Not‐For‐Profit Provision Of Public Services

Bibliographic Data

ID9714679
AuthorsPatrick Francois (0000-0003-3287-037X, CentER, Tilburg University, CMPO, Bristol and University of British Columbia, corresponding author)
Year2003
Volume113
Issue486
PagesC53-C61
Publication date2003-03-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/1468-0297.00110
OpenAlexW2127677104
LanguageEN
Citations received16
References cited9

Not-for-profit firms are greatly over-represented in the childcare, medical care, education and care for the aged sectors where service providing workers, as well as purchasers, seem to care about the level or quality of service being provided. Since all individuals who care about service levels receive non-excludable benefits, these services have a public good element. Such care can be used to motivate employees to perform tasks beyond their strict job description. But such care only motivates effort if workers believe it affects the final level of provision. Existing theories suggest that nonprofit firms should arise in sectors where it is difficult for the purchaser to contract with the provider of the good or service sold.' Nonprofits are, indeed, usually found in the provision of services, where this type of contract is difficult to specify, but most service sectors are exclusively provided by for-profit firms, whose concern for their reputations ensures delivery of quality service. Existing theories of nonprofits based on contracting purchase difficulties cannot satisfactorily explain why reputations do not similarly work for for-profit firms in sectors where nonprofit firms are widespread. This paper is motivated by the observation that nonprofits are highly concentrated in the delivery of caring services where the service provided often has a public good component. Examples of such services are childcare, medical care, education and care for the aged. For multi-country evidence on this, see RoseAckerman (1996, Figure 2). In such sectors, service providing workers, as well as purchasers, often have a civic-minded interest in service and consider the level or quality of service important. It is posited here that this is an important distinction between these services and the vast majority of others such as: financial services, insurance, professional services etc., where much less civic-minded care exists. The paper demonstrates that nonprofit firms are more effective than for-profit firms in obtaining care motivated effort, in addition to pecuniarily motivated ef

Business · Economics · Public economics · Finance · Housing, Finance, and Neoliberalism · Nonprofit Sector and Volunteering · Taxation and Compliance Studies

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