The Positive and Negative Consequences of “Managerialization”: Evidence From Japanese Nonprofit Elderly Care Service Providers

Abstract

In recent decades, many researchers have pointed out that nonprofit organizations are becoming “managerialized.” Although the “managerialization” may enable these organizations to improve their financial performance, it may also reduce their unprofitable mission-related services. However, there are few studies examining both aspects simultaneously. This study focuses on the managerialization of nonprofit organizations, especially the tightness of budgetary control systems and characteristics of top managers, as well as the negative and positive consequences of becoming managerialized. To test our hypotheses, we collected information about Japanese nonprofit elderly care service providers using a survey. Research results revealed top managers with more experience tend to improve the financial performance of nonprofit elderly care service providers using tight budgetary control. However, the results show no relationship between tight budgetary control and the provision of unprofitable mission-related services. Thus, in our setting, managerialization has a positive effect; there is no negative effect.

Institutional isomorphism and nonprofit managerialism: For better or worse?

“…While acknowledging the existence of different forms of managerialism (Dobrai & Farkas, 2016), researchers have concluded that there are both positive and negative consequences of adopting business strategies and tools in NPOs (Maier et al, 2016; Shirinashihama, 2018). Generally, research has shown that the effects of managerialism depend on how an organization reacts to competing institutional norms, namely their nonprofit character and certain for‐profit tools or practices (Kravchenko & Moskvina, 2018).…”

“…One of the main arguments in favor of the positive effects of managerialism is the opportunity it offers for more effective and efficient use of resources (von Schnurbein, 2014) by helping NPOs to improve their programs and services. By achieving more objectives with fewer resources, they enhance their financial performance (Shirinashihama, 2018) with greater cost‐efficiency (Ni, Chen, Ding, & Wu, 2017). Organizations that exhibit signs of managerialism, for instance by offering additional commercial services to subsidize their programs (Meyer & Simsa, 2014) or by investing in their organizational capacities (Faulk & Stewart, 2017), can benefit from social and financial returns on investment.…”

“…As described in the previous section, isomorphic pressures are responsible for homogenization of the nonprofit sector (Dolnicar et al, 2008; Frumkin & Galaskiewicz, 2004; Meyer & Rowan, 1977; Ramanath, 2009), with organizations increasingly adopting business tools and practices in a process described as managerialism (Maier et al, 2016). This managerialization of organizations can boost organizational performance (Duque‐Zuluaga & Schneider, 2008; Shirinashihama, 2018), but brings with it a risk of mission drift (Eikenberry & Kluver, 2004; Jones, 2007), depending on how an organization reacts to different or even competing institutional logics (Kravchenko & Moskvina, 2018). We, therefore, hypothesize that mimetic, normative, and coercive isomorphic pressures affect organizations distinctively in terms of performance and mission drift via managerialism.…”

Nonprofits as Schools for Democracy: The Justifications for Organizational Democracy Within Nonprofit Organizations

“…Third, and related to the above, there is pressure on nonprofits to follow managerialism (Shirinashihama, 2018) rather than focusing on producing democratically inclined citizens. As Skocpol (2013) states, within America (and arguably worldwide) there has been a "transition from membership activities to professionally managed institutions and advocacy groups" (p. 128).…”

“…Yet, as we will explore below, this romantic vision of nonprofits as schools of democracy is challenged by empiricist evidence (Van der Meer & van Ingen, 2009), which suggests nonprofits often do not achieve the desired effect of socializing members into democratic participation. It is also challenged by theoretical claims (including those drawing on neo-institutional theory), that nonprofits are increasingly directed toward alternative goals of efficiency and effectiveness in line with managerialism (see, for instance, Shirinashihama’s, 2018, argument that managerialism benefits nonprofits through tight budgetary control). Consequently, nonprofits are under pressure not to focus on being schools of democracy but rather managerialist ends, particularly hitting funding targets (Dart, 2004; King, 2017; Sanders, 2015), thus self-regulating themselves which compels them to adapt to certain (managerial) norms and values (for a discussion, see AbouAssi & Bies, 2018).…”