Marketization in a statist-corporatist nonprofit sector: the case of Hong Kong

Abstract

In this article, an actor-centered approach was used to conceptualize marketization trends under statist-corporatist regimes and to critically examine theories on the trends and impact of marketization. A grounded theory method was used to guide data collection. A total of 65 critical incidents from the perspective of senior executives were collected from 18 nonprofit organizations in Hong Kong. Their annual budgets all exceeded US$6.5 million. Behavioral event interviews were conducted with the senior executives to understand how they conceptualized the organizational challenges and rationalized their decisions. The results show that commercialization was not a major marketization trend in statist-corporatist regimes. Nonprofit organizations were found enhancing self-governance capacities through building management competencies, articulating organizational policies and know-how, and adopting strategic management. It was not driven by institutional isomorphism. Second, strategic human resource management was revealed as another strategy to reduce resource dependence, which enriches the theory's current focus on earned-income strategies. Third, service expansions were observed as either directed at service gaps or driven by competition. By specifying the rationales for service expansion in exclusively nonprofit service markets, the study nuances the debate over the impact of marketization on nonprofit sectors. Points for practitioners For policymakers, it is important to be aware of the impact of market mechanisms on the nonprofit sector, which varies across countries due to the differences in the institutional framework for social service provision. For nonprofit managers, particularly those working in a statist-corporatist sector, they may benefit from self-governance strategies, revenue strategies such as active fundraising campaigns and regular donor programs, and strategic human resource management practices. More importantly, it is revealed that service expansions driven by competition for market shares and resources could render nonprofits, particularly those serve multiple types of target beneficiaries susceptible to the struggles of defining organizational identity and core competencies.