“The advancing of management”: Cross‐sector agents and rationalization of nonprofits in Eastern China

• DOI: http://doi.org/10.1002/nml.21349
• Published date: 01 June 2019
• Author: Chengcheng Song,Juelin Yin
• Date: 01 June 2019

RESEARCH ARTICLE

“The advancing of management”: Cross-sector

agents and rationalization of nonprofits in Eastern

China

Chengcheng Song

1

| Juelin Yin

2

1

School of Public Administration and Research

Center for NGO & Society Innovation, East China

Normal University, Shanghai, China

2

Business School, Sun Yat-sen University,

Guangzhou, China

Correspondence

Juelin Yin, N642, Business School, Sun Yat-sen

University, No. 135 Xingang West Road, Haizhu

District, Guangzhou 510275, China.

Email: yinjuelin@gmail.com

Funding information

National Natural Science Foundation of China,

Grant/Award Numbers: 71804046, 71672146,

71572016, 71872165; [Correction added on April

19, 2019, after first online publication: The funding

information was incorrect, and it is now corrected.]

Fundamental Research Funds for the Central

Universities, Grant/Award Number: 2019ECNU-

HWFW026

This study examines and extends former theoretical argu-

ment of nonprofit rationalization in the Chinese context.

Based on a survey study of 179 nonprofit organizations

across Zhejiang province of Eastern China, we find that

nonprofits led by individuals with prior business experi-

ence and with more extensive business networking are

more likely to adopt rationalized rules and practices.

Moreover, the results indicate support for the mediation

effect of business networking on the relationship between

prior experience and rationalization. We also find the

moderation effects of management training on the direct

effect of prior business experience and on business net-

working, as well as the indirect effect of prior business

experience on rationalization via business networking.

Our findings contribute to explaining the formation of

rationalization in the Chinese nonprofit sector and provide

implications for future research, practice, and policy.

KEYWORDS

cross-sector interaction, leadership, nonprofits in China,

rationalization

1|INTRODUCTION

The nonprofit world has changed dramatically in the past few decades, with a growing number of

nonprofits competing for scarce resources and more businesses starting to get involved in traditional

nonprofit service areas (Dees, 1998; Jäger, Höver, Schröer, & Strauch, 2013; Young & Salamon,

2002). The discourse of efficiency and market has permeated the sector, with talks about social entre-

preneurship and venture philanthropy gaining increasing momentum (Maier, Meyer, & Steinbereith-

ner, 2016; Moody, 2008; Sanders & McClellan, 2014). Researchers have generally captured such a

Received: 20 October 2017 Revised: 6 December 2018 Accepted: 11 December 2018

DOI: 10.1002/nml.21349

Nonprofit Management and Leadership. 2019;29:529–548. wileyonlinelibrary.com/journal/nml © 2019 Wiley Periodicals, Inc. 529

remarkable change of nonprofits (Dart, 2004; Striebing, 2017; Suárez, 2011) as becoming “business-

like.”Neoinstitutionalists contribute a more comprehensive and precise notion as “organizational

rationalization”(or “rationalization”) to catch the nature of this transformation (Brunsson & Sahlin-

Andersson, 2000; Hwang & Powell, 2009; Meyer, 2002).

Rationalization, according to Hwang and Powell (2009, p. 272), refers to “the integration of for-

malized roles and rules around unified sovereignty, entailing the construction of nonprofits as ‘actors’

with clear identities,”through the use of strategic planning, independent financial auditor, and quanti-

tative program evaluation in the practices. They have proved that the expanded professional manage-

rialism in the nonprofit area constitutes one of the main causes of rationalization in America. For

instance, the more a nonprofit is staffed by educated and credentialed personnel from business world,

the more methodical and bureaucratic procedures will be applied. In line with them, research on ratio-

nalization also considered other antecedents that explain variations in nonprofits' adoption of

business-like practices (Reisman, 2018). A majority of research studies have examined the linkage of

rationalization and nonprofit leaders who pursue particular interests or are driven by affective desires.

For instance, a plethora of publications extol people in the nonprofit sector to be social entrepreneurs,

who adopt private sector management tools and strategies to achieve social sector goals (Dart, 2004;

Dees, 1998). Other studies examine economic, civic, and political conditions as causes of nonprofit

rationalization (Maier et al., 2016).

Although recent literature focuses on nonprofit leaders' professional background and its associa-

tion with rationalization, whether the professional networking carried by these leaders (Drori,

Meyer, & Hwang, 2009; Owen-Smith & Powell, 2008), either from the past or the present, makes a

difference in nonprofit rationalization remains an open question (Marshall & Suárez, 2014). Also,

extant research has tested the influence of business background and management training of nonprofit

leaders and staff on rationalization (Maier et al., 2016; Hwang & Powell, 2009; Reisman, 2018;

Suárez & Hwang, 2013), but the potential of their interaction effect on the nonprofit rationalization

seems to be underscored.

Furthermore, because most of studies are based on nonprofits in Western societies, it is unclear

whether or not the mechanisms that drive nonprofits to adopt rationalized models will vary in different

contexts (regimes, social infrastructures) (Greenwood, Raynard, Kodeih, Micelotta, & Lounsbury,

2011; Scott, 2014). Because of a long-time dominant role of state in shaping the ecology of nonprofits,

the considerable size of “nonprofit economy”(Weisbrod, 1991) does not exist in China yet, and the

actual composition of Chinese nonprofits is also different from that of their Western counterparts. For

example, there are few or even no full-time staff in many Chinese nonprofits, and training programs are

relatively quite rare, compared with their North American counterparts (Chan & Lai, 2018; Spires,

2012). Moreover, most of the training programs are only available in big cities (Huang, 2018). Hence,

scholars still need to illustrate alternative causes that lead to nonprofit growth and rationalization in

China (Johnson & Na, 2015; Ni & Zhan, 2017).

In this study, we focus on the imprinting and networking of nonprofit leaders' prior experience in

the business world and theorize the institutional mechanisms that contribute to nonprofit rationaliza-

tion in China. In particular, we outline some nonprofit leaders as cross-sector agents, by testing the

mediation effect of managerial business ties between leaders' business background and rationaliza-

tion. Moreover, regarding the influence of professional education on managers' decision-making of

organizational practices (Meyer & Bromley, 2013; Striebing, 2017; Suárez, 2011), we propose the

moderation effect of management training on relations between leaders' business background and

nonprofit rationalization. We elaborate on the theoretical and practical implications of our study at

the end of this article.

530 SONG AND YIN