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Nonprofit organizations, institutional economics, and systems thinking

Listed author(s):
  • Valentinov, Vladislav
  • Hielscher, Stefan
  • Pies, Ingo

The present paper applies the logic of John Kenneth Gailbraith's institutional economics analysis of corporate power to inquiring into the societal role of the nonprofit sector. Building on Galbraith's insight that corporations cause subtle but pervasive societal imbalances, the paper locates the role of nonprofit organizations in compensating for these imbalances, thus showing corporations and nonprofit organizations to be mutually complementary rather than antagonistic actors. This argument is supported by Niklas Luhmann's vision of the precarious relationship between the complexity and sustainability of social systems as well as by Kenneth Boulding's analysis of the farmer and labor movement. Luhmann's and Boulding's perspectives show profit-seeking corporations to be social systems developing high technological complexity at the cost of sacrificing their societal sustainability, while the improvement of the latter constitutes the rationale of many nonprofit organizations. The same systems-theoretic logic suggests, however, that nonprofit organizations may tend to underestimate the technological complexity of implementing their mission-related activities, thereby undermining their own effectiveness.

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File URL: http://www.sciencedirect.com/science/article/pii/S0939362515000278
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Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 39 (2015)
Issue (Month): 3 ()
Pages: 491-501

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Handle: RePEc:eee:ecosys:v:39:y:2015:i:3:p:491-501
DOI: 10.1016/j.ecosys.2014.12.002
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  7. Valentinov, Vladislav, 2014. "K. William Kapp's theory of social costs: A Luhmannian interpretation," Ecological Economics, Elsevier, vol. 97(C), pages 28-33.
  8. Jacques Defourny & Marthe Nyssens, 2010. "Conceptions of Social Enterprise and Social Entrepreneurship in Europe and the United States: Convergences and Divergences," Journal of Social Entrepreneurship, Taylor & Francis Journals, vol. 1(1), pages 32-53, March.
  9. Wolfram Elsner, 2012. "The Theory of Institutional Change Revisited: The Institutional Dichotomy, Its Dynamic, and Its Policy Implications in a More Formal Analysis," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 46(1), pages 1-44, March.
  10. 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.
  11. Valentinov, Vladislav, 2015. "From equilibrium to autopoiesis: A Luhmannian reading of Veblenian evolutionary economics," Economic Systems, Elsevier, vol. 39(1), pages 143-155.
  12. Putterman, Louis, 2013. "Institutions, social capability, and economic growth," Economic Systems, Elsevier, vol. 37(3), pages 345-353.
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