Better Safe Than Sorry

Legitimacy and Organizational Identity

Legitimacy is an intangible and socially constructed concept, defined by Suchman (1995, p. 574) as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.” Accordingly, organizational legitimacy is understood as stakeholder and public approval of an organization and its activities, granting the organization its right to exist and authority to operate. In the case of NPOs, resource acquisition and mission attainment depend on organizational legitimacy (Harris, Dopson, & Fitzpatrick, 2009, p. 423), because legitimate organizations are perceived as “more meaningful, more predictable, and more trustworthy” (Suchman, 1995, p. 575).

Legitimacy should not be confused with reputation. Whereas legitimacy is an evaluation of acceptability based on norms and values, reputation is a judgment of relative status between two or more organizations (Deephouse & Carter, 2005, p. 331). Reputation is also derived from virtually any past action or attribute, whereas legitimacy comes from a more narrow range of sources (Bitekine, 2010).

The people granting an organization its legitimacy are known as constituents and the approval process is called legitimation (Hybels, 1995). Sometimes the support of a small societal segment is enough for legitimacy, but it is equally a question of how many oppose an organization. It can also be argued that legitimacy does not depend on the number of constituents, but on whose support an organization has. Identifying one’s primary stakeholders is thus vital (Pfeffer & Salancik, 2003). Members, clients, donors, staff, the general public, and partners or allies have all been identified as important stakeholders of nonprofit organizations (Candler & Dumont, 2010).

If constituents become dissatisfied with an organization and judge its actions as illegitimate, they may discontinue their participation in the organization or retract their endorsement and support (Elsbach & Sutton, 1992). Organizations with illegitimate behavior also find it difficult to attract employees, investors, and business partners (He & Baruch, 2010). Particularly during times of dramatic organizational change, constituents are more critical than usual, especially if they expect a long-term relationship with an organization. A legitimacy crisis may also arise from lack of support from traditions and norms, known as the “liability of newness” (Singh, Tucker, & House, 1986; see Ashforth & Gibbs, 1990). Because CSPs represent a new way of organizing that is not automatically legitimate (Bryson, Crosby, & Stone, 2006), both internal and external constituents may react adversely to such activities.

Management is responsible for ensuring that an organization follows laws and avoids breaching ethical norms. The board of an NPO must also ensure that activities are in line with the organizational mission and manage external representation of the organization (Miller-Millesen, 2003; Stone & Ostrower, 2007). As with most cultural processes, legitimacy management builds on communication; in this case between organization and constituents. To be legitimate it is generally not enough that the organization’s activities are congruent with societal values; this fact also needs to be communicated to constituents (Branco & Rodrigues, 2006). Communication should be interpreted in a wide sense also including various nonverbal, symbolic actions. Consistency and predictability are keys to retaining legitimacy (Mobus, 2005; Suchman, 1995).

Consistency and predictability are also central concepts in organizational identity literature. Organizational identity is that which is central, enduring, and distinct about an organization (Albert & Whetten, 1985) and it is important “for understanding the relationship between actions on and interpretations of an issue over time” (Dutton & Dukerich, 1991, p. 520). Literature on organizational identity can thus offer valuable insight into constituent reference points for legitimacy claims. It is the projected organizational identity as expressed through material or cultural artifacts in combination with organizational action that serve as basis of interpretation (Hatch & Schultz, 1997). The more substance in terms of objects, technical quality, and tangible outcomes, the less organizational character judgments will depend on “beliefs loosely coupled to the core activities” (Alvesson, 1990, p. 385). In the case of nonprofit organizations, however, organizational mission, values, and activities are likely to be central to evaluation due to service intangibility and challenges in quality measurement.

Organizational identity restricts action because, to avoid a legitimacy crisis, organizations need to ensure continuity and distinctiveness. Continuity equals stability, or following organizational tradition, whereas distinctiveness refers to how organizations define themselves in relation to others. Distinctiveness claims answer the question of “what type of organization” and typically results in juxtapositions such as public versus private and profit versus nonprofit (Whetten & Mackey, 2002). Ensuring continuity and distinctiveness constrains organizational behavior because organizations must live up to certain constituent expectations, which are dependent on how they have positioned themselves in the past. According to Lucea (2010, p.135), organizations in a particular field, like the NPO sector, share “a set of deeply ingrained values and accepted behavior repertoires” and, to gain legitimacy vis-à-vis other actors, organizations self-categorize using particular subsets of these values. However, there is often a gap between the projected image and constituent perception.

