Risky business? The survival implications of exploiting commercial opportunities by nonprofits

Abstract

Prior research is equivocal as to the performance implications of exploiting market-based opportunities by nonprofit organizations. We investigate an under-addressed measure of performance in this literature: organizational survival. Drawing upon resource dependence theory, we argue that performance is largely dependent upon the extent to which nonprofits focus on market-based opportunities. Through analysis of the population of Canadian charities, we find support for a U-shaped relationship indicating that low to moderate levels of market-based income decrease the likelihood of firm exit, whereas high levels increase this likelihood.