Non-profit and for-profit entrepreneurship: a trade-off under liquidity constraint

Abstract

Many non-profit enterprises are created ex-nihilo by individuals. The choice of non-profit status may be all the more surprising since this legal form denies founders the right to appropriate profits from the invested capital. The aim of this article is to understand the reasons why some individuals decide to create nonprofit organisations instead of for-profit firms and do so under liquidity constraint. The model suggests that non-profit organisations enter at higher optimal levels of production, and are more constrained by access to credit. Moreover, non-profit entrepreneurs are more managerially efficient than their for-profit counterparts. However they cannot allocate capital as efficiently as the for-profit firms would do.

Empreendedorismo Em Organizações Sem Fins Lucrativos, Empreendedorismo Social E Hibridismo: Iguais, Similares Ou Diferentes?

“…Foram também identificadas semelhanças específicas entre o empreendedorismo em organizações sem fins lucrativos e o hibridismo, isso quanto à questão da utilização de modelos de gestão e governança; e quanto aos gestores e lideranças destas organizações. (Bilodeau e Slivinski, 1996, 1998Glaser e Shleifer, 2001;Chapelle, 2010; Huarng e Hui-Kuang, 2011; Hustinx e De Waele, 2015). É um conceito, porém que ainda não está bem definido e claro na literatura, ainda busca por uma definição (Martin e Osberg, 2007;Dacin et al, 2010;Abu-Saifan, 2012), pode ter significados diferentes para as pessoas (Dees, 1998) (Rossheim et al, 1995;Bilodeau e Slivinski, 1996, 1998 O empreendedorismo social é associado ao hibridismo, por unir a missão social e de negócio (Doherty et al, 2014).…”

“…E como tal, é pesquisado especificamente nas organizações sem fins lucrativos. Nesta temática, diversos estudos foram identificados (Bilodeau e Slivinski, 1996, 1998Glaeser e Shleifer, 2001;Chapelle, 2010;Ruvio et al, 2010;Lee, 2015), dentre eles, estudos que tratavam do empreendedorismo social e do hibridismo (Helm e Andersson, 2010;Weerawardena e Mort, 2012;Hustinx e De Waele, 2015;Parente, 2016;Scheiber, 2016).…”

Introduction: The Challenges of Defining and Studying Contemporary Entrepreneurship

“…They argue that universities promote the development of knowledge‐based economies in general, as they generate, apply, and disseminate knowledge. Though universities differ substantially in size and in their primary goals, some governments are encouraging these institutions to be more entrepreneurial (Baregheh, Rowley, & Sambrook, ; Chapelle, ; Fernández de Lucio, Mas‐Verdú, & Tortosa, ; Lin, Lin, & Lin, ; Martinez‐Gomez, Baviera‐Puig, & Mas‐Verdú, ; Smallbone, Welter, Voytovich, & Egorov, ) to enhance their contribution to regional economic development. Using institutional economics as the theoretical framework, Kirby et al (this issue) present two empirical investigations (i.e., phases one and two of their research) to advance the literature.…”

Debt to Equity Levels in Polish Nonprofit Organisations

“…Non-profit organisation financial debt management decisions need to take into account the relationship between future effects in the context of risk as debt financing in a specific form that increases financial risk (Bem, 2015). That perspective is close to the creation of for-profit firms' value (Chapelle, 2010;Siedlecki & Bem, 2016). The requirements for net-working capital linked with the elements shaping it, such as the level of cash tied up in inventories, accounts receivable, cash and near cash assets, the early settlement of accounts payable, are those where the difference can be seen.…”