCA and theorize about its effect in an understudied context.
Design/methodology/approach
The authors combine SCA with supply chain orientation, of which awareness is central. The authors combine qualitative and archival data for a 10-year period to test SCA in nonprofits. SCA was measured unobtrusively to avoid respondent bias; then, the authors explore how SCA relates to revenue generation from services provided.
Findings
SCA correlates positively with revenue generation. Drawing on a contingency perspective, the authors test two moderators relevant to nonprofits. The positive effect of SCA on revenue is stronger for nonprofits collocated in cities with corporate headquarters but weaker for those with larger boards.
Research limitations/implications
The study further advances the notion of awareness for studying SCM phenomena and provides evidence of its relevance in the unexamined context of human services nonprofit organizations (NPOs). This work has implications for how attention to SCM principles shapes organizational outcomes, the factors that moderate these relationships and the importance of unobtrusively measuring awareness in SCM research. The authors used WayBack Machine to harvest websites. However, the quality and depth of text obtained prior to 2008 were lower than those of later years. Additionally, archival data for NPOs are limited.
Practical implications
Findings inform about the fit between nonprofit resources, type of board and fit with how to fund operations. This research provides an alternative way for policy makers to assess NPO capacity by focusing on the fundamental SCM concepts.
Social implications
The authors contribute to the dialogue about NPOs developing financial independence through revenue generation from services sold to end customers.
Originality/value
NPOs are seldom studied in SCM. This is an attempt to study NPOs by combining qualitative and quantitative data.
Given the increased social and strategic value of corporate philanthropy (CP) in businesses, a growing number of corporations have established associated corporate foundations to institutionalize and formalize their CP. Notably, CP has been channeled through team charitable foundations in professional sport, which are corporate foundations closely tied to their parent teams while having own (quasi) independent governance structure. However, these corporate foundations have received less scholarly attention. The study explores the relationship between corporate foundation governance and organizational performance in the context of professional sport. Specifically, this study focuses on how board structural characteristics, such as board size and board diversity, and board leadership, such as board chair affiliation with the parent team and the presence of a paid executive director, influence the team foundation's total received contributions. To empirically test our hypotheses, the study used longitudinal data of financial and personnel information of team foundations in the United States from 2011 to 2017. The results show that the team foundations with a larger board and paid executive director generate more significant revenues (received from contributions, grants, and gifts). The study illuminates how the internal governing environment shapes and steers a corporate foundation's philanthropic practices and performance.
This study explores the impact of board size, board gender diversity and organization age on the likelihood of having a female chair in National Sports Federations. We adopted a quantitative methodology to compare 297 federations in five countries (Italy, Portugal, Spain, Turkey, and the United Kingdom), and collected the data from the official websites of the federations. The findings show that the board size, the proportion and the total number of women on the sports board, and the federation age have no significant impact on having a woman as a board chair when we include the countries' under study in the model. When the model does not differ by country, the odds of there being a female chair are higher as the total number of female members on the board increases, which could mean that national cultures have impacted women's representation as chairs in sports boards. The study also provides evidence on the impact of the board size and the total number of female directors on the gender of the chairperson, and the results show that chairwomen tend to preside on smaller boards. This study contributes to cumulative knowledge by presenting an international comparison of women's access to the top positions of sports governing boards of federations in Europe. Also, 3 Address correspondence to María Luisa Esteban luisaes@unizar.es. 3 the study evidences the likelihood that the chairperson is a woman according to the size of the board.
La Imaginación Motora es el acto de imaginar una acción sin ejecutar el acto
físico. La práctica con Imaginación Motora acelera el aprendizaje y mejora las destrezas
motrices. Previo a ello, es necesario evaluar la capacidad de los individuos para
formarse imágenes mentales. El objetivo de este trabajo es realizar la primera fase del
proceso de adaptación transcultural al español del cuestionario en inglés “Kinesthetic
and Visual Imagery Questionnaire (KVIQ).
El “Kinesthetic and Visual Imagery Questionnaire (KVIQ) es un test que evalúa
la habilidad de la Imaginación Motora compuesto por 20 ítems agrupados en 2 dimensiones.
Ha sido diseñado para ser aplicado en personas con movilidad reducida. Para el desarrollo de la versión preliminar se utilizó la metodología traducción-retrotraducción
por 4 traductores independientes, bilingües y nativos en el idioma de destino, seguido
del consenso de un comité de expertos en las discrepancias para alcanzar una equivalencia
semántica y cultural.
No se encontraron problemas destacables en la traducción al español. La palabra
“imagery” causó conflicto en el comité y finalmente se optó por traducir como
“imaginación”. Se mantuvo la traducción literal en el 30% de los ítems; una traducción
semejante que no altera el significado en el 40%; se añadieron elementos y descartaron
otros en el 20% y se modificaron el 10% por una nomenclatura anatómica en
español más correcta.
La versión preliminar obtenida en español es semejante semánticamente a la
original. Es necesario realizar el estudio piloto que valide lingüísticamente la versión
y explore inicialmente sus propiedades psicométricas.
