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Employee Care and the Role of Nonprofit Organizations

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  • Patrick Francois

Abstract

Employees may care about the effect of their labor effort on output. When such care exists, this paper shows that nonprofit organizations (NPOs) are able to motivate their workers at lower cost than a standard profit-maximizing firm. Unlike previous explanations for NPOs, which depend on the noncontractibility of output, this explanation is consistent with the sectoral pattern of NPO activity. It also generates predictions about when NPOs are likely to be more efficient and predicts differences in employment patterns between for-profit firms and NPOs that are consistent with observations.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 157 (2001)
Issue (Month): 3 (September)
Pages: 443-

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200109)157:3_443:ecatro_2.0.tx_2-

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Cited by:
  1. Vlassopoulos, Michael, 2007. "Volunteer hiring, organizational form and the provision of mission-oriented goods," Discussion Paper Series In Economics And Econometrics 0707, Economics Division, School of Social Sciences, University of Southampton.
  2. Gregory E. Goering, 2007. "The strategic use of managerial incentives in a non-profit firm mixed duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 83-91.
  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. Goering, Gregory E., 2008. "Welfare impacts of a non-profit firm in mixed commercial markets," Economic Systems, Elsevier, vol. 32(4), pages 326-334, December.

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