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Competition and Performance in the Nonprofit Sector: The Case of U.S. Medical Research Charities

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  • Feigenbaum, Susan

Abstract

This paper develops a model of nonprofit firm behavior which links nonprofit market structure, firm-specific characteristics, and firm performance. A method for defining nonprofit industries is proposed in order to generate measures of intramarket competition for donations in one specific philanthropic "industry"-the medical research charity industry. These measures and other data are used to estimate structure-performance relationships implied by the behavioral model. Analysis of administrative, fundraising and research allocations shows that market structure is indeed important in determining the behavior of charities. Increases in market concentration lead to reduced funding for research projects and greater discretionary expenditures. Copyright 1987 by Blackwell Publishing Ltd.

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  • Feigenbaum, Susan, 1987. "Competition and Performance in the Nonprofit Sector: The Case of U.S. Medical Research Charities," Journal of Industrial Economics, Wiley Blackwell, vol. 35(3), pages 241-253, March.
    • Handle: RePEc:bla:jindec:v:35:y:1987:i:3:p:241-53
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    Cited by:

    1. Aldashev, Gani & Verdier, Thierry, 2010. "Goodwill bazaar: NGO competition and giving to development," Journal of Development Economics, Elsevier, vol. 91(1), pages 48-63, January.
    2. Graddy-Reed, Alexandra, 2020. "Getting ahead in the race for a cure: How nonprofits are financing biomedical R&D," Research Policy, Elsevier, vol. 49(8).
    3. Pierre-Guillaume Méon & Philip Verwimp, 2016. "Pro-social behavior after a disaster: parochial or universal? Evidence from a natural experiment in Belgium," Working Papers CEB 16-054, ULB -- Universite Libre de Bruxelles.
    4. Gayle, Philip G. & Harrison, Teresa D. & Thornton, Jeremy, 2017. "Entry, donor market size, and competitive conduct among nonprofit firms," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 294-318.
    5. Harrison Teresa & Thornton Jeremy, 2014. "Too Many Nonprofits? An Empirical Approach to Estimating Trends in Nonprofit Demand Density," Nonprofit Policy Forum, De Gruyter, vol. 5(2), pages 213-229, October.
    6. Peter Backus & David Clifford, 2013. "Are big charities becoming more dominant?: cross-sectional and longitudinal perspectives," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(3), pages 761-776, June.
    7. Crettez, Bertrand & Hayek, Naila & Zaccour, Georges, 2020. "Do charities spend more on their social programs when they cooperate than when they compete?," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1055-1063.
    8. Crettez, Bertrand & Hayek, Naila & Zaccour, Georges, 2021. "Optimal dynamic management of a charity under imperfect altruism," Omega, Elsevier, vol. 100(C).
    9. Faulk Lewis, 2014. "Overcoming the Cause of Failure and the Role of Issue Salience: Toward a Comprehensive Theory for Nonprofit Activity and Competition in a Three-Sector Economy," Nonprofit Policy Forum, De Gruyter, vol. 5(2), pages 335-365, October.
    10. Ly, Pierre & Mason, Geri, 2012. "Competition Between Microfinance NGOs: Evidence from Kiva," World Development, Elsevier, vol. 40(3), pages 643-655.
    11. Debadutta K. Panda, 2019. "Competitive dynamics in not-for-profit organizations: evidence from India," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 1251-1274, December.

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