Corporate philanthropy has noticeably kept its momentum as a growing trend across the globe in various industries. While existing literature has mainly focused on the nature and motivation of corporate philanthropy from various perspectives, this dissertation shifts our attention to the variation of corporate philanthropy among organizations in the same industry. Specifically, the dissertation seeks to answer the following research question in the professional sport context: why do some teams give more than others despite being in the same industry? The dissertation aims to provide a comprehensive understanding of how institutional and organizational factors influence the philanthropic activities of professional sport teams through their associated charitable foundations. To this end, three distinct studies were conducted using longitudinal philanthropic giving data from team foundations in four professional sport leagues in the United States. The studies presented in the dissertation provide a multilateral understanding of the factors influencing professional sport teams’ corporate philanthropy. Study 1 examines how the presence of multiple peers from different institutional fields (i.e., professional sport league and geographic community) affects sport teams in terms of influencing their philanthropic contributions (Chapter II). The results suggest that sport teams are more likely to be affected by the philanthropic giving levels of their league peers than their local peers, and the effect of league peers is stronger when the team’s foundation size is smaller. Study 2 questions how community institutional forces (i.e., regulative, socio-normative, and cultural-cognitive) affect professional sport teams in terms of their charitable contributions (Chapter III). The findings show that higher state income tax rates and a greater presence of nonprofits in the community increase the level of team philanthropic giving. Study 3 explores the influence of team foundation governance on a professional sport team’s philanthropic giving (Chapter IV). The results suggest that larger foundation board size and presence of a paid foundation executive director increase philanthropic giving of professional sport teams. Collectively, the findings of this dissertation highlight that CP is a multifaceted and contextual organizational phenomenon whose drivers and outcomes vary by institutional and organizational environments in which professional sport teams operates.
Today, non-governmental organisations (NGOs) are among the most important stakeholders in terms of global governance and business operations. The aim of this thesis is to investigate the external and internal influential factors of the operational efficiency of non-governmental organisations (NGOs) in China. By introducing the extended resource-based view (ERBV) into the context of NGO operations, a proposed conceptual model with 14 indicators is tested. In this study, based on the panel data collected on the Chinese Research Data Services Platform (CNRDS) and ERBV, a multiple regression analysis is performed to test the 14 influential factors identified in the dataset. By adopting ERBV, it is concluded that both intra- and inter-organisational resources are interacted and make a significant and positive association with NGOs’ operational efficiency. In particular, it is found that the availability of financial resources, political connections and NGO professionalism are all crucial factors to improve NGO operational efficiency in China. In addition, this thesis also made several contributions. First, in terms of the theoretical contribution, it may be the first study introducing the ERBV into the context of NGO, which extended several concepts (e.g. professionalisation, and interactions between internal and external resources) into the NGO context; Second, this study contributes to practitioners, such as managers in NGOs and corporates (e.g. the different roles of volunteers and paid staffs in fundraising); Also, this study makes social contributions, including implications for policymakers in China. By the end of this research, several limitations and research directions are presented for studies in the future.
The Community Mutual and Growth (MC²) network is a group of category I micro finance institutions (MFIs) with a primarily rural vocation that were created to serve the inhabitants of rural areas excluded from the traditional banking system. The dynamism and viability of this network of MFIs open promising avenues for research, especially on the factors that determine their survival. This study explores the manner in which the mode of governance of the MC², which is a function of the cultural identity of an area, determines survival. Following a qualitative approach, we perform interviews with the management and staff of 14 MFIs of more than 15 years of age in the West region of Cameroon. The survival of the MFIs of this network is based on a mode of co-operative governance whose success depends on the main cultural specificities of the area, a permanent “monitoring” system ensured by support structures at the technical and financial level, and an organisation based on self-managed and self-controlled endogenous initiatives.
By expanding understanding of individuals’ reasons to serve on nonprofit boards, practitioners will be able to improve recruitment and retention of quality board members. This study explores board members’ reasons for joining and continuing to serve on a volunteer nonprofit board of directors. A survey of nonprofit board members shows similarities in reasons for initially serving and continuing to serve on a board, but analysis of group means reveals significant differences on 20 of 27 dimensions examined. Organizational-level reasons are reported as more important as a result of board service, whereas individual- and community-level items decline in importance after board service. Latent factors that appear to be important for both joining and continuing to serve on a nonprofit board include organizational commitment, personal growth, recognition, and socialness.
O objetivo deste trabalho de doutoramento foi investigar a influência da governança corporativa no recebimento de doações, em particular, de receitas operacionais vinculadas, no contexto das entidades do terceiro setor com atuação no Brasil, sob a perspectiva analítica da teoria da agência. Observou-se essa lacuna de pesquisa, apesar da inegável contribuição dos estudos anteriores, devido ao foco das investigações residir nos possíveis efeitos dos mecanismos de governança, e não na governança como construção latente, e à carência de estudos empíricos no contexto brasileiro. As unidades de análise escolhidas foram as associações e fundações privadas sem fins lucrativos do segmento meio ambiente com atuação no Brasil. Os dados foram coletados por meio de levantamento documental, sendo a amostra composta por 108 observações. Assumindo como proxy de governança a presença de 21 mecanismos de governança na estrutura organizacional das entidades, que emergiram da revisão da literatura, foi identificada por meio de análise de correspondência múltipla a estrutura subjacente de governança, composta por seis dimensões: Conselho de Administração, Gestão, Conselho Fiscal, Auditoria, Transparência e Prestação de Contas. A partir dessa estrutura subjacente foi verificado, por meio da técnica Partial Least Squares Structural Equation Modeling, que a governança, tomada como construto de 2ª ordem refletido pelos construtos de 1ª ordem que compõe essa estrutura subjacente de governança, impactou positivamente o recebimento de recursos vinculados. Adicionalmente verificou-se que a distinção da entidade (OS, OSCIP ou CEBAS) não moderou a relação entre governança e recebimento de recursos vinculados. Os resultados deste trabalho representam um avanço nos estudos sobre governança no terceiro setor ao evidenciar que a governança contribui para que as entidades do terceiro setor tenham acesso mais fácil a mercado de doação, especialmente considerando que as organizações doadoras não responderam favoravelmente à distinção da entidade.
