Nonprofit-business collaboration strategy: operationalising a strategy for nonprofit organisations

Nonprofit organizations (NPOs)1 have become a key provider of public services (Kelly, 2007). In recent years, however, the environment in which NPOs operate has become increasingly challenging due to a number of factors, including an increase in uncertainty over government funding policy (Akingbola, 2004, Anheier, 2009), an intensification in rivalry between NPOs (Chew and Osborne, 2009), and a lack of employee commitment (Kong, 2008). Osborne et al. (2012) have found that in response to such challenges NPOs are, for instance, re-engineering their operations to reduce overhead costs, achieving economies of scale through merging with counterparts, emphasizing the leadership role of trustees, and replacing government funding with new and untraditional streams of income. This chapter concerns the latter in regard to nonprofit business collaboration (NBC), specifically how and under what conditions NPOs can collaborate with businesses to support their organizational sustainability. As a strategic option for NPOs, this aspect of NBC inquiry has been largely overlooked (Al-Tabbaa et al., 2014, Cantrell et al., 2008, Harris, 2012).
The chapter is organized into three principal sections. In the first, we review the NBC literature and present the concept of NBC as a tripartite value-creation mechanism. Importantly, we use this review to identify a salient gap in the nonprofit and NBC literatures: NBC from the perspective of the NPO. In addressing this gap, the second section introduces a conceptual framework that we developed to assist NPOs in developing and operationalizing an NBC strategy. The framework is based on the three elements of strategy: context (the environment in which an organization operates), content (the choices to achieve the strategy purpose) and process (the formulation and implementation of the chosen strategy) (Pettigrew, 1985, Pettigrew and Whipp, 1991). However, using this concept of strategy to study public services providers (e.g., NPOs) can be criticized due to its manufacturing origins (Beck et al., 2008, Dart, 2004). Therefore, we review the service management approach (Osborne et al., 2013, Osborne, 2009, Thomas, 2012) to demonstrate how our framework, and it theoretical foundation , is still relevant to NPOs, thus enhancing its validity. We conclude the chapter with an evaluation of NBC-related risks and threats to NPOs and consider implications for future research and practice.