Nonprofit-business collaboration: An empirical-based framework for value creation

Abstract

While interest in nonprofit-business collaboration (NBC) has grown rapidly in the past decades, literature has underexposed the peculiarities of nonprofit organizations (NPOs), compared to the ample attention on the perspective of the firm and the implications for society. In specific, we lack clarity on how NPOs can deliberately seek collaboration with the business sector to foster their organizational viability and economic interests, in addition to their traditional focus on delivering social value and meaningfulness. This active approach has become imperative given the growing uncertainty of government funding and budgetary constraints. However, the proactive involvement in NBC is complex and risky. In this study, we address this dilemma by investigating several NPOs that are active in NBC. Based on the analysis and findings, we developed an empirical-based framework that explains the essence of NPOs’ proactive engagement with the business sector. More specifically, we offer subtle theoretical and empirical investigations of various internal and external contingencies that explain the effectiveness of NPOs in establishing collaboration with firms for value creation. Moreover, we advance the current debate concerning the need to establish a clear distinction between value creation for society (conceived as the sum of benevolent benefits obtained from the collaboration) and for the partners. As such, we showed that the active-in-collaboration NPOs distinguish between different NBC values that include economic benefits (for survival), institutional development (for organizational effectiveness), and transformational for changing business practice (for the fulfillment of mission). Therefore, we shift the focus from the predominating perspectives of society and business to consider NPOs as an active component of this relationship. Together, these findings offer a robust nonprofit-centric foundation that is necessary for NBC practice and theory development. JEL Classification: M1 Business Administration