In response to failures of central planning, the Chinese government has experimented not only with free-market trade zones, but with allowing non-profit foundations to operate in a decentralized fashion. A network study shows how these foundations have connected together by sharing board members, in a structural parallel to what is seen in corporations in the United States and Europe. This board interlocking leads to the emergence of an elite group with privileged network positions. While the presence of government officials on non-profit boards is widespread, government officials are much less common in a subgroup of foundations that control just over half of all revenue in the network. This subgroup, associated with business elites, not only enjoys higher levels of within-elite links, but even preferentially excludes government officials from the NGOs with higher degree. The emergence of this structurally autonomous sphere is associated with major political and social events in the state–society relationship. Cluster analysis reveals multiple internal components within this sphere that share similar levels of network influence. Rather than a core-periphery structure centered around government officials, the Chinese non-profit world appears to be a multipolar one of distinct elite groups, many of which achieve high levels of independence from direct government control.
This chapter summarizes our reflections on microfinance, at theoretical and empirical levels. We examine the impact of microfinance on poverty reduction and review formal versus informal credit markets, regulatory and governance issues, competition and performance. We conclude by identifying promising research ideas for future research, including the need for mainstreaming gender and fragile states as key aspects of multi-level analysis of microfinance in order to inform financial inclusion and sustainable development goals (SDGs).
Antecedentes y objetivos: El papel que las fundaciones desempeñan actualmente en la sociedad justifica el análisis de su eficiencia, resultando imprescindible conocer si los recursos de los que disponen son convenientemente destinados a su finalidad. En este sentido, el trabajo que presentamos propone un enfoque actual y sin precedentes para el análisis de los determinantes de la eficiencia de las fundaciones de España durante el período 2008-2010.
Método y datos: Nuestro análisis se basa en la elección de aquellos factores exógenos que resumen y describen de una forma óptima la situación de estas organizaciones, así como en la elección de la metodología de la técnica no paramétrica DEA y, más concretamente, el procedimiento bietápico de doble bootstrap de Simar y Wilson.
Como inputs discrecionales se proponen la dotación fundacional, el total de activos, el total de gastos y el número de empleados. Los outputs considerados son el nivel de los ingresos obtenidos y el número de usuarios atendidos.
Resultados: Los resultados del modelo indican una ineficiencia técnica pura (supuesto CRS) del 27,7%. Relajando la hipótesis CRS por la VRS, la ineficiencia en el empleo de los inputs alcanza el 31,92%. Adicionalmente, y utilizando el procedimiento bootstrap de Simar y Wilson, se obtiene una ineficiencia técnica del 28,70%.
Conclusiones: El análisis DEA de dos etapas revela que las fundaciones más eficientes se caracterizan por su naturaleza privada. Así mismo, las fundaciones con mayor antigüedad, las que cuentan con voluntarios entre sus colaboradores y las que poseen un número amplio de patronos son igualmente más eficientes.
This study compares educational foundations in the Chinese Mainland and Taiwan systematically and empirically using a complete evaluation index-system tool based on corporate governance theory that involves both static governance structures and dynamic governance mechanisms. Understanding the differences between foundations in the Mainland and Taiwan can affect government policy and foundation management methods. A group decision making-analytic hierarchy process (GDM-AHP) alongside an evaluation index value of foundation governance (EIVFG) model established a weight coefficient of the evaluation index system, yielding EIVFG scores. Despite having similar EIVFG scores, foundations in the Mainland and Taiwan have distinct governance structures. The governance mechanisms of foundations are more important than their governance structures, and Taiwanese educational foundations are more mature than Mainland foundations with regard to their underlying governance mechanisms. These findings underscore the importance of policies that employ the principles of fairness and impartiality (rather than requiring legal inspections) and that establish thereby an environment of mutual trust that fosters foundations’ maturity and growth.
Italian bank foundations are a particular kind of nonprofit organization, operating in the exclusive interest of a territory, especially in the fields of art, culture, health, and social assistance. Although they share in substance the common idea of foundations, their governance structure presents some peculiarities that distinguish them from typical nonprofit organizations. Bank foundations’ governance structures comprise two different boards with different but complementary functions. The Board of Trustees is in charge of the foundation’s direction; it defines objectives, strategies, and long-term programs. The Board of Directors has more of an administrative function, translating long-term plans into short-term programs of action. Defined as such, this board structure allows the foundation to overcome the rigidity that typically characterizes the dual governance model. It acknowledges a deeper connection between the policy-making body and management and thereby ensures a closer link between strategy formulation and strategy implementation.
In non-profit organizations, delegation relationships between voluntary board members and full-time executives exist. Due to conflicts of interests and information asymmetries, the question arises how a “good” organizational leadership can be ensured. Literature suggests that a clear distribution of responsibilities between voluntary board members and full-time executives constitutes an important mechanism to avoid governance issues. This allocation of responsibilities is subject to the present paper. Using the example of German sport associations, we analyze the distribution of responsibilities between voluntary board members and full-time executives within the framework of an exploratory field study. We focus on collaboration in strategy development, its implementation and monitoring. Our results suggest that the distribution of tasks concerning the development and adoption of a strategy as well as financial target planning corresponds to recommendations from literature. We identify needs of action with regard to operational planning and monitoring activities of voluntary board members.
PurposeThis article aims at investigating knowledge transfer and exchange (KTE) between founder firms and corporate foundations (CFs), looking at mechanisms able to enhance CFs’ orientation of effectiveness.
Methodology/approachWe analyze 50 questionnaires collected through a survey of CFs based in Italy (redemption of 42.7% of the total). We use a number of regressions to verify the change of explained variance moving from a basic model with control variables (enter method) and a model including KTE mechanisms with an impact on orientation to effectiveness (stepwise method).
FindingsThe analysis produced a model which underlines the influence of knowledge transfer mechanisms in stimulating orientation to effectiveness. The adoption of specific knowledge transfer mechanisms by founder firms can have a significant influence on how CFs manage their effectiveness. Three mechanisms emerge from the study as elements with a positive impact.
