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The Economics Of The Non‐Distribution Constraint: A Critical Reappraisal

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  • Vladislav VALENTINOV

Abstract

ABSTRACT**: This paper re‐examines the non‐distribution constraint as a key structural feature of non‐profit organization. It argues that its traditional understanding as a trustworthiness‐enhancing device is incomplete. This paper shows that the non‐distribution constraint is also a reflection of the directly utility‐enhancing character of involvement in non‐profit firms for their key stakeholders. This alternative explanation allows one to solve the central puzzle of trustworthiness theory: why doesn't the non‐distribution constraint destroy entrepreneurial motivation? Additionally, it helps one to understand the role of the non‐distribution constraint in economic theories of non‐profit organization that do not rely on trustworthiness theory. Finally, it enables one to logically integrate the different economic theories of non‐profit organization.

Suggested Citation

  • Vladislav VALENTINOV, 2008. "The Economics Of The Non‐Distribution Constraint: A Critical Reappraisal," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 79(1), pages 35-52, March.
    • Handle: RePEc:bla:annpce:v:79:y:2008:i:1:p:35-52
    DOI: 10.1111/j.1467-8292.2007.00351.x
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    References listed on IDEAS

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    1. Jeffrey P. Ballou, 2005. "An Examination of the Presence of Ownership Effects in Mixed Markets," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 21(1), pages 228-255, April.
    2. Adalbert Evers & Jean-Louis Laville, 2004. "Defining the third sector in Europe," Chapters, in: Adalbert Evers & Jean-Louis Laville (ed.), The Third Sector in Europe, chapter 1, Edward Elgar Publishing.
    3. Petra Brhlikova & Andeas Ortmann, 2006. "The Impact of the Non-distribution Constraint and Its Enforcement on Entrepreneurial Choice, Price, and Quality," CERGE-EI Working Papers wp299, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
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    Cited by:

    1. Gabriela Vaceková & Zuzana Prouzová, 2014. "Non-profit Commercial Revenues. Evidence from the Czech Republic," MUNI ECON Working Papers 16, Masaryk University, revised Dec 2014.
    2. Sacchetti, Silvia & Tortia, Ermanno, 2012. "The internal and external governance of cooperatives: the effective membership and consistency of value," AICCON Working Papers 111-2012, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    3. Valentinov, Vladislav & Vaceková, Gabriela, 2015. "Sustainability of Rural Nonprofit Organizations: Czech Republic and Beyond," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 7(8), pages 9890-9906.
    4. Silvia Sacchetti & Ermanno C. Tortia, 2010. "A NEW FRAMEWORK FOR THE ECONOMIC ANALYSIS OF COOPERATIVE FIRMS: Self-defined rules, common resources, motivations, and incentives," Econometica Working Papers wp21, Econometica.
    5. Vladislav Valentinov & Gabriela Vaceková, 2015. "Sustainability of Rural Nonprofit Organizations: Czech Republic and Beyond," Sustainability, MDPI, vol. 7(8), pages 1-17, July.
    6. Sacchetti, Silvia & Tortia, Ermanno, 2013. "The Silver Lining Of Cooperation," AICCON Working Papers 125-2013, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    7. Thieme, Lutz & Falk, Rüdiger, 2021. "Zur Entwicklung von Vergütungssystemen in deutschen Großsportvereinen," Working Papers of the European Institute for Socioeconomics 35, European Institute for Socioeconomics (EIS), Saarbrücken.
    8. Vladislav Valentinov, 2012. "Toward a holistic nonprofit economics: insights from institutionalism and systems theory," Journal of Bioeconomics, Springer, vol. 14(1), pages 77-89, April.

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