Governance and Behavior in Nonprofits: Analysis of Uruguayan Health Care Organizations

Literature on nontraditional firms has focused on behavioral differences with for-profit firms. Less attention has been given to the variations in behavior among nontraditional firms. This chapter examines differences across three types of Uruguayan nonprofit health care organizations. This chapter draws on a unique dataset of Uruguayan health care organizations during the period 1982–1990, as well as interviews with doctors working in the three types of nonprofits during spring 2010. We use a simple OLS regression to identify differences in average behavior, and differences in reaction to a regulatory change. The chapter shows that structure of stake holding and governance significantly affect behavior, even where many behaviors are highly regulated. These findings highlight the importance of specifying governance structure when predicting behavior of nontraditional firms. Empirical tests of behavioral differences between traditional and nontraditional firms will be more meaningful if the governance structure of nontraditional firms is common and specified. A limitation of our study is our inability to control for the timing of degeneration of producer cooperatives. This would be one element of governance structure to consider in future data collection. These findings highlight the need to avoid drawing broad policy conclusions from the behavior of a specific subset of nontraditional firms. This chapter highlights the importance of carefully specifying stakeholder and governance structure when predicting behavior of nontraditional firms. It is of interest to anyone using a sample of nontraditional firms to test general hypotheses about their behavior.