Practical implicationThe results apply to nonprofit or public bodies, especially if we consider partnerships or organizational networks. The individuated criteria for selecting a positive KTE could drive similar choices of other nonprofit bodies.
Social implicationThe study individuates a set of practices that are potentially able to influence positively the orientation to effectiveness of CFs, and the capacity to perform their activities and respond to social needs more successfully.
Originality/valueThis research considers CFs as founder firms’ subsidiaries, with a growing strategic importance. This research reveals how KTE mechanisms can foster the development of orientation to effectiveness if implying interaction, firms’ commitment, autonomy, and alignment with the firms’ strategy and CFs’ purposes.
The Codes of Best Practices have turned into rules that any organization trying to improve its governance performance must fulfil. However, the automatic adherence to these recommendations does not always drives to an increase of the results. Our study shows how in heterogeneous sectors, as the foundational one, not only the board of trustees is differently composed according to the entity's characteristics but also its influence on the organizational efficiency is dissimilar.
Stakeholders play a fundamental role in the governance systems of non-profit organisations. Their participation in decision-making processes - especially within governing bodies and in terms of mission reporting - is an essential element for effective and coherent organisation management. The present study carries out empirical research into Italian banking foundations (IBFs), a particular kind of grant-giving foundation with specific statutory obligations towards their stakeholders, including local communities and the beneficiaries of contributions. These types of foundations are unique, featuring characteristics that could contribute to a better understanding of the role played by governing bodies among third-sector organisations in creating a system of stakeholder engagement, participation, and dialogue. Using content analysis, we studied the Annual Reports and statutes of 88 IBFs in order to verify whether the presence of a member assembly in this particular type of grant-giving foundation affects the degree of stakeholder engagement in mission reporting. The results of our study reveal a greater presence of stakeholder engagement policies and practices among foundations with member assemblies, as well as a tendency towards stakeholder management in foundations without this type of governing body.
El propósito de este trabajo es determinar la relación existente entre el tipo de opinión emitido en los informes de auditoría de las fundaciones públicas estatales y un conjunto de caracterfísticas fundacionales para ayudar a mejorar la gestión y el control de estas instituciones. Con esta fina- lidad se ha construido un marco teorico en el que se desarrollan los efectos esperados de las variables seleccionadas sobre la opinión de los informes (tamaño de la fundación, tipo de auditor, excedente del ejercicio, opinión del informe en el ejercicio anterior y adscripcion ministerial). Posteriormente, y al objeto de desarrollar el estudio, se han estimado diferentes modelos de regresión logística, tomando una muestra de 256 fundaciones que han sido auditadas durante período 2002-2008.
Drawing on comparative case studies, this article critiques the positioning of accountability as a benign and straightforward governance function. From a critical management studies perspective, I offer a conceptualization of the relationship between governance and accountability in which issues of power, beliefs about the nature of organizing, and social relations are integral features. The article clarifies how principal-agent governance assumptions, based on a central logic of unitarism, can drive narrow compliance-based interpretations of accountability. Such an approach appears at odds with the values embedded in the social missions of many nonprofits insofar as they prioritize small sections of powerful stakeholders over sustained periods of time. Conversely, a pluralist logic appears to create space for broad accountability to multiple stakeholders. Here, expressive, values-based accountability is seen as a source of legitimacy and can produce complex relationships, which challenge the instrumental orientation to social relations that principal-agent theories assume.
This article examines some of the main limitations of research on the governance of nonprofit organizations. It argues that there are limitations in both the way governance has been conceptualized and the ways in which it has been researched. It suggests that research has focused too narrowly on the boards of unitary organizations, and ignored both the wider governance system and the more complex multilevel and multifaceted governance structures that many organizations have evolved. It also argues that the dominant research designs employed have been cross-sectional and positivist in orientation. As a result, too little attention has been paid to board processes and change and how they are influenced by contextual and historical factors. Based on this analysis, some new directions for nonprofit governance research are briefly mapped out.
This article investigates the impact of knowledge transfer (Goh 2002) from founder firms to the corporate foundations (CFs) on the CFs’ effectiveness. Starting from a typology of CFs’ effectiveness (Ostrower 2006a), we conducted a survey addressed to a sample of Italian CFs to address the impact of different knowledge transfer methods (KTMs) on three dimensions of CFs’ orientation to effectiveness: proactive orientation, social advocacy, and capacity building. The research identified four different KTMs and, using a linear regression, pointed out that the methods adopted by founder firms have a significant influence on proactivity, competences, and on social advocacy of CFs.
This article reviews the American literature in social science for the period 1975–1992 on the determinants of volunteer participation in programs and associations. It finds that most studies are too narrow in the hinds of variables that they include and that explanatory power is reduced as a result. Such participation is significantly greater for certain hinds of variables: contextual (for example, smaller community), social background (for example, higher education), personality (for example, more efficacy/internal locus of control), and attitude (for example, more group attractiveness) as well as situational variables (for example, being asked to join). Very few studies combine measures of each type of variable. When several predictor realms arc included, much higher variance is accounted for. Other social participation (political, mass media, recreational, and so on) is associated with volunteer participation. This association confirms a general activity model that posits a clustering of different types of socioculturally approved discretionary activity.
Agency theory has long been studied in the corporate setting and used to explain performance in management and in boards of directors. However, little has been done to extend this research into the area of not-for-profits. Using data collected from member institutions of the Council of Independent Colleges, relationships between boards of trustees and presidential demography and institutional performance were examined. Data were analyzed using panel regression with a separate panel for each year’s data and for each of the responding schools. Using revenue and gift income as dependent variables, it was found that increases in the size, average tenure, and level of business executive background on a board led to subsequent increases in performance for the institution. Diversity of the board had mixed results, whereas presidential tenure improved performance. These findings partially support the hypotheses and extend the explanatory reach of agency theory into the not-for-profit sector.
