Organizational performance of nonprofit and for-profit sport organizations

Abstract

Research question: This study contributes to the organizational performance literature by conceptualizing differences in performance between nonprofit and for-profit organizations using property rights theory and suggesting comparative measures for multiple performance dimensions. It advances the following research question: Are there significant differences in organizational performance between nonprofit and for-profit sport organizations?

Research methods: Data from a nationwide online survey of nonprofit (n = 1640) and for-profit sport organizations (n = 732) in German equestrian sport are used for the empirical analysis. The challenge was to find adequate measures for the comparison of the two types of legal forms. Altogether, 22 regression models for performance measures across four dimensions (financial, product, customer, strategic) are estimated with the legal form (nonprofit vs. for-profit) and some controls as independent variables.

Results and findings: The results show that for-profit organizations outperform nonprofit organizations in terms of overall financial performance, while nonprofits excel with regard to price structure. For-profits attach more importance to program quality, employee qualifications, and strategies. No significant differences can be observed in the product dimension. However, for-profits tend to focus on customer groups that have typically been targeted by nonprofits. Since the models also control for organizational size and resources, the results indicate that differences are not always attributable to the legal form.

Implications: The findings imply that for-profits do not outperform nonprofits in all performance dimensions. Nonprofits should consider that for-profits have invaded some of their typical domains and should be more flexible when market demand changes, while for-profits should reconsider their price structure.

Keywords:

• organizational performance
• property rights theory
• legal form
• sport organization
• equestrian sport

Acknowledgments

The authors would like to thank the Fédération Equestre Nationale for supporting the research into equestrian sport organizations in Germany.