The Economics Of The Non-Distribution Constraint: A Critical Reappraisal
This paper re-examines the non-distribution constraint as a key structural feature of non-profit organization. It argues that its traditional understanding as a trustworthiness-enhancing device is incomplete. This paper shows that the non-distribution constraint is also a reflection of the directly utility-enhancing character of involvement in non-profit firms for their key stakeholders. This alternative explanation allows one to solve the central puzzle of trustworthiness theory: why doesn't the non-distribution constraint destroy entrepreneurial motivation? Additionally, it helps one to understand the role of the non-distribution constraint in economic theories of non-profit organization that do not rely on trustworthiness theory. Finally, it enables one to logically integrate the different economic theories of non-profit organization. Copyright © 2008 The Author Journal compilation © CIRIEC 2008.
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Volume (Year): 79 (2008)
Issue (Month): 1 (03)
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