This article synthesizes empirical researchfindings on the impact of boards of directors on corporate financial performance. An integrative model of board attributes and roles is presented, and research support on their links is discussed. The review identifies critical short-comings of past studies and concludes by offering an agenda for future studies in this promising area of empirical research.
The contribution of board structure and process dynamics to organiza tional and board effectiveness is the focus of this article. Based on data collected from a cross section of Canadian nonprofit organizations, the results show a positive association between the perception of board effec tiveness and the use of many of the most widely advocated prescriptions on how a nonprofit board of directors should operate. However, when objective indicators of organizational performance are examined, the link between performance and board behaviors is found to be more limited.
This empirical study of the strategic direction of California community foundations explores how this choice is affected by organizational and community characteristics and by external forces. The authors develop a model of the determinants of organizational strategy in community foundations and analyze it based on interviews and on data collected on community foundations and their communities. They then consider the implications for public policy. Strategic choice was found to be affected by organization age, community stability, the profess ionalization of the field, and the growth in national competitors. They also consider the implications of these results for recent changes in local governance. Community foundations that have been established for some time and those located in communities that are stable are the ones that appear best positioned to enhance the problem-solving capacity of communities.
This study examined the association between corporations’environments, strategies, and past performance and the composition of their boards of directors as measured by size and outside director representation. The environment, strategy and past performance were viewed as posing a strategic contingency; each of these sets could determine the success or failure of the company. Data on 119 Fortune 500 industrial companies for the 1983-9 period were used. Canonical analysis showed that increased uncertainty of a firm's environment, use of external growth and diversification; reliance on leverage as a means of finance, and poor past financial performance were associated with large board size and increased outside representation in subsequent years. Most important, board composition was positively associated with future measurements of corporate financial performance.
This paper examines why and how corporate governance practices are implemented across countries. We look at the worldwide development and adoption of codes of good governance, a set of best practice recommendations regarding the behavior and structure of the board of directors. We find that codes of good governance serve to compensate for deficiencies in the legal system covering shareholders' rights. The results also show that size of capital markets, degree of government intervention, and percentage of foreign investors in the stock market are predictors of the existence of codes of corporate governance, while country openness has no significant effect.
This paper investigates the relationship between nonprofit board composition and organizational efficiency. Overall, we find a significant statistical association between the presence of major donors on the board and indicators of organizational efficiency. While proof of a causal link is beyond the scope of this study, our findings are consistent with the Fama and Jensen (1983) conjecture that major donors monitor non-profit organizations at least in part through their board membership. This study also implies that, with the exception of the finance committee, it is the presence of major donors on the board and not their presence on committees that is associated with organizational efficiency measures. The multivariate analysis shows that the ratio of total expenses to program expenses is significantly and negatively associated with higher donor representation. Decomposing the total expense ratio into its two components, we find that different factors affect the administrative and fund-raising expense ratios. The percentage of major donors on the finance committee, a key committee overseeing budgets and administrative expenses, is negatively related to the organization's administrative expenses ratio. The presence of major donors on other board committees is not significantly statistically associated with nonprofit efficiency.
This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the 'separation and control' issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears the costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.
This paper analyzes the survival of organizations in which decision agents do not bear a major share of the wealth effects of their decisions. This is what the literature on large corporations calls separation of 'ownership' and 'control.' Such separation of decision and risk bearing functions is also common to organizations like large professional partnerships, financial mutuals and nonprofits. We contend that separation of decision and risk bearing functions survives in these organizations in part because of the benefits of specialization of management and risk bearing but also because of an effective common approach to controlling the implied agency problems. In particular, the contract structures of all these organizations separate the ratification and monitoring of decisions from the initiation and implementation of the decisions.
Religiously affiliated providers of social services are becoming increasingly important in the transformation of social welfare policy in the United States. This article focuses on governance issues and challenges facing these small service providers. Using perspectives from the organization and management literatures and examples from prior research, the article makes three general observations. First, predictable patterns of governance exist, depending on the types of structural relationships religiously affiliated agencies have with their religious bases. Second, governance will be affected by particular characteristics of both small and religious organizations. Third, growth presents critical challenges to the ability of these providers to maintain their indigenous religious cultures. Hypotheses are offered to stimulate further research in each of these areas.
This article discusses some of the key differences in board behavior between nonprofit organizations and for-profit firms using a relatively new dataset from New York City nonprofits. We provide evidence on the broader role that nonprofit boards play for their organizations and then give some suggestive results on the relationship between board structure and composition, and individual board member performance. The results provide some evidence that the executive directors of nonprofits may use their power to push boards toward fundraising in place of monitoring activity. Using a fixed-effects framework, we also find no systematic relationship between board personal demographics and performance, although both tenure on a board and multiple board service do seem to matter.
Andreas Ortmann and Mark Schlesinger, in their article “Trust, Repute, and the Role of Nonprofit Enterprise,” examine what they term “the trust hypothesis,” namely “the claim that asymmetric information in the markets for certain goods and services can explain the existence of nonprofit enterprise in those markets” (this volume). There is much that is sensible in what they say, and they have performed a valuable service in pulling together some of the more recent empirical literature on asymmetric information in markets heavily populated with nonprofit firms. I have some concerns, however, both with respect to the authors’ formulation of the trust hypothesis and with their approach to its verification.
