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The Economics Of The Non-Distribution Constraint: A Critical Reappraisal

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  • Vladislav VALENTINOV

Abstract

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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  • Vladislav VALENTINOV, 2008. "The Economics Of The Non-Distribution Constraint: A Critical Reappraisal," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 79(1), pages 35-52, March.
  • Handle: RePEc:bla:annpce:v:79:y:2008:i:1:p:35-52
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    References listed on IDEAS

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    1. G. Bognetti & L. Robotti, 2003. "The Reform of Local Public Utilities in Italy," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 74(1), pages 117-137, March.
    2. Patrick W. Schmitz, 2000. "Partial Privatization and Incomplete Contracts: The Proper Scope of Government Reconsidered," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(4), pages 394-411, August.
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    Cited by:

    1. Sacchetti, Silvia & Tortia, Ermanno, 2012. "The internal and external governance of cooperatives: the effective membership and consistency of value," AICCON Working Papers 111-2012, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    2. repec:zbw:espost:170724 is not listed on IDEAS
    3. Sacchetti, Silvia & Tortia, Ermanno, 2013. "The Silver Lining Of Cooperation," AICCON Working Papers 125-2013, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    4. Vladislav Valentinov, 2012. "Toward a holistic nonprofit economics: insights from institutionalism and systems theory," Journal of Bioeconomics, Springer, vol. 14(1), pages 77-89, April.
    5. Gabriela Vaceková & Zuzana Prouzová, 2014. "Non-profit Commercial Revenues. Evidence from the Czech Republic," Working Papers 16, Masaryk University, Faculty of Economics and Administration, Department of Public Economics, revised Dec 2014.
    6. Silvia Sacchetti & Ermanno C. Tortia, 2010. "A NEW FRAMEWORK FOR THE ECONOMIC ANALYSIS OF COOPERATIVE FIRMS: Self-defined rules, common resources, motivations, and incentives," Econometica Working Papers wp21, Econometica.
    7. Valentinov, Vladislav & Vaceková, Gabriela, 2015. "Sustainability of Rural Nonprofit Organizations: Czech Republic and Beyond," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 9890-9906.

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