Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice

CentER Discussion Paper No. 2007-07

TILEC Discussion Paper No. 2007-003

31 Pages Posted: 2 Jun 2005 Last revised: 30 Jan 2014

See all articles by Patrick Herbst

Patrick Herbst

University of Stirling - Department of Accounting and Finance

Jens Prufer

Tilburg University - CentER; Tilburg University - Department of Economics; Tilburg University - Law and Economics Center (TILEC)

Multiple version iconThere are 2 versions of this paper

Date Written: September 20, 2011

Abstract

We formalize the difference between firms, nonprofits, and cooperatives and identify optimal organizational choice in a model of quality provision. Firms provide lowest and nonprofits highest levels of quality. Efficiency, however, depends on the competitive environment, the decision making process among owners and technology. Firms are optimal when decision making costs are high. Else, firms are increasingly dominated by either nonprofits or cooperatives (depending on the incremental costs of quality production). Increased competition improves relative efficiency of firms and decreases relative efficiency of nonprofits.

Keywords: Theory of the Firm, Nonprofits, Cooperatives, Organizational Choice, Organizational Change

JEL Classification: L21, L31, D23

Suggested Citation

Herbst, Patrick and Prufer, Jens, Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice (September 20, 2011). CentER Discussion Paper No. 2007-07; TILEC Discussion Paper No. 2007-003. Available at SSRN: https://ssrn.com/abstract=734125 or http://dx.doi.org/10.2139/ssrn.734125

Patrick Herbst (Contact Author)

University of Stirling - Department of Accounting and Finance ( email )

Stirling, Scotland FK9 4LA
United Kingdom

Jens Prufer

Tilburg University - CentER ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
436
Abstract Views
2,121
rank
65,032
PlumX Metrics