Adopting an information-processing perspective and drawing on work in social psychology, this study examined the effects of top management team size and chief executive officer (CEO) dominance on firm performance in different environments. Data from 47 organizations revealed that firms with large teams performed better and firms with dominant CEOs performed worse in a turbulent environment than in a stable one. In addition, the association between team size and CEO dominance, and firm performance, is significant in an environment that allows top managers high discretion in making strategic choices but is not significant in a low-discretion environment.
In a study of 57 hospitals in a large midwestern state, the determinants of the size, composition, and function of boards of directors were examined. The function of the board was partly explained by the organizational context, and particularly the ownership and source of funds. The size of the board of directors was related to the requirements for successful linkage with the environment and with the function of the board. The composition of the board was related to the social context in which the organization is embedded, as well as to the function of the board. Finally, board function and composition did have an impact on the hospital's ability to obtain community support and on organizational effectiveness, defined as the ability to attract resources from the environment. It was concluded that boards of directors of formal organizations can be productively analyzed as one possible mechanism linking the organization with its environment.
The literature on nonprofit boards of directors is rich with prescriptive advice about the kinds of activities that should occupy the board's time and attention. Using organizational theory that has dominated the empirical investigation of private sector board behavior (agency, resource dependence, and institutional), this article contributes to the literature on nonprofit board governance in three important ways. First, it provides a link between theory and practice by identifying the theoretical assumptions that have served as the foundation for the "best practice" literature. Second, the article presents a theory-based framework of board behavior that identifies the environmental conditions and board/organizational considerations that are likely to affect board behavior. And finally, it offers a set of hypotheses that can be used in future empirical investigations that seeks to understand the conditions under which a nonprofit board might assume certain roles and responsibilities over others.
We examine the equity ownership structure and board composition of a sample of 583 firms over the ten-year period 1983–1992. Our evidence suggests that a substantial fraction of firms exhibit large changes in ownership and board structure in any given year. These changes are correlated with one another and are not reversed in subsequent years. Ownership and board changes are strongly related to top executive turnover, prior stock price performance, and corporate control threats, but only weakly related to changes in firm-specific determinants of ownership and board structure. Furthermore, large ownership changes are typically preceded by economic shocks and followed by asset restructurings.
Until relatively recently, there has been little serious historical scholarship or organizational analysis concerning foundations. This article examines the experience of the Ford Foundation in creating and implementing a large new grant-making initiative applying three models of organizational behavior: the rational actor model, a bureaucratic politics model, and an organizational process model. The article provides a preliminary analysis of the strength of these models for illuminating the way foundations operate and shape their grant-making programs. Large foundations are complex institutions whose decisions may not always be optimal on some public interest or cost-benefit calculus. At a time when public affairs professionals find themselves turning to private foundations for solutions, an understanding of internal dynamics may help in building public-private partnerships on a realistic footing.
To verify the existence and relevance of control mechanisms that impede the expropriation of resources by the managers of nonprofits and that improve efficiency, we use a representative sample of Spanish nongovernmental development organizations (NGDOs). The authors study how the donors' structure and board of trustees relates to organizational efficiency. Results show that the presence of an active institutional donor provides a control mechanism for these NGDOs, thus favoring the efficient allocation of resources, and that the structure of the board of trustees is irrelevant in this respect. Results are robust to alternative measures of technical and allocative efficiency.
This study examines U.S. affiliates of an international voluntary associa tion (Habitat for Humanity) and the relationship of local board composi tion, membership composition, and community characteristics. Using survey and census data, we were interested in whether characteristics of the local community are important predictors of the types of members recruited and the kinds of persons who emerge as voluntary organization leaders. We found that the characteristics of the local community influ ence composition and the size of membership and boards of directors. Additionally, we found that membership composition is also related to board composition.
This article presents a proposal for improved corporate governance that could be implemented voluntarily by business corporations and their boards, without relying on changes in laws, regulations, court decisions, or shareholder behavior. The central elements of the proposal involve: limiting board size; setting a two-to-one ratio of independent to inside directors; increasing the time directors spend on board matters, including an annual two or three day strategy session; annual evaluation of the CEO by the outside directors; selecting a lead outside director; improving the flow of information to the board; systematically reviewing corporate and management performance against goals; creating an annual forum for the board to meet with major shareholders; and providing a special report to shareholders, and access to the proxy statement for major shareholders, in the event of unsatisfactory long-term results.
Analyses of survey responses from the executive directors of 184 human service organizations examined the relationships of board characteristics to board activities, and of board activities to organizational outcomes. Results indicated that board characteristics most predictive of board activities were the numbers of board mem bers who were representatives of the client population, who had expertise in mar keting, who were trained in the types of service provided by the agency, and who regularly performed volunteer work for the agency. Although in general board activities had few statistical relationships with agency outcomes, the board's in volvement in working to enhance the agency's image in the community was related to a number of outcome measures.
In the United States all legally incorporated non-profit organizations are required to have boards of directors. The members of these boards are unpaid volunteers. This paper examines the reasons board members participate. A triad of data collec tion techniques—questionnaires, interviews, and observations-was used to study the members of the boards of directors of ten human service agencies. The study is based on an incentive approach to participation, which suggests that participation occurs in response to incentives, the expectation of valued outcomes. Four catego ries of incentives-material, social, developmental, and ideological—are used to or ganize the data. The study demonstrates that board members have multiple and complex incentives for participation, that some members achieve an adequate num ber of incentives and some do not, that few members participate in response to in centives that are dependent on specific policy outcomes and that even fewer serve as consumer representatives, and that there are differences among agencies in board members' reasons for serving. Implications for board recruitment and retention are discussed.
