IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/v18y2018i2p20n2.html
   My bibliography  Save this article

Going Along or Going Independent? A Dynamic Analysis of Nonprofit Alliances

Author

Listed:
  • Chen Jiawei

    (University of California Irvine, Department of Economics, 3151 Social Sciences Plaza A,Irvine, CA 92697, USA)

  • Sacks Michael

    (West Virginia University, Department of Economics and Center for Free Enterprise, 1601 University Ave., PO Box 6025,Morgantown, WV 26505, USA)

Abstract

This paper investigates strategic alliances in the nonprofit sector in the form of franchising. Using a dynamic model of local public goods with endogenous affiliation and splitting, we show that local organizations may choose to affiliate with the national organization for faster capital accumulation. Temporary alliance occurs when a local organization strategically affiliates with the national organization only to break away after accumulating enough capital. Alliance is more likely to arise and persist when the local chapter is smaller, when the local chapter’s mission is closer to the national organization’s, when the national organization is more efficient in production, and when the local chapter is more patient. Moreover, regulation that requires the local chapter to be affiliated with the national organization would be welfare reducing when the local chapter is large, when the local and national missions differ substantially, and when production at the national organization is inefficient.

Suggested Citation

  • Chen Jiawei & Sacks Michael, 2018. "Going Along or Going Independent? A Dynamic Analysis of Nonprofit Alliances," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 18(2), pages 1-20, April.
    • Handle: RePEc:bpj:bejeap:v:18:y:2018:i:2:p:20:n:2
    DOI: 10.1515/bejeap-2017-0009
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejeap-2017-0009
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejeap-2017-0009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Haimanko, Ori & Le Breton, Michel & Weber, Shlomo, 2004. "Voluntary formation of communities for the provision of public projects," Journal of Economic Theory, Elsevier, vol. 115(1), pages 1-34, March.
    2. Ghatak, Maitreesh & Mueller, Hannes, 2011. "Thanks for nothing? Not-for-profits and motivated agents," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 94-105, February.
    3. Anup Malani & Tomas Philipson & Guy David, 2003. "Theories of Firm Behavior in the Nonprofit Sector. A Synthesis and Empirical Evaluation," NBER Chapters, in: The Governance of Not-for-Profit Organizations, pages 181-216, National Bureau of Economic Research, Inc.
    4. April Mitchell Franco & Darren Filson, 2006. "Spin‐outs: knowledge diffusion through employee mobility," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 841-860, December.
    5. Ying Fan & Kai-Uwe Kühn & Francine Lafontaine, 2017. "Financial Constraints and Moral Hazard: The Case of Franchising," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 2082-2125.
    6. Kamien, Morton I & Zang, Israel, 1993. "Competing Research Joint Ventures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 2(1), pages 23-40, Spring.
    7. April Mitchell Franco & Darren Filson, 2006. "Spin‐outs: knowledge diffusion through employee mobility," RAND Journal of Economics, The RAND Corporation, vol. 37(4), pages 841-860, December.
    8. Todd Sandler & John Tschirhart, 1997. "Club theory: Thirty years later," Public Choice, Springer, vol. 93(3), pages 335-355, December.
    9. Fershtman, Chaim & Nitzan, Shmuel, 1991. "Dynamic voluntary provision of public goods," European Economic Review, Elsevier, vol. 35(5), pages 1057-1067, July.
    10. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, September.
    11. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    12. Harrison Teresa D. & Laincz Christopher A, 2008. "Entry and Exit in the Nonprofit Sector," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-42, July.
    13. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-1320, December.
    14. Blair,Roger D. & Lafontaine,Francine, 2011. "The Economics of Franchising," Cambridge Books, Cambridge University Press, number 9780521775892.
    15. Jaramillo, Fernando & Kempf, Hubert & Moizeau, Fabien, 2003. "Inequality and club formation," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 931-955, May.
    16. Renáta Kosová & Francine Lafontaine, 2010. "Survival And Growth In Retail And Service Industries: Evidence From Franchised Chains," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 542-578, September.
    17. Giorgio Zanarone, 2009. "Vertical Restraints and the Law: Evidence from Automobile Franchising," Journal of Law and Economics, University of Chicago Press, vol. 52(4), pages 691-700, November.
    18. Oster, Sharon M., 1996. "Nonprofit organizations and their local affiliates: A study in organizational forms," Journal of Economic Behavior & Organization, Elsevier, vol. 30(1), pages 83-95, July.
    19. Lakdawalla, Darius & Philipson, Tomas, 2006. "The nonprofit sector and industry performance," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1681-1698, September.
