Exploring Niche Alteration in Nonprofit Organizations

• Published date: 01 May 2023
• DOI: http://doi.org/10.1177/00953997231165255
• Author: Duncan J. Mayer,Robert L. Fischer
• Date: 01 May 2023
• Subject Matter: Articles

https://doi.org/10.1177/00953997231165255

Administration & Society

2023, Vol. 55(5) 982 –1006

© The Author(s) 2023

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DOI: 10.1177/00953997231165255

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Article

Exploring Niche

Alteration in Nonprofit

Organizations

Duncan J. Mayer1 and Robert L. Fischer1

Abstract

The organizational niche is a concept integral to organizational ecology,

reflecting an organization’s mission, expertise, capacity, and resource

requirements. The choice of niche is crucial to the viability of the organization;

however, the reasons organizations alter their niche are poorly understood.

We hypothesize that nonprofit organizations alter their niche to reduce

environmental pressure and gain access to resources. The results indicate

that niche alteration predicts increases in total revenue with average

increases in revenue from program services and contributions (depending

on the measure). Additionally, nonprofits that are younger, larger, and have

more concentrated revenue, are more likely to alter their niche.

Keywords

organizational ecology, organizational niche, NTEE codes, revenue, nonprofit

organizations

Introduction

Nonprofit organizations are subject to immense environmental pressure,

including fluctuations in demand for services, changes to tax laws, macroeco-

nomic trends, and direct competition (D. A. Carroll & Stater, 2009; W. J. Mayer

et al., 2012; Thornton, 2006; Tuckman & Chang, 1991; Wicker et al., 2015).

1The Jack, Joseph and Morton Mandel School of Applied Social Sciences, Case Western

Reserve University, Cleveland, OH, USA

Corresponding Author:

Duncan J. Mayer, Jack, Joseph and Morton Mandel School of Applied Social Sciences, Case

Western Reserve University, 11235 Bellflower Rd, Cleveland, OH 44106, USA.

Email: DuncanMayer77@gmail.com

1165255AAS0010.1177/00953997231165255Administration & SocietyMayer and Fischer

research-article2023

Mayer and Fischer 983

The population ecology of organizations (hereon, organizational ecology)

focuses on the role of these forces in the transformation of organizations and

organizational populations (G. Carroll, 1984; Hannan & Freeman, 1977).

While transformations such as organizational founding and types of exits have

received substantial attention (Baum & Oliver, 1996; Hager et al., 2004; Lu

et al., 2020; D. J. Mayer, 2022; Park et al., 2021; Twombly, 2003), less attention

has been paid to structural adaptations among nonprofit organizations.

The organizational niche characterizes the productive capacities and

resource requirements of the organization (Baum & Singh, 1994; Hannan &

Freeman, 1977); among nonprofits the niche is often the starting point for

financial and program planning, and has been emphasized for its implications

for nonprofit’s community connections, the organization’s financial struc-

ture, and the competition they face (Fischer et al., 2011; Hannan & Freeman,

1989; Paarlberg & Varda, 2009; Young, 2007). Prior research has often

treated the organizational niche as a static feature, however, organizations are

dynamic and active agents that may alter their niche in response to stimuli,

such as competition and opportunities (Baum & Singh, 1996). The contribu-

tion of this article is to test the ecological propositions related to why non-

profits alter their niche (measured using the national taxonomy of exempt

entity codes). While motivated by organizational ecology, we participate in

the tradition of ecological studies that depart from population based inference

(sometimes called “demographic analysis”) and seek to understand the

behavior of individual organizations (Baum & Singh, 1994, 1996; Paarlberg

& Hwang, 2017; Paarlberg et al., 2018; Sullivan et al., 2021). We posit that

organizations alter their niche to increase access to resources (revenue), and

the likelihood of an organization altering their niche is a function of selection

pressure and structural inertia, where selection pressure represents the forces

motivating adaptation and change among organizations, while structural

inertia represents the forces that allow organizations to sustain their current

structure (Baum & Singh, 1996; Hannan & Freeman, 1984, 1989).

Organizational Ecology

Organizational ecology is a branch of organizational theory with a rich history

in the nonprofit sector, as it originated in the study of labor unions, and has con-

tinued to generate research since (Abzug, 1999). Broadly, organizational ecol-

ogy borrows metaphors and concepts from human ecology and evolution to link

environmental conditions to organizational processes, focusing on founding,

variation, and dissolution. Organizational ecology is often used to understand

alterations to organizational structure over time, as well as how such alterations

are constrained by environmental conditions. The theory couples environmental