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Nonprofits In The Field: An Economic Analysis Of Peer Monitoring And Sabotage

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  • Emmanuelle AURIOL
  • Stefanie BRILON

Abstract

Two types of intrinsically motivated workers are considered: good workers care about the mission of an organization, whereas bad workers derive pleasure from destructive behavior. Compared to the case with only good workers, the mission-oriented sector has to resort to higher monitoring to deal with the threat of sabotage. When standard monitoring is not possible, peer monitoring might deter bad workers from entering the nonprofit sector but reduces output due to free riding and because workers require higher compensation to work in teams. Nonprofits implement peer monitoring only if the expected damage that bad workers can inflict is larger than the loss of productivity due to teamwork. For senior staff with high reservation utility, they turn a blind eye on serious sabotage if the likelihood of hiring a bad worker is perceived as small. But they almost systematically implement peer monitoring for junior staff.

Suggested Citation

  • Emmanuelle AURIOL & Stefanie BRILON, 2018. "Nonprofits In The Field: An Economic Analysis Of Peer Monitoring And Sabotage," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 157-174, March.
  • Handle: RePEc:bla:annpce:v:88:y:2017:i:3:p:157-174
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    File URL: http://onlinelibrary.wiley.com/doi/10.1111/apce.2018.89.issue-1/issuetoc
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    Cited by:

    1. Dang, Canh Thien & Owens, Trudy, 2020. "Does transparency come at the cost of charitable services? Evidence from investigating British charities," Journal of Economic Behavior & Organization, Elsevier, vol. 172(C), pages 314-343.
    2. Jean Damascene Mvunabandi & Charmaine Lathleiff & Paul-Francois Muzindutsi, 2022. "Financial Accounting as a Tool to Enhance Non-Government Organisations Performance: A Case Study of a Large NGO in Durban, South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 12(3), pages 10-17, May.

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