Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/206876
Authors: 
Valentinov, Vladislav
Year of Publication: 
2009
Citation: 
[Journal:] International Journal of Social Economics [ISSN:] 0306-8293 [Volume:] 36 [Issue:] 1/2 [Publisher:] Emerald [Place:] Bingley [Year:] 2009 [Pages:] 81-92
Publisher: 
Emerald, Bingley
Abstract: 
Purpose: Managerial nonpecuniary preferences have been emphasised by the behavioural theories of nonprofit organisation but only weakly related to this organisation's market failure theories. The present paper aims to fill this gap by examining the ways in which the market failure‐addressing capacity of nonprofit firms requires recourse to managerial nonpecuniary preferences. Design/methodology/approach: The paper proceeds by examining the ways in which the market failure theories of nonprofit organisation conceptualise this organisation's market failure‐addressing mechanism. Findings: It is shown that the market failure theories of nonprofit organisation can be logically complete only if they include an explanation of managerial motivation consisting in the gratification of nonpecuniary preferences. Practical/implications: Nonprofit firms are thereby shown to address market failures in a way different from that of for‐profit firms. Specifically, whereas for‐profit firms address market failures based on their advantages over market organisation in processing information and aligning incentives, nonprofit firms make the production of goods and services that are undersupplied due to market failures the object of nonprofit managers' nonpecuniary preferences. Originality/value: The economic theory of nonprofit organisation has been traditionally marked by a dichotomy of the market failure theories and behavioural theories, only the latter of which recognised the role of managerial nonpecuniary preferences. By demonstrating that these preferences are crucial to the former theories as well, this paper integrates these two theorising strands and thus deepens the theoretical understanding of the nonprofit sector.
Subjects: 
market system
strategic alignment
non-profit organizations
Persistent Identifier of the first edition: 
Additional Information: 
Dieser Beitrag ist mit Zustimmung des Rechteinhabers aufgrund einer (DFG-geförderten) Allianz- bzw. Nationallizenz frei zugänglich. - This publication is with permission of the rights owner freely accessible due to an Alliance licence and a national licence (funded by the DFG, German Research Foundation) respectively.
Document Type: 
Article
Document Version: 
Published Version

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