The Contextual Impact of Nonprofit Board Composition and Structure on Organizational Performance: Agency and Resource Dependence Perspectives

International Journal of Voluntary and Nonprofit Organizations, Forthcoming

Posted: 26 Sep 2009

See all articles by Jeffrey L. Callen

Jeffrey L. Callen

University of Toronto - Rotman School of Management

April Klein

New York University (NYU) - Department of Accounting

Daniel Tinkelman

Pace University

Date Written: September 25, 2009

Abstract

We study the relation between stability of the nonprofit organization’s environment and its board structure and the impact of this relation on organizational performance from the perspectives of both Agency Theory and Resource Dependence (Boundary Spanning) Theory. The impact of board characteristics on organizational performance is contextual. Specifically, we predict and show for a sample of U.S. nonprofits that board mechanisms related to monitoring are more likely to be effective for stable organizations, whereas board mechanisms related to boundary spanning are more effective for less stable organizations. We find that the two theories are complementary and address different aspects of nonprofit performance, but the results are statistically stronger and more often consistent with resource dependence than with agency theory. Overall, this study supports Miller-Millesen’s (2003) contention that, because the nonprofit environment is often more complex and heterogeneous than the for-profit world, no one theory describes all tasks of nonprofit boards.

Keywords: nonprofit governance, boards, resource dependency, agency theory, organizational stability

JEL Classification: D23, L31, M41

Suggested Citation

Callen, Jeffrey L. and Klein, April and Tinkelman, Daniel, The Contextual Impact of Nonprofit Board Composition and Structure on Organizational Performance: Agency and Resource Dependence Perspectives (September 25, 2009). International Journal of Voluntary and Nonprofit Organizations, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1478647

Jeffrey L. Callen (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-5641 (Phone)
416-971-3048 (Fax)

April Klein

New York University (NYU) - Department of Accounting ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012
United States

Daniel Tinkelman

Pace University ( email )

1 Pace Plaza
Lubin School of Business
New York, NY 10038-1502
United States

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