Identity claims define “what the organization must do to avoid acting out of character” (Whetten, 2006, p. 221). When faced with tough choices, members draw on identity traits to evaluate whether or not an action is in line with the organization’s core. The question is then whether or not collaborating with companies is “out of character” for NPOs. This question can be determined based on the extent to which organizational members feel identity dissonance (Elsbach & Kramer, 1996) as well as the extent of external constituent opposition. Identity dissonance means that members comprehend an activity as strongly inconsistent either with the organization’s past or its type (Whetten, 2006, p. 223).

Nonprofit Organizations and Cross-Sector Partnerships

Nonprofit organizations can be found in a variety of fields, ranging from culture and environment to health and education. Their existence can be understood as a response to government and market failures in the provision of public goods (Steinberg, 2006). One of the defining features of an NPO is its reliance on volunteer labor (Anheier & Salamon, 2006, p. 97), and by definition, NPOs do not make profit but redistribute revenues in the benefit of a cause. The raison d’être of an NPO is its mission statement, which functions as an organizational compass guiding all activities (Frumkin & Andre-Clark, 2000).

NPOs are restricted by their social mission and can never shift to a profit orientation without losing organizational legitimacy. However, missions are frequently so broadly and vaguely phrased that they allow for some commercial association (Tuckman & Chang, 2006). Within the last decade, a number of societal developments have forced NPOs to “commercialize.” According to Young and Salamon (2002, pp. 424-426), six factors explain this transformation: diminishing government support, increased demand for services provided by NPOs (e.g., due to aging populations), increased competition from companies, increased competition from other NPOs, broader availability of partners that are interested in working with NPOs, and increased accountability requirements forcing NPOs to focus on efficiency and effectiveness (cited by Bosscher, 2009, p. 2). As such, “many nonprofits have ventured further and more openly into the for-profit arena” (Jones, 2007, p. 300).

Today, the scope and scale of commercial activity within the nonprofit sector is unprecedented, and many NPOs engage in commercial activities such as running commercial ventures, outsourcing of services to for-profit entities, or partnering with companies (Tuckman & Chang, 2006). CSPs with companies are particularly popular and increasingly commonplace within the realm of CSR (Eweje, 2007).

CSPs are praised for their potential to pool resources to achieve environmental sustainability and global health (Murray, Haynes, & Hudson, 2010). As a novel source of social innovation and value (LeBer & Branzei, 2010), CSPs are presented as a “magic formula” (Rundall, 2000, p. 1501) simultaneously ensuring corporate responsibility and allowing NPOs to increase their capacity in the fight against global problems. The assumption is that, by pooling resources, organizations from both sectors benefit from synergy effects and can jointly address global meta-problems that could not be overcome in isolation (Lee, 2011). CSPs are also actively promoted as one of the preferred ways to meet the Millennium Development Goals of international organizations like the United Nations (Utting & Zammit, 2009).

By working with companies NPOs get access to additional resources and corporate expertise and may benefit from enhanced credibility among other funders, increased awareness of brand and cause, leveraged societal change, and advanced democratic dialogue (Austin, 2000; Macdonald & Chrisp, 2005; Phillips, 2002). All of these effects are undoubtedly important, in a world where “Life is increasingly transactional, and nonprofits are increasingly vulnerable” (Skloot, 2000, p. 315), and NPOs struggle to offset declining government support while seeking to improve their organizational innovativeness to be able to respond to internal and external needs (Jaskyte & Kisieliene, 2006; Weisbrod, 1997).

The first proposition that can be developed based on literature is that CSPs with companies are likely to increase NPO legitimacy. This increase can occur because CSPs are argued to function as a signal of credibility for other stakeholders (Eikenberry & Kluver, 2004; Wymer & Samu, 2009). The additional corporate funding creates important financial stability and may give the NPO opportunity to lower service fees. Partnering with companies can also allow the NPO to reach out to new beneficiaries, and CSPs can function as an advocacy strategy in attempting to change companies through collaboration rather than confrontation (Elkington & Fennell, 2000; Yaziji, 2004). Seen from this perspective CSPs only strengthen NPO capacity to carry out its mission and is not identity threatening.

There are, however, also several reasons why engagement with commercial organizations may jeopardize NPO legitimacy. CSPs are frequently characterized by power imbalances in favor of the company (Battisti, 2009; Murray et al., 2010). As a result, there is a danger that companies take advantage of the situation by appropriating the reputational capital of the NPO. Through so called corporate greenwashing, companies may partner with NPOs only to “buy” public trust while carrying out business as usual. Hidden corporate agendas and restrictions may also limit NPO advocacy activities or the NPO’s ability to partner with other organizations (Millar, Choi, & Chen, 2004; Valor Martínez, 2003). Moreover, if the corporate partner is involved in some scandal, both the NPOs reputation and legitimate status is at stake (Wymer & Samu, 2003).

