Exploring Niche Alteration in Nonprofit Organizations

Published date01 May 2023
AuthorDuncan J. Mayer,Robert L. Fischer
Date01 May 2023
Subject MatterArticles
Administration & Society
2023, Vol. 55(5) 982 –1006
© The Author(s) 2023
Article reuse guidelines:
DOI: 10.1177/00953997231165255
Exploring Niche
Alteration in Nonprofit
Duncan J. Mayer1 and Robert L. Fischer1
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.
organizational ecology, organizational niche, NTEE codes, revenue, nonprofit
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
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

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