Factors Influencing Network Formation Among Social Service Nonprofit Organizations in Hong Kong and Implications for Comparative and China Studies

ABSTRACT

This article examines the factors influencing network formation among social service nonprofit organizations (NPOs) in Hong Kong and aims to illustrate the value of comparative studies of network formation. We argue that two distinct funding regimes, namely a statist-corporatist regime and a liberal regime, are present in Hong Kong. Based on the characteristics of these funding regimes, we examine five factors affecting the size of networks: organizational size, joint-action experience, resource dependency, program needs, and environmental uncertainty. Our study shows that social service NPOs that were formed in two different historical time periods display markedly different operational behavior in networking. While the joint-action experience and program needs of an organization demonstrate a consistent influence on the network formation of NPOs, the effects of organizational size and resource dependency on network size are moderated by environmental uncertainty. We contend that, due to historical and political contexts that are unique to this region, hybridity may be a characteristic of state–nonprofit relations in Greater China. Such unique contexts give rise to patterns of network formation and collaborative governance that may have important implications for state–nonprofit relations and civil society development.

ACKNOWLEDGEMENTS

Part of the work described in this article was supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No.: HKU4133/04H). The data in this article are obtained from the “Mapping the Civil Society in Hong Kong” project of the Centre for Civil Society and Governance (CCSG), The University of Hong Kong, and the data are utilized here with the courtesy of CCSG. The authors are thankful to the various participants of the Conference on Collaborative Governance in Mainland China, Taiwan, and Hong Kong: Trends, Issues and Perspectives, held at Fudan University, Shanghai, 17 June 2011, including Bin Chen, Ting Gong, Jun Yi Hsieh, Yijia Jing, and Richard Walker, who have made very helpful comments on an earlier version of this article. Thanks are also due to the editors of this symposium and the anonymous referees for their comments and suggestions, which have significantly improved our manuscript. The responsibility for the contents of this article rests solely with the authors.

Notes

*p < .05.

**p < .05; ***p < .01.

For a discussion of the historical origin of widely utilizing NPOs as agents for social service delivery, please refer to Lee (2005). Under the Standard Unit Cost Model, the government offered funding to NPOs according to the recognized unit cost of providing a particular service. The system is input- and historical-based in the sense that the amount of funding offered to an NPO is based on the cost of providing a particular service (as opposed to an output-based model in which the funding will be linked to criteria such as productivity or performance). The use of itemized budgeting means that virement between items is not allowed. As a whole, the funding model does not give NPOs much flexibility on how they can use the money, but the amount of funding tends to be quite stable over time.

The term statist-corporatist as used by Lee (2005) is adapted from Salamon, Sokolowski, and Anheier (2000), who originally classify nonprofit regimes into four types based on the level of state social spending and the size of the nonprofit sector. Lee argues that the nonprofit regime in Hong Kong displays the hybrid character of both a statist and a corporatist regime. In this paper, the emphasis is more on the characteristics of the relationship between the state and the nonprofit sector as shaped by the funding system.

The construction of our model in this article is much indebted to the seminal works of various scholars in this area. In particular, our choice of independent variables has been much inspired by Graddy and Chan (2006).

It is officially stated that the Director of Social Welfare has the authority to withhold or terminate funding if an NPO fails to achieve a reasonable standard of performance in accordance with the FSAs or due to other shortcomings. For details, please refer to Lump Sum Grant Manual, available online: http://www.swd.gov.hk/en/index/site_ngo/page_subventions/sub_lsgmanual/ 5/31/12.

We have also experimented with different thresholds, such as a cut-off point at 51%, 52%, to 60%. The results of alternative thresholds are consistent with that we report.

See also Graddy and Chan (2006) for using HHI to measure client diversity.

A total of 243 NPOs responded to our survey. However, some survey questions have missing values so that we have to eliminate 78 observations. The validity of the sample representation has been checked. Please see note 8.

The average annual income of NPOs reported by the Directory of Social Service Organizations in Hong Kong is around HKD 54 million (N = 272; Min = HKD 48,000; Max = HKD 900 million). The average annual income from our analysis (N = 165; average = HKD 33.3 million; Min = HKD 112,690; Max =HKD 396 million) is lower than the one given in the Directory because we do not have the network partnership information from the top six NPOs, whose total annual incomes exceed 500 million. Although our analyzed sample contains NPOs with a smaller average annual income, our analyzed sample actually excludes more extreme cases and represents more generalizable cases. We have also compared the average of total staff and the other variables between our sample and that of the Directory. The results show a much smaller variation between the two samples.

The estimated results of using 1990 as cut-off date has the highest R ² (= 0.271) and adjusted R ² (= 0.198). The R ² and adjusted R ² of using 1989 as cut-off date are 0.266 and 0.192. The R ² and adjusted R ² of using 1991 as cut-off date are 0.265 and 0.190. The R ² and adjusted R ² of using 1992 as cut-off date are 0.254 and 0.179.

Additional information

Notes on contributors

Eliza W. Y. Lee

Eliza W. Y. Lee ([email protected]) is a Professor in the Department of Politics and Public Administration and Director of the Centre for Civil Society and Governance at the University of Hong Kong. She obtained her PhD from Syracuse University. Her current research interests are the politics of social policy development, civil society organizations, participatory governance, public management and gender, with particular focus on Hong Kong and its comparison with selected Asian states.

Helen K. Liu

Helen K. Liu ([email protected]) is an Assistant Professor in the Department of Politics and Public Administration and an Honorary Fellow of the Centre for Civil Society and Governance at The University of Hong Kong. She obtained her PhD from the Indiana University Bloomington. Her research interests include interorganizational networks and nonprofit management.