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Non-Profit Organizations in a Bureaucratic Environment

  • Paul A. Grout
  • Wendelin Schnedler

    ()

How does the environment of an organization influence whether workers voluntarily provide effort? We study the power relationship between a non-profit unit (e.g. university department, NGO, health trust), where workers care about the result of their work, and a bureaucrat, who supplies some input to the non-profit unit, but has opportunity costs in doing so (e.g. Dean of faculty, corrupt representative, government agency). We find that marginal changes in the balance of power eventually have dramatic effects on donated labor. We also identify when strengthening the non-profit unit decreases and when it increases donated labor.

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Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 08/202.

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Length: 30 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:bri:cmpowp:08/202
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  1. Schnedler, Wendelin & Vadovic, Radovan, 2007. "Legitimacy of Control," IZA Discussion Papers 3013, Institute for the Study of Labor (IZA).
  2. Ellingsen, Tore & Johannesson, Magnus, 2006. "Pride and Prejudice: The Human Side of Incentive Theory," CEPR Discussion Papers 5768, C.E.P.R. Discussion Papers.
  3. Tim Besley & Maitreesh Ghatak, 2005. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 928, London School of Economics and Political Science, LSE Library.
  4. Wendelin Schnedler, 2008. "When Is It Foolish to Reward for A While Benefiting from B?," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 595-619, October.
  5. Francois, Patrick, 2000. "'Public service motivation' as an argument for government provision," Journal of Public Economics, Elsevier, vol. 78(3), pages 275-299, November.
  6. Roland Bénabou & Jean Tirole, 2005. "Incentives and Prosocial Behavior," NBER Working Papers 11535, National Bureau of Economic Research, Inc.
  7. Guido Friebel & Wendelin Schnedler, 2011. "Team Governance: Empowerment or Hierarchical Control," Post-Print hal-00978261, HAL.
  8. Armin Falk & Michael Kosfeld, . "The Hidden Costs of Control," IEW - Working Papers 250, Institute for Empirical Research in Economics - University of Zurich.
  9. Glaeser, Edward L. & Shleifer, Andrei, 2001. "Not-for-profit entrepreneurs," Journal of Public Economics, Elsevier, vol. 81(1), pages 99-115, July.
  10. Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers 372, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Dirk Sliwka, 2003. "On the Hidden Costs of Incentive Schemes," Bonn Econ Discussion Papers bgse12_2003, University of Bonn, Germany.
  12. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817, July.
  13. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
  14. Avinash Dixit, 2002. "# Incentives and Organizations in the Public Sector: An Interpretative Review," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 696-727.
  15. Marisa Ratto & Wendelin Schnedler, 2004. "Too Few Cooks Spoil The Broth," Royal Economic Society Annual Conference 2004 154, Royal Economic Society.
  16. David Easley & Maureen O'Hara, 1983. "The Economic Role of the Nonprofit Firm," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 531-538, Autumn.
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