This analysis of peace grant making of U.S. foundations in 1988-1996 is guided by neo- institutional organizational theory. The author argues that legitimacy concerns underlie the choices foundations make regarding the organizations and causes they fund. Aca- demic and elite recipients give legitimacy to foundations and draw most of the latter's support. Foundations' authority in conferring legitimacy is prominent vis-à-vis nonelite organizations, which often seek to mobilize foundation support but receive much less of it than elite grantees do. The overall size of peace grant making was very small in the exam- ined period and declined in constant dollars from 1988 to 1996. The author suggests that foundations were disinclined to fund peace due to normative pressure from the "national security state." Future research should advance theories about sources of external influ- ence on foundations, paying particular attention to the state's capacity to shape organiza- tional behavior of foundations and of the nonprofit sector generally.
This study examines the interrelation between board composition and variables that capture various agency and financial dimensions of the firm. The agency literature suggests that outside directors on the board provide important monitoring functions in an attempt to resolve, or at least mitigate, agency conflicts between management and shareholders. The agency literature indicates that other mechanisms such as managerial equity ownership, dividend payments, and debt leverage also serve as important devices in reducing agency conflicts in firms. This study argues and documents that an inverse relationship exists between the proportion of external members on the board and managerial stock ownership, dividend payout, and debt leverage. This is consistent with the hypothesis that individual firms choose an optimal board composition depending upon alternative mechanisms employed by the firm to control agency conflicts. Board composition is also found to be systematically related to a number of other variables including institutional holdings, growth, volatility, and CEO tenure.
A new interest in philanthropic foundations has gradually emerged in Europe, as well as in other regions of the world. At the same time, citizens have rediscovered foundations as a private alternative to tackle social, cultural, or environmental needs not sufficiently addressed by the welfare state. Although foundations are undoubtedly facing renewed attention, little is yet known about the scope, structure, and policy contexts of the European foundation sectors, and there is a dearth of comparative research. Nevertheless, there appear to be substantial differences in the history and traditions of foundations across countries and significant variations in the shapes foundation sectors take (Strachwitz and Toepler, 1996; Anheier and Toepler, 1999). Moreover, the very concept of what a foundation is differs cross-nationally, and the definition of this set of institutions seems subject to cultural specificity.With the foundation fields largely being a terra incognita in most countries, comparative analysis, where attempted, has tended to focus on the United States, the only country to produce a substantial body of knowledge and data on foundations. Using the United States as a point of reference, however, has not been without problems.Though pointing to the apparently vast size of the U.S. foundation sector (in terms of both numbers of organizations and assets) provided a convenient starting point to lodge complaints about the local lack of such traditions, it also contributed to myth building around the foundation concept internationally (Toepler, 1998). Now that more attention is focused on local foundation communities and data are slowly improving, things can be put into better perspective.In this article, I briefly describe legal definitions and common types of foundations in both the United States and Germany and
Are nonprofit organizations 'different' from firms with owners? The accepted economic account holds that nonprofits are more trustworthy than business firms because nonprofits cannot distribute profits to owners. However, all firms, nonprofit or proprietary, have converged into similar patterns of behavior. Firms, whether nonprofit or proprietary (or even public), are subject to many of the same economic forces, such as resource dependency, institutional isomorphism, and organizational slack. Even in the absence of shareholders somebody still has to run the enterprise: to decide what objectives to pursue, and how; to manage its financial and human resources; and to span the boundaries of the organization in interacting with the key constituencies, other organizations, and the public. While nonprofits have shareholders privileged with rights of accountability, in most of the business sector shareholders have long lost effective control to firm management. In short, management in both sectors has decisional authority, whether de facto, as in the proprietary sector, or de jure, as in the nonprofit sector. Moreover, the 'nondistribution constraint' cannot guarantee that the nonprofit operates better or worse than a proprietary enterprise in overcoming information asymmetries. The absence of shareholders demanding profits enables the organization to relax into productive inefficiencies, or to cross-subsidize activities the patron would not want to pay for (could she only observe them). Such inefficiencies or cross-subsidization might 'cost' more than the profits the enterprise might otherwise distribute to shareholders if it operated in a proprietary form. Separately, in an industry with more than one nonprofit, the nondistribution constraint cannot help patrons choose between competing nonprofits. It might be difficult to find enough differences on other grounds to justify continued subsidies based on organizational form. Subsidies might need to be targeted to desired services, provided either in the nonprofit or for-profit sector.
This paper models the interaction of firm insiders and outsiders on a corporate board and addresses the question of the ideal size and composition the board board. In the model, the board is responsible for monitoring projects and making CEO succession decisions. Inside directors are better informed regarding the quality of firm investment projects, but outsiders can use CEO succession to motivate insiders to reveal their superior information and help the board in implementing higher value projects. The optimal board structure is determined by the tradeoff between maximizing the incentive for insiders to reveal their private information, minimizing the cost to outsiders to verify projects, and maximizing outsiders' ability to reject inferior projects. I show that optimal board size and composition are a function of the directors' and firm's characteristics. I also develop testable implications for the cross-sectional variations in the optimal board structure across firms.
Many people are suspicious of self-interest and incentives and oppose motivating humans through incentives. I analyze the meaning of incentives in the logic of choice and argue that it is inconceivable that purposeful actions are anything other than responses to incentives. Money is not always the best way to motivate people. But where money incentives are required, they are required precisely because people are motivated by things other than money. Self-interest is consistent with altruistic motives. Agency problems, however, cannot be solved by instilling greater altruism in people because altruism, the concern for the well-being of others, does not make a person into a perfect agent who does the bidding of others. I discuss the universal tendency of people to behave in non-rational ways. Though they are Resourceful, Evaluative Maximizers (REMMs) humans are imperfect because their brains are biologically structured so as to blind them from perceiving and correcting errors that cause psychic pain. The result is systematic, non-functional behavior. I discuss a Pain Avoidance Model (PAM) that complements REMM by capturing the non-rational component of human behavior (the crux of human self-control problems). Recognizing these self- control problems leads to an expansion of agency theory since they are a second source of agency costs in addition to those generated by conflicts of interest between people. See also the related paper by Jensen and Meckling The Nature of Man.
