INTERNATIONAL MARKET SELECTION OF NONPROFIT ORGANIZATIONS (NPOS): DO WE NEED A NEW THEORY?

Abstract

Despite the growth in the number of NPOs operating abroad, very few studies have been devoted to understanding the international market selection of NPOs. The objective of this paper is to highlight the differences between the for-profit (FPO) and non-profit sectors and thereby argue that the international market selection decisions faced by organizations belonging to these two sectors are different. The study argues that current theories on traditional and for-profit internationalization have to be extended if they are to be used to predict non-profit international market selection. Further in order to highlight the critical differences between the two sectors, the study has examined the international market selection decisions faced by these firms and then developed propositions so that future studies might further develop and empirically test them. As a starting point, the study argues that due to structural differences in the two sectors NPO and FPO, in terms of mission, financing and planning, NPOs tend to have different objectives and pursue different strategies in achieving those objectives compared to FPOs. Furthermore, examining the existing for-profit theories reveal that certain assumptions (e.g., opportunism) on which these theories are based can be challenged in the non-profit context due to the sector’s unique characteristics (e.g., the profit

distribution constraint). Therefore, the study argues that certain long-held assumptions on for- profit internationalization cannot be used in their current form to explain the behaviour of non- profit organizations.