Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice

P. Herbst, J. Prüfer

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper formalizes the difference between firms, nonprofits, and cooperatives and identifies optimal organizational choice. In a model of quality provision, we find a clear ranking of quality produced: Firms provide lowest and nonprofits highest levels of quality. Efficiency, however, depends on the competitive environment, the decision making process and technology. Cooperatives are optimal when decision making costs are low. Else, cooperatives are increasingly dominated by either nonprofits or firms (depending on the incremental costs of quality production). Finally, changes in the competitive environment affect organizational choice: Increased competition induces a shift towards firm organization and away from nonprofits.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages40
Volume2007-7
Publication statusPublished - 2007

Publication series

NameCentER Discussion Paper
Volume2007-7

Fingerprint

Competitive environment
Ranking
Decision-making process
Incremental cost
Decision making
Costs

Keywords

  • Theory of the Firm
  • Cooperatives
  • Nonprofits
  • Organizational Choice
  • Organizational Change

Cite this

Herbst, P., & Prüfer, J. (2007). Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice. (CentER Discussion Paper; Vol. 2007-7). Tilburg: Microeconomics.
Herbst, P. ; Prüfer, J. / Firms, Nonprofits, and Cooperatives : A Theory of Organizational Choice. Tilburg : Microeconomics, 2007. (CentER Discussion Paper).
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Herbst, P & Prüfer, J 2007 'Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice' CentER Discussion Paper, vol. 2007-7, Microeconomics, Tilburg.

Firms, Nonprofits, and Cooperatives : A Theory of Organizational Choice. / Herbst, P.; Prüfer, J.

Tilburg : Microeconomics, 2007. (CentER Discussion Paper; Vol. 2007-7).

Research output: Working paperDiscussion paperOther research output

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N2 - This paper formalizes the difference between firms, nonprofits, and cooperatives and identifies optimal organizational choice. In a model of quality provision, we find a clear ranking of quality produced: Firms provide lowest and nonprofits highest levels of quality. Efficiency, however, depends on the competitive environment, the decision making process and technology. Cooperatives are optimal when decision making costs are low. Else, cooperatives are increasingly dominated by either nonprofits or firms (depending on the incremental costs of quality production). Finally, changes in the competitive environment affect organizational choice: Increased competition induces a shift towards firm organization and away from nonprofits.

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KW - Cooperatives

KW - Nonprofits

KW - Organizational Choice

KW - Organizational Change

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Herbst P, Prüfer J. Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice. Tilburg: Microeconomics. 2007. (CentER Discussion Paper).