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Nonprofit Organization and the Division of Labor: A Theoretical Perspective

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  • Vladislav Valentinov

Abstract

This paper asks whether nonprofit organization can have a positive rationale in an economy based on the division of labor, taking into account that the process of the division of labor occurs through profit-motivated economic behavior. By reconsidering existing economic theories of nonprofit organization in the context of the theory of the division of labor, the paper shows nonprofit organization to be an institutional consequence of two limitations on the division of labor: high coordination costs among interdependent agents and the existence of production-related, as opposed to consumption-related, preferences. These limitations prevent the system of the division of labor from fully gratifying the consumption preferences of economic agents and, thereby, create a functional niche for nonprofit organization. Copyright International Atlantic Economic Society 2006

Suggested Citation

  • Vladislav Valentinov, 2006. "Nonprofit Organization and the Division of Labor: A Theoretical Perspective," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 34(4), pages 435-447, December.
    • Handle: RePEc:kap:atlecj:v:34:y:2006:i:4:p:435-447
    DOI: 10.1007/s11293-006-9032-z
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    References listed on IDEAS

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    Cited by:

    1. Sahar Bahmani & Miguel-Ángel Galindo & María Méndez, 2012. "Non-profit organizations, entrepreneurship, social capital and economic growth," Small Business Economics, Springer, vol. 38(3), pages 271-281, April.

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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