Quality, reputation and the choice of organizational form
Quality, reputation and the choice of organizational form
This paper revisits the hypothesis that nonprofit organizations emerge in markets that are characterized by contractual incompleteness because they ensure consumers against opportunistic behavior. We extend the Glaeser and Shleifer [Glaeser, E., Shleifer, A., 2001. Not-for-profit entrepreneurs. Journal of Public Economics 81, 99-115] framework, which studies an entrepreneur's optimal choice of organizational form and service quality when quality is non-contractible into a repeated interaction setting. The main result is that when reputations can be sustained, then for-profit status is the preferred organizational form and high quality services are ensured. This finding suggests that existing explanations of nonprofit organizations that focus entirely on contractual imperfections in the producer/consumer relationship may be inadequate
nonprofit status reputation contractual incompleteness
515-527
Vlassopoulos, Michael
2d557227-958c-4855-92a8-b74b398f95c7
August 2009
Vlassopoulos, Michael
2d557227-958c-4855-92a8-b74b398f95c7
Vlassopoulos, Michael
(2009)
Quality, reputation and the choice of organizational form.
Journal of Economic Behavior & Organization, 71 (2), .
(doi:10.1016/j.jebo.2009.02.014).
Abstract
This paper revisits the hypothesis that nonprofit organizations emerge in markets that are characterized by contractual incompleteness because they ensure consumers against opportunistic behavior. We extend the Glaeser and Shleifer [Glaeser, E., Shleifer, A., 2001. Not-for-profit entrepreneurs. Journal of Public Economics 81, 99-115] framework, which studies an entrepreneur's optimal choice of organizational form and service quality when quality is non-contractible into a repeated interaction setting. The main result is that when reputations can be sustained, then for-profit status is the preferred organizational form and high quality services are ensured. This finding suggests that existing explanations of nonprofit organizations that focus entirely on contractual imperfections in the producer/consumer relationship may be inadequate
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Published date: August 2009
Keywords:
nonprofit status reputation contractual incompleteness
Organisations:
Economics, Faculty of Social, Human and Mathematical Sciences
Identifiers
Local EPrints ID: 80161
URI: http://eprints.soton.ac.uk/id/eprint/80161
ISSN: 0167-2681
PURE UUID: a4fe9d78-452e-44be-99f5-011b62edda4c
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Date deposited: 24 Mar 2010
Last modified: 14 Mar 2024 02:52
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