    20. Kevin Siqueira & Todd Sandler, 2001. "Models of alliances: Internalizing externalities and financing," Defence and Peace Economics, Taylor & Francis Journals, vol. 12(3), pages 249-270.
    21. Johnson, Tana & Urpelainen, Johannes, 2012. "A Strategic Theory of Regime Integration and Separation," International Organization, Cambridge University Press, vol. 66(4), pages 645-677, October.
    22. repec:bla:jemstr:v:2:y:1993:i:1:p:23-40:a is not listed on IDEAS
    23. Yannis Caloghirou & Stavros Ioannides & Nicholas S. Vonortas, 2003. "Research Joint Ventures," Journal of Economic Surveys, Wiley Blackwell, vol. 17(4), pages 541-570, September.
    24. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carvalho, Jean-Paul & Sacks, Michael, 2021. "The economics of religious communities," Journal of Public Economics, Elsevier, vol. 201(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kosová, Renáta & Lafontaine, Francine, 2012. "Much ado about chains: A research agenda," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 303-308.
    2. Antonio Tesoriere, 2015. "Competing R&D joint ventures in Cournot oligopoly with spillovers," Journal of Economics, Springer, vol. 115(3), pages 231-256, July.
    3. Nathan E. Wilson, 2016. "For-profit status and industry evolution in health care markets: evidence from the dialysis industry," International Journal of Health Economics and Management, Springer, vol. 16(4), pages 297-319, December.
    4. Barigozzi, Francesca & Burani, Nadia, 2016. "Competition and screening with motivated health professionals," Journal of Health Economics, Elsevier, vol. 50(C), pages 358-371.
    5. Modhurima Dey Amin & Syed Badruddoza & Robert Rosenman, 2018. "Quality Differentiation Under Mixed Competition in Hospital Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(4), pages 473-484, December.
    6. Itai Ater & Oren Rigbi, 2007. "Price Control In Franchised Chains: The Case Of McDonald's Dollar Menu," Discussion Papers 06-022, Stanford Institute for Economic Policy Research.
    7. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2012. "Quality competition with profit constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 642-659.
    8. Sacks, Michael, 2021. "Incentives for the over-provision of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 197-213.
    9. Matej Lahovnik Edith Bečić Steiner, 2019. "Organization in New Business Environment: a Franchisor’s View," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 22(SCI), pages 83-94, March.
    10. Lapo Filistrucchi & Jens Prüfer, 2013. "Nonprofits are not alike: The Role of Catholic and Protestant Affiliation," Working Papers - Economics wp2013_07.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    11. Sandler, Todd, 2001. "On financing global and international public goods," Policy Research Working Paper Series 2638, The World Bank.
    12. Boeker, Warren & Howard, Michael D. & Basu, Sandip & Sahaym, Arvin, 2021. "Interpersonal relationships, digital technologies, and innovation in entrepreneurial ventures," Journal of Business Research, Elsevier, vol. 125(C), pages 495-507.
    13. Moscone, Francesco & Siciliani, Luigi & Tosetti, Elisa & Vittadini, Giorgio, 2020. "Do public and private hospitals differ in quality? Evidence from Italy," Regional Science and Urban Economics, Elsevier, vol. 83(C).
    14. Mark J. O. Bagley, 2019. "Networks, geography and the survival of the firm," Journal of Evolutionary Economics, Springer, vol. 29(4), pages 1173-1209, September.
    15. Fredriksen, Lars & Wennberg, Karl & Balachandran, Chanchal, 2015. "Mobility and Entrepreneurship: Evaluating the scope of knowledge-based theories of entrepreneurship," Ratio Working Papers 266, The Ratio Institute.
    16. Laura Marsiliani & Thomas I. Renstroem, 2010. "Privately provided public goods in a dynamic economy," Department of Economics Working Papers 2010_02, Durham University, Department of Economics.
    17. Peter Nunnenkamp & Hannes Öhler & Tillmann Schwörer, 2011. "US based NGOs in International Development Cooperation: Survival of the Fittest?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 83, Courant Research Centre PEG.
    18. Fini, Riccardo & Grimaldi, Rosa & Meoli, Azzurra, 2020. "The effectiveness of university regulations to foster science-based entrepreneurship," Research Policy, Elsevier, vol. 49(10).
    19. Ying Fan & Kai-Uwe Kühn & Francine Lafontaine, 2017. "Financial Constraints and Moral Hazard: The Case of Franchising," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 2082-2125.
    20. Christopher Goetz & Henry Hyatt & Erika McEntarfer & Kristin Sandusky, 2016. "The Promise and Potential of Linked Employer-Employee Data for Entrepreneurship Research," NBER Chapters, in: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, pages 433-462, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    nonprofit; strategic alliance; breakup; industry dynamics; capital accumulation;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:18:y:2018:i:2:p:20:n:2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.