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Faithful Strategies: How Religion Shapes Nonprofit Management

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  • Lapo Filistrucchi

    (Department of Economics and Management, University of Florence, 50127 Florence, Italy; CentER and Tilburg Law and Economics Center (TILEC), Tilburg University, 5000 LE Tilburg, Netherlands)

  • Jens Prüfer

    (Department of Economics, CentER and TILEC, Tilburg University, 5000 LE Tilburg, Netherlands)

Abstract

This paper studies the strategies employed by Catholic and Protestant nonprofit hospitals in Germany and traces them back to the theological foundations of those religions. Using a unique data set, we find that Catholic nonprofit hospitals follow a strategy of horizontal diversification and maximization of the number of patients treated. By contrast, Protestant hospitals pursue a strategy of horizontal specialization and focus on vertical differentiation, putting in more sophisticated inputs and producing more complex services. These effects increase if the environment of a hospital gets more competitive. We present a model that rationalizes the strategic differences as a result of the difference between Catholic and Protestant values identified in the literature. We then test alternative explanations to the observed empirical differences and show that none of them is supported by the data.

Suggested Citation

  • Lapo Filistrucchi & Jens Prüfer, 2019. "Faithful Strategies: How Religion Shapes Nonprofit Management," Management Science, INFORMS, vol. 65(1), pages 188-208, January.
    • Handle: RePEc:inm:ormnsc:v:65:y:2019:i:1:p:188-208
    DOI: 10.1287/mnsc.2017.2945
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    Cited by:

    1. Prüfer, Jens & Xu, Y., 2021. "The Nonprofit's Dilemma," Other publications TiSEM bf17c5e5-ed33-4e3b-a52b-e, Tilburg University, School of Economics and Management.
    2. Adrian Chadi & Matthias Krapf, 2017. "The Protestant Fiscal Ethic: Religious Confession And Euro Skepticism In Germany," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1813-1832, October.
    3. Francisco Gomez Martinez & Sander Onderstal & Maarten Pieter Schinkel, 2019. "Can Collusion Promote Corporate Social Responsibility? Evidence from the Lab," Tinbergen Institute Discussion Papers 19-034/VII, Tinbergen Institute, revised 12 Nov 2019.
    4. Burbano, Vanessa C. & Ostler, James, 2021. "Differences in consumer-benefiting misconduct by nonprofit, for-profit, and public organizations," Organizational Behavior and Human Decision Processes, Elsevier, vol. 166(C), pages 117-136.
    5. Prüfer, Jens, 2018. "Trusting privacy in the cloud," Information Economics and Policy, Elsevier, vol. 45(C), pages 52-67.

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    More about this item

    Keywords

    nonprofits; not-for-profit sector; religious values; religious organizations; Catholicism and Protestantism;
    All these keywords.

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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