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

Herbst P & Prufer J (2016) Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice, Annals of Public and Cooperative Economics, 87 (3), pp. 315-343.

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.

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

AuthorsHerbst Patrick, Prufer Jens
Publication date09/2016
Publication date online30/05/2016
Date accepted by journal08/01/2016
PublisherWiley-Blackwell for CIRIEC
ISSN 1370-4788

Annals of Public and Cooperative Economics: Volume 87, Issue 3

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