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Quality, service level, or empire: which is the objective of the nonprofit arts firm?

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  • Arthur Brooks
  • Jan Ondrich

Abstract

In this article, we examine the objectives of nonprofit arts firms. We approach this problem from both theoretical and empirical angles, building a structural model of arts nonprofit utility that distinguishes between the maximization of quality, the organization’s level of service, and its budget. We then construct an empirical method for testing which objective is evident in firm-level data. As an example application, we test the objectives of the managers of American public radio stations in the 1990s, finding that about half of stations have discernible objectives. The data show service is not an objective for about 30% of the stations; quality can be ruled out for 49%; and budget is rejected for 69%. In addition, large stations are harder to classify by objective than small ones are. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Arthur Brooks & Jan Ondrich, 2007. "Quality, service level, or empire: which is the objective of the nonprofit arts firm?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 31(2), pages 129-142, June.
    • Handle: RePEc:kap:jculte:v:31:y:2007:i:2:p:129-142
    DOI: 10.1007/s10824-007-9032-0
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    References listed on IDEAS

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    1. Richard Steinberg, 1986. "The Revealed Objective Functions of Nonprofit Firms," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 508-526, Winter.
    2. Harvey, A C, 1976. "Estimating Regression Models with Multiplicative Heteroscedasticity," Econometrica, Econometric Society, vol. 44(3), pages 461-465, May.
    3. David Card & Alan B. Krueger, 1996. "Labor Market Effects of School Quality: Theory and Evidence," NBER Working Papers 5450, National Bureau of Economic Research, Inc.
    4. repec:fth:prinin:357 is not listed on IDEAS
    5. Arthur C. Brooks, 2000. "Public subsidies and charitable giving: Crowding out, crowding in, or both?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(3), pages 451-464.
    6. Henry Hansmann, 1981. "Nonprofit Enterprise in the Performing Arts," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 341-361, Autumn.
    7. Throsby, David, 1994. "The Production and Consumption of the Arts: A View of Cultural Economics," Journal of Economic Literature, American Economic Association, vol. 32(1), pages 1-29, March.
    8. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
    9. Bruce R. KINGMA & Robert McClelland, 1995. "PUBLIC RADIO STATIONS ARE REALLY, REALLY NOT PUBLIC GOODS: Charitable contributions and impure altruism," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 66(1), pages 65-76, March.
    10. David Card & Alan Krueger, 1996. "Labor Market Effects of School Quality: Theory and Evidence," Working Papers 736, Princeton University, Department of Economics, Industrial Relations Section..
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    More about this item

    Keywords

    Public radio; Charitable giving; Managerial objectives; Z11; L31;
    All these keywords.

    JEL classification:

    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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