“Nonprofits may ally with a company having committed unethical or illegal activities and ignore it when forming the partnership, or these scandals may occur during the alliance development. As a consequence, they will lose credibility and their reputation will be damaged” (Valor-Martinez, 2003, p. 212).

All kinds of commercial activity involve a risk of mission drift: a loss of nonprofit spirit and philanthropic orientation in favor of a “business mentality geared toward bottom-line issues” (Kim, 2003). In identity terminology this mission drift would be an example of nonprofits losing their distinctiveness from commercial companies. Commercial activity diverts time and resources away from other mission related activities (Weisbrod, 1998) and may lead to a prioritization of profits over quality and care. Some opponents thus argue that NPOs taint their values by associating themselves with commercial companies (Bosscher, 2009). Along the same lines, NPOs have also been criticized for “selling out” to companies (Beloe et al., 2003; Cedstrand, 2005). Such critique is not uncommon as NPO supporters are often highly critical of companies (Sharp & Brock, 2010).

Consequently, there is a real risk that CSPs cause stakeholders to discontinue their organizational support or protest in various ways. In the worst case scenario,

“the effort to raise additional, much-needed capital may backfire. Members may allow their memberships to lapse, and potential donors may think twice before giving to an organization that seems to have other ways of raising money. People may feel that such activities taint a nonprofit’s commitment to its announced purposes” (Jones, 2007, p. 300).

CSPs can take many different forms with varying degrees of integration. The types of collaboration covered by this article are patronage, philanthropy, strategic philanthropy, sponsorship, cause-related marketing, and partnership or social alliance as defined by Seitanidi and Ryan (2007, p. 249). Of particular relevance is the relationship between these forms of collaboration and Austin’s (2000, p. 72) collaboration continuum with three different stages of partnership: philanthropic, transactional, and integrative. According to Seitanidi and Ryan (2007), patronage, philanthropy, and strategic philanthropy are examples of partnerships on the first stage, sponsorship and cause-related marketing are second-stage partnerships and social alliances represent the integrative stage.

Philanthropic CSPs are characterized by a one way resource flow. The company acts as a donor and the NPO is the recipient. Partnership investments are low and there is minimum interaction and communication. Relationships are primarily unidirectional with the company as the donor and the NPO as a passive beneficiary. Although they are often long-term, the points of contact are fleeting and infrequent. Transactional CSPs are a bit more strategic and mutual benefit is expected. The aim of the reciprocal exchange is broader than pure resource alleviation. The integrative stage of partnership is characterized by “boundarylessness” as the partner organizations merge with one another (Austin, 2000). Although philanthropy and check writing represents the old model of CSPs, scholars have noted a shift toward more integrative forms of partnership (Jamali & Keshishian, 2009; Rondinelli & London, 2003; Sagawa & Segal, 2000). Although there is a long standing tradition of corporate philanthropy, other types of social alliances can be expected to meet constituent skepticism due to the “liability of newness” (Singh et al., 1986).

A number of scholars argue that CSPs involve a significant legitimacy risk for NPOs, particularly at more integrative levels of partnership due to the problem of power asymmetry in favor of companies. In CSPs the company is usually seen as the more powerful actor, because it brings the financial resources to the table. At the lower stages of engagement this power imbalance can perhaps be neglected, but at the integrative end of the continuum where joint decision making is assumed it becomes a central issue as there is a risk that the company acts opportunistically and exploits the NPO. In addition, the closer the association between an NPO and a company the more evident rationality and culture clashes are likely to become (Berger, Cunningham, & Drumwright, 2004; Eweje, 2007; Millar et al., 2004).

Finally, integrative alliances are usually long-term, which means that NPOs commit themselves to a specific company. Over a longer period of time there is naturally a higher risk of adverse effects of the alliance because the company may get embroiled in a scandal. Integrative partnerships also require negotiation and contracting skills. Although companies are strong in this respect, NPOs may not possess the necessary capabilities. As a result there is a risk of opportunism as the company may dictate the terms and lay down contractual conditions that are unfavorable for the NPO. Furthermore, there is a danger that the NPO becomes too dependent on a company as a source of funding, which puts it at risk during recessions, if the company runs at a loss, or at the end of the partnership (Andreasen, 1996; Polonsky & Wood, 2001).