Case studies suggest that important changes in the composition and structure of boards of trustees of non-profit organisations have occurred in recent decades. The nature of these changes, and how they may vary across industry and locale, are not well documented. This pilot study compares changes in structure and board membership of three elite non-profit organisations in two cities at three points in time: 1925, 1955 and 1985. This study focuses on governing boards of the major art museum, largest non-profit hospital and local United Way of Boston and Cleveland. Board members' biographical data are used to assess models of board diversification based on environmental pressures and changes in local elites. We find evidence that trusteeship varies historically, regionally and across industries, and we set the stage for broader-based empirical comparative work on changes in non-profit boards of trustees.
Using a comprehensive sample of nearly 7,000 firms from 1990 to 2004, we examine the corporate board structure, trends, and determinants. Guided by recent theoretical work, we find that board structure across firms is consistent with the costs and benefits of the board's monitoring and advising roles. Our models explain as much as 45% of the observed variation in board structure. Further, small and large firms have dramatically different board structures. For example, board size fell in the 1990s for large firms, a trend that reversed at the time of mandated reforms, while board size was relatively flat for small and medium-sized firms.
This paper reexamines the relation between firm value and board structure. We find that complex firms, which have greater advising requirements than simple firms, have larger boards with more outside directors. The relation between Tobin's Q and board size is U-shaped, which, at face value, suggests that either very small or very large boards are optimal. This relation, however, arises from differences between complex and simple firms. Tobin's Q increases (decreases) in board size for complex (simple) firms, and this relation is driven by the number of outside directors. We find some evidence that R&D-intensive firms, for which the firm-specific knowledge of insiders is relatively important, have a higher fraction of insiders on the board and that, for these firms, Q increases with the fraction of insiders on the board. Our findings challenge the notion that restrictions on board size and management representation on the board necessarily enhance firm value.
We posit that limited transparency of firms’ operations to outside investors increases demands on governance systems to alleviate moral hazard problems. We investigate how ownership concentration, directors’ and executive's incentives, and board structure vary with: (1) earnings timeliness, and (2) organizational complexity measured as geographic and/or product line diversification. We find that ownership concentration, directors’ and executives’ equity-based incentives, and outside directors’ reputations vary inversely with earnings timeliness, and that ownership concentration, and directors’ equity-based incentives increase with firm complexity. However, board size and the percentage of inside directors do not vary significantly with earnings timeliness or firm complexity.
Using a unique panel dataset that tracks corporate board development from a firm's IPO through 10 years later, we find that: (i) board size and independence increase as firms grow and diversify over time; (ii) board size—but not board independence—reflects a tradeoff between the firm-specific benefits and costs of monitoring; and (iii) board independence is negatively related to the manager's influence and positively related to constraints on that influence. These results indicate that economic considerations—in particular, the specific nature of the firm's competitive environment and managerial team—help explain cross-sectional variation in corporate board size and composition. Nonetheless, much of the variation in board structures remains unexplained, suggesting that idiosyncratic factors affect many individual boards’ characteristics.
This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the ‘separation and control’ issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears these costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.The directors of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master's honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.Adam Smith, The Wealth of Nations, 1776, Cannan Edition(Modern Library, New York, 1937) p. 700.
This paper presents findings from an in‐depth empirical study of the role of boards and their relations with senior managers in four organisations from the public and non‐profit sectors. The findings are interpreted using a conceptual framework which sees the outputs of boards as shaped by board inputs, processes and contextual factors, in particular wider institutional pressures. The results indicate that the strategic contribution of boards varies widely and depends on a complex interplay of factors: the system of regulation, sectoral traditions and norms of governance, the way board members are chosen, board members skill and experience, organisational size and status, and the way boards are organised and run. The wider institutional pressures that shape these factors can result in boards facing tensions and trade‐offs that can result in their contribution to stragegy being squeezed by other board roles.
This article reports on the results of a survey of charities in England and Wales, which examined how their boards are changing and whether various external initiatives to improve board performance are having an effect. In particular, the research explored the impact of organizational size. The findings suggest that the size of the organization does matter, as a variety of board characteristics and changes vary with size. The article concludes by examining some of the implications of these findings for theory and practice.
Cuantificar para conocer -- Balance económico-social -- Asociaciones y fundaciones -- Entidades singulares -- Cajas de ahorros -- Cooperativas y sociedades laborales -- Mutualidades de previsión social -- Un apunte sobre centros especiales de empleo y empresas de inserción -- Un decálogo conclusivo -- Notas metodológicas -- Resumen del trabajo de campo
Sumario: Part one contains a set of models, or frameworks, for the better understanding of people and organizations. Part two looks at some key and current organizational issues in the light of the concepts introduced in part one. Part of the intention is to demonstrate how the theories can be applied to the practices. Part three is a guide about the sources of the ideas, concepts and theories.
Not-for-profit organizations play a critical role in the American economy, but little attention is paid to the pressures and challenges that affect their governance. We know such firms donât try to maximize profits, but what do they maximize? The Governance of Not-for-Profit Organizations tackles that question head-on, assembling experts on the not-for-profit sector to examine the diverse and wide-ranging concerns of universities, art museums, health care providersâand even the medieval church. Contributors look at a number of different aspects of not-for-profit operations, from the problems of fundraising, endowments, and governance to specific issues like hospital advertising. The picture that emerges is complex and surprisingâone in which some institutions function as efficiently as for-profit firms while others appear to be maximizing the interests of their elite workers, rather than those of their donors, customers, or society at large.