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Structural embeddedness and the liability of newness among nonprofit organizations

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  • Mark A Hager
  • Joseph Galaskiewicz
  • Jeff A Larson

Abstract

Ecological studies have consistently reported that younger organizations are more likely to close or disband than older organizations. This article uses neo-institutional theory and social capital theory to explore this finding. We derive hypotheses from these perspectives and test them on a panel of nonprofit organizations in Minneapolis-St Paul (USA) using event history analysis. We find that larger organizations and organizations more dependent upon private donations are less likely to close, and government funding reduces the age effect on mortality; that is, older and younger publicly funded organizations are equally likely to survive or fail. However, among older organizations, not having government funding increases chances of survival. In contrast, volunteer staffing accentuates the age effect. Older organizations that were more dependent on volunteers had a lower likelihood of closure than younger organizations dependent on volunteers, while age had no effect on closure for organizations not dependent on volunteers. We conclude by examining our findings in light of the extant thinking on the liability of newness and the role of institutional and network embeddedness on the chances of organizational survival.

Suggested Citation

  • Mark A Hager & Joseph Galaskiewicz & Jeff A Larson, 2004. "Structural embeddedness and the liability of newness among nonprofit organizations," Public Management Review, Taylor & Francis Journals, vol. 6(2), pages 159-188, June.
    • Handle: RePEc:taf:pubmgr:v:6:y:2004:i:2:p:159-188
    DOI: 10.1080/1471903042000189083
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    2. Murphy Patrick J. & Pollack Jeff & Nagy Brian & Rutherford Matthew & Coombes Susan, 2019. "Risk Tolerance, Legitimacy, and Perspective: Navigating Biases in Social Enterprise Evaluations," Entrepreneurship Research Journal, De Gruyter, vol. 9(4), pages 1-19, October.
    3. Pernille Gjerløv-Juel & Michael S. Dahl, 2012. "Spin-off Growth and Job Creation: Evidence on Denmark," Chapters, in: Guido Buenstorf (ed.), Evolution, Organization and Economic Behavior, chapter 10, Edward Elgar Publishing.
    4. Amankwah-Amoah, Joseph, 2016. "An integrative process model of organisational failure," Journal of Business Research, Elsevier, vol. 69(9), pages 3388-3397.
    5. Aparna Katre & Paul Salipante, 2012. "Start–Up Social Ventures: Blending Fine–Grained Behaviors from Two Institutions for Entrepreneurial Success," Entrepreneurship Theory and Practice, , vol. 36(5), pages 967-994, September.
    6. Amankwah-Amoah, Joseph, 2015. "A unified framework for incorporating decision-.making into explanations of business failure," MPRA Paper 65896, University Library of Munich, Germany.
    7. Ravi Chinta & Mee-Shew Cheung & Nejat Capar, 2015. "Double Whammy or Double Advantage: ¡°Foreignness¡± and ¡°Newness¡± as Determinants of Success in International Business," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 6(1), pages 76-87, February.
    8. Rhys Andrews, 2022. "Organizational Publicness and Mortality: Explaining the Dissolution of Local Authority Companies," Public Management Review, Taylor & Francis Journals, vol. 24(3), pages 350-371, March.
    9. Edeoba William Edobor & Maria I. Marshall, 2021. "Earth, wind, water, fire and man: How disasters impact firm births in the USA," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 107(1), pages 395-421, May.
    10. Mihaela PACESILA, 2018. "Promoting The Image Of Ngos In Society," Proceedings of Administration and Public Management International Conference, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 14(1), pages 104-112, October.
    11. Lam, Marcus & Klein, Sacha & Freisthler, Bridget & Weiss, Robert E., 2013. "Child center closures: Does nonprofit status provide a comparative advantage?," Children and Youth Services Review, Elsevier, vol. 35(3), pages 525-534.
    12. Ashley Shena, 2014. "The Impact of Government Funding on Competition in the Nonprofit Sector: An Integrative Model and Review of Empirical Research," Nonprofit Policy Forum, De Gruyter, vol. 5(2), pages 289-305, October.
    13. Kelsey M. Taylor & Eugenia Rosca, 2023. "Sink, swim, or drift: How social enterprises use supply chain social capital to balance tensions between impact and viability," Journal of Supply Chain Management, Institute for Supply Management, vol. 59(2), pages 62-86, April.
    14. Sebastian Ion Ceptureanu & Eduard Gabriel Ceptureanu & Vlad Liviu Bogdan & Violeta Radulescu, 2018. "Sustainability Perceptions in Romanian Non-Profit Organizations: An Exploratory Study Using Success Factor Analysis," Sustainability, MDPI, vol. 10(2), pages 1-23, January.
    15. Zhang, Yanlong, 2015. "The contingent value of social resources: Entrepreneurs' use of debt-financing sources in Western China," Journal of Business Venturing, Elsevier, vol. 30(3), pages 390-406.
    16. Lokhman Hakim BIN OSMAN, 2015. "Network Communication Model: Propensity Of Network Inter-Connectivity Based On Types Of Network Relations," Management and Marketing Journal, University of Craiova, Faculty of Economics and Business Administration, vol. 0(2), pages 274-294, November.
    17. Nikolić Nenad & Jovanović Ivan & Nikolić Đorđe & Mihajlović Ivan & Schulte Peter, 2019. "Investigation of the Factors Influencing SME Failure as a Function of Its Prevention and Fast Recovery after Failure," Entrepreneurship Research Journal, De Gruyter, vol. 9(3), pages 1-21, July.
    18. Ronelle Burger & Trudy Owens, 2011. "Receive Grants or Perish? The Survival Prospects of African Nongovernmental Organizations," Discussion Papers 11/07, University of Nottingham, CREDIT.
    19. Goodman, Christopher B, 2019. "Patterns in Special District Creation and Dissolution," SocArXiv zwgjh, Center for Open Science.
    20. Aki Harima & Fabrice Periac & Tony Murphy & Salomé Picard, 2021. "Entrepreneurial Opportunities of Refugees in Germany, France, and Ireland: Multiple Embeddedness Framework," International Entrepreneurship and Management Journal, Springer, vol. 17(2), pages 625-663, June.
    21. Amankwah-Amoah, Joseph & Zhang, Hongxu, 2014. "What can we learn from failed international companies?," MPRA Paper 63591, University Library of Munich, Germany, revised 2014.
    22. Helen Haugh & Paul Robson & John Hagedoorn & Kate Sugar, 2022. "The nascent ecology of social enterprise," Small Business Economics, Springer, vol. 58(3), pages 1223-1242, March.
    23. Gila Burde, 2018. "Improved Methods for Predicting the Financial Vulnerability of Nonprofit Organizations," Administrative Sciences, MDPI, vol. 8(1), pages 1-8, February.

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