A second proposition regarding the relationship between NPO legitimacy and type of CSP concerns a specific form of cause-related marketing (CRM) that involves co-branding or licensing of the NPO’s brand to the company. Cause-related marketing is a particular form of transactional CSP. Although empirical research has shown that NPOs generally benefit from CRM alliances by deriving revenue from the sale of commercial products or getting additional visibility for their cause from advertising campaigns (Wymer & Samu, 2009), there is reason to believe that brand-focused CSPs may be more risky in terms of NPO legitimacy. The reason for this risk is that “Brands act as carriers of symbolic meaning in the market place” (Dickinson & Barker, 2007, p. 76) and function as strong representations of the NPO identity. Branding alliances are particularly risky, because there is a danger that the company can use the NPO logo inappropriately, and the NPO may be perceived as commercial as opposed to charitable (Polonsky & Wood, 2001). In sum, although the “joining of two brands can be beneficial, it can also bring with it major risks when the branding alliance is not well received and evaluations of the alliance are not favourable” (Dickinson & Barker, 2007, p. 75). If the partnership is ill-received, constituents may argue that the NPO has betrayed its principles. There are also examples of lawsuits due to unsuccessful co-branding campaigns (Cone, Feldman, & DaSilva, 2003).

In terms of hedging risks, existing research is ambiguous about the importance of partner “fit.” Whereas some scholars argue that NPOs should make sure that the partner is the right “match” in terms of various dimensions, others argue that a priori differences can be disregarded because collaboration breeds solidarity, trust, and collective identity.

One stream of literature has taken the common culture approach, suggesting that NPOs should look for corporate partners that are perceived to “fit” the organization. According to this perspective, problems in CSPs arise due to preexisting and irreconcilable differences in organizational characteristics, and tensions can be avoided by choosing a partner that is structurally, culturally, and operationally similar. Overall, similarity is the most common highlighted dimension of congruence (Dickinson & Barker, 2007). “If differences are severe and there are no overlaps (in goals, cultures, markets, decision processes, or structures), the alliance may be a mismatch rather than a partnership that can foster synergy” (Berger et al., 2004, p. 67). When there is an overlap in values and overall goals the risk of mission drift is lower and the central characteristics of the NPO’s identity remain unchallenged.

In contrast, another group of scholars criticize the common culture perspective for being too static and ignoring the emergence of new cultural practices. Instead they promote the perspective of emergent culture. According to Parker and Selsky (2004, p. 465) “negotiated practices rather than shared values are at the core of an emergent culture.” In contrast to the common culture approach, which views trust as a prerequisite for CSPs, the emergent culture approach sees trust as an outcome of CSPs. The idea of the emergent culture perspective is that by working together, and through communication (discourse), organizations develop shared meanings and solidarity. This solidarity is the foundation for the development of collective identity (Hardy, Lawrence, & Grant, 2005; Parker & Selsky, 2004).

The partnership is viewed as a separate entity and the importance of a priori differences and strategic fit between partners is downplayed. To protect their identity and autonomy in situations of power imbalances, NPOs can opt for preserving their own culture through separation—a particular mode of acculturation (Nahavandi & Malekzadeh, 1988; Parker & Selsky, 2004). In terms of maintaining legitimacy, the emergent culture perspective implies that partnership design and implementation are more important than strategic fit.

Method

This section of the article describes the author’s motivation for using methodological triangulation and for selecting a case study approach. Some case selection arguments are also provided. Before giving an account of data collection procedures and analysis approaches, the research setting is described.

Findings

This section presents the findings from the survey and the interviews in comparison to the theoretical propositions presented earlier.

Neither the survey nor the interviews provided support for this proposition. On the contrary, survey results indicated that CSPs can be viewed as legitimacy threatening. Respondents were asked to evaluate how a potential collaboration between the NPO and a company would influence their perception of the organization. A simple independent t-test in relation to the neutral test value 3 showed that cross-sector collaboration has an overall significantly negative impact on the organization’s image. The test was conducted for both significance level 5% and 1%. The results suggest that CSP are not legitimacy enhancing, but threatening. The average mean for all responses was 2.78 with a standard deviation of 0.782. However, it is important to note that relatively many 39 respondents left this question either unanswered or chose the alternative “don’t know.”

Because closed survey questions do not provide any reasons for the attitudes, the last survey question was intentionally left open inviting respondents to explain their opinions about potential CSPs. About 10% of the respondents used this opportunity and their comments also reveal a certain fear. Constituents were worried that the NPO as a result of CSPs would forget its ideology, lose its independence, and start focusing too much on financial issues.

