ABSTRACT
Nonprofit organisations (NPOs)1 are a central part of the social fabric of modern economies, and have a growing role in the delivery of services that have been historically associated with the public sector, such as education and health care (Kelly, 2007; Kindred and Petrescu, 2014).The environment, however, in which NPOs operate has become increasingly challenging. Factors including an increase in uncertainty over government funding policy, an intensification in rivalry in the nonprofit sector (Al-Tabbaa et al., 2013), and a lack of employee commitment (Kong, 2008) represent a threat to their sustainability. In response to such pressures, Osborne et al. (2012) have found that NPOs are, for instance, re-engineering their operations to reduce overhead costs (see Huatuco et al., 2014), achieving economies of scale through merging with counterparts, emphasising the leadership role of trustees, and replacing government funding with new and non-traditional sources.This chapter concerns the latter, focusing on nonprofit-business collaboration (NBC) as an alternative source of tangible and intangible resources to support NPO sustainability. NBC is one of the three different forms of social partnership (Figure 3.1) that aim to create social value.We define NBC as a discretionary agreement between an NPO and a for-profit business, typically involving the exchange of specific organisational benefits between the partners, to address social and/or environmental issues. In this chapter, we present and discuss NBC as a strategic option for NPOs; an
important aspect of NBC inquiry that has been largely overlooked (Al-Tabbaa et al., 2014; Harris, 2012).To begin with, we review various types of NBC and demonstrate their differences and similarities. We next discuss NBC as a tripartite value-creation mechanism (value to society, business, and NPOs). Following this section, we present a framework that we developed to help NPOs engage strategically in NBC.The framework is based on the ‘three elements of strategy’ concept (Pettigrew, 1985): context (the environment in which an organisation operates), content (the choices to achieve the strategy purpose), and process (the formulation and implementation of the chosen strategy). However, this concept assumes that production and consumption processes are separable (reflecting its manufacturing origin), whereas the public services that NPOs provide are typically produced and consumed concurrently.To resolve this apparent contradiction, we draw on the service management approach (Osborne et al., 2013),which is a theory for managing
public services providers (including NPOs). In the final section,we consider implications for cross-sector collaboration literature research and practice.
