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Faithful Strategies: How Religion Shapes Nonprofit Management

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  • Lapo Filistrucchi

    () (Dipartimento di Scienza per l'Economia e l'Impresa)

  • Jens Prufer

    () (Tilburg University)

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, which shape managers' values. 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. The results are consistent with the predictions of our model, which supports the differences between Catholic and Protestant values identified in the literature.

Suggested Citation

  • Lapo Filistrucchi & Jens Prufer, 2014. "Faithful Strategies: How Religion Shapes Nonprofit Management," Working Papers - Economics wp2014_01.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  • Handle: RePEc:frz:wpaper:wp2014_01.rdf
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    1. Jill R. Horwitz & Austin Nichols, 2007. "What Do Nonprofits Maximize? Nonprofit Hospital Service Provision and Market Ownership Mix," NBER Working Papers 13246, National Bureau of Economic Research, Inc.
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    4. Filistrucchi, L. & Ozbugday, F.C., 2012. "Mandatory Quality Disclosure and Quality Supply : Evidence from German Hospitals," Discussion Paper 2012-031, Tilburg University, Tilburg Law and Economic Center.
    5. Anup Malani & Tomas Philipson & Guy David, 2003. "Theories of Firm Behavior in the Nonprofit Sector. A Synthesis and Empirical Evaluation," NBER Chapters,in: The Governance of Not-for-Profit Organizations, pages 181-216 National Bureau of Economic Research, Inc.
    6. Patrick HERBST & Jens PRUFER, 2016. "Firms, Nonprofits, And Cooperatives: A Theory Of Organizational Choice," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(3), pages 315-343, December.
    7. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
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    9. Josse Delfgaauw & Robert Dur & Carol Propper & Sarah Smith, 2011. "Management Practices: Are Not For Profits Different?," Tinbergen Institute Discussion Papers 11-094/1, Tinbergen Institute.
    10. Adam D. Rennhoff & Mark F. Owens, 2012. "Competition and the Strategic Choices of Churches," American Economic Journal: Microeconomics, American Economic Association, vol. 4(3), pages 152-170, August.
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    12. Edward L. Glaeser, 2003. "Introduction to "The Governance of Not-for-Profit Organizations"," NBER Chapters,in: The Governance of Not-for-Profit Organizations, pages 1-44 National Bureau of Economic Research, Inc.
    13. van Hoorn, André & Maseland, Robbert, 2013. "Does a Protestant work ethic exist? Evidence from the well-being effect of unemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 1-12.
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    Cited by:

    1. 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.
    2. Prüfer, J.O., 2014. "Trusting Privacy in the Cloud," Discussion Paper 2014-047, Tilburg University, Tilburg Law and Economic Center.

    More about this item

    Keywords

    religious values; managers' values; nonprofits; religious organizations; Catholicism and Protestantism;

    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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