The interviewees acknowledged a number of advantages of CSPs like additional funding, networking opportunities, learning, and innovation, as well as increased visibility and the potential to reach more people. Nevertheless, they did not explicitly state nor imply that the NPO’s credibility would be enhanced by working with private sector organizations. Instead there was a sense of concern regarding how other funders would react. The finance officer in particular was worried that CSPs might have a crowding out effect and discourage other donors from giving money to the organization:

“There is a danger that other external funders may look askance at us if we associate ourselves closely with some commercial company, and there is also a risk that the NPO is discredited if the corporate partner is cast in a bad light.” (finance officer)

The organization’s development manager was also concerned about the potential impact of CSPs. According to this manager, the NPO could lose its credibility and scare off members and customers by working with companies: “We need to preserve our image as a private, free, and politically independent organization. [. . .] I fear that we would lose our customers and members.”

The quotations above imply that the organization’s identity and legitimacy are strongly founded on the notion of independence. Because partnerships by definition require giving up some autonomy, CSPs are potentially legitimacy threatening. Beyond independence, external constituents also raised the risks of mission drift and commercialization. In sum, the case does not offer support for Proposition 1. On the contrary, both the survey results and the interviews suggest that there is an impending legitimacy risk of CSPs.

Simple independent t-tests in relation to the neutral value 3 were used to test respondent attitudes toward various forms of potential cross-sector collaboration (ranging from anonymous corporate philanthropy to social alliances) to find significantly positive or negative results. All tests were conducted on significance levels 5% and 1%. Results are illustrated in Figure 1. The white bars represent significantly positive results and the black bars significantly negative results. The bar for earmarked donations is grey, because the result was not significant. The corresponding test values can be found in appendix Table 2.

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Figure 1.

Constituent attitudes toward different forms of cross-sector collaboration.

Patronage, philanthropy, and strategic philanthropy all have significantly positive results on a significance level of both 5% and 1%. These CSP types, which correspond to Austin’s (2000) first stage of cross-sector interaction known as philanthropic, appear to be generally accepted. Respondent attitudes toward transactional CSPs are a bit more ambiguous, but generally positive as four out of the six different CSP types on this level received positive evaluations. Both sponsorship and event sponsorship are significantly positive, whereas product sponsorship received a significantly negative evaluation. Both general and cause-related marketing in project form were apprehended as positive on both significance levels. Brand licensing is, however, perceived as highly unfavorable. The result for social alliances is significantly negative on a 5% level and not significant on a 1% level. Social alliance alone represents what Austin calls the integrative stage.

For each type of collaboration, respondents were also asked to evaluate how likely certain specified reactions would be. The means for all reactions were tested against the neutral value 3 and none of the results were significant. However, an increasing likelihood of protest reactions can be observed when moving toward integrative forms of collaboration. The increasing likelihood measured in percentages is shown in Table 1.

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Table 1.

Reaction Likelihoods.

Collaborative stage	Termination of membership	Stop volunteering	Resigning	Not donate money to the NPO	Boycotting of NPO services	Dissuading friends and family from using NPO services
1	1.51	1.58	1.48	1.73	1.53	1.42
2	1.68 (+11.3%)	1.73 (+ 9.5%)	1.68 (+ 13.5%)	1.95 (+ 12.7%)	1.65 (+7.8%)	1.54 (+8.5%)
3	1.91 (+13.7%)	1.99 (+ 15%)	1.87 (+ 11.3%)	2.15 (+ 10.3%)	1.84 (+11.5%)	1.71 (+ 11%)

Note. NPO = Nonprofit Organization.

When comparing the means, the likelihood of a protest reaction increases on average by 10% from collaborative stage 1 to 2 and 2 to 3. This pattern is an interesting observation indicating an increased legitimacy risk, although none of the likelihoods are statistically significant. Overall, however, the evidence from the survey suggests that philanthropic and transactional partnerships are more acceptable than integrative CSPs which support Proposition 2.

In line with the survey, the interviews also provide evidence in support of Proposition 2. Respondents reflected around the issue of commercialization. Because of the structure of the NPO which includes a number of public service ventures, integrative CSPs were regarded as particularly problematic as they would further accentuate the NPO’s business orientation and downplay its philanthropic orientation:

“Project-based alliances are better and I would not go as far as a social alliance, at least not now. We are very particular about highlighting our nonprofit status because of our public service spin-offs and because of the highly competitive market conditions. At this moment I think we should refrain from working closely with the private sector apart from short-term campaigns.” (association manager)

Apart from illustrating that the association manager believes that transactional CSPs are “safer” than integrative CSPs, the quotation also sheds light on a temporal dimension of risk that has been neglected in previous CSP research. There may be times at which some forms of CSPs are riskier than others. From a strategic perspective NPOs should take into account their current organizational conditions, heated societal debates (like health