Firms, nonprofits, and cooperatives: A theory of organizational choice

Patrick Herbst, Jens Prüfer

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We formalize the difference between profit-maximizing firms, nonprofits, and cooperatives and identify optimal organizational choice in a model of quality provision. Firms provide lowest and nonprofits highest levels of quality. Efficiency, however, depends on the competitive environment, the decision making process among owners and technology. Firms are optimal when decision making costs are high. Else, firms are increasingly dominated by either nonprofits or cooperatives. Increased competition improves relative efficiency of firms and decreases relative efficiency of nonprofits.
Original languageEnglish
Pages (from-to)315-343
JournalAnnals of Public and Cooperative Economics
Volume87
DOIs
Publication statusPublished - Sep 2016

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Keywords

  • theory of the firm
  • nonprofits
  • cooperatives
  • organizational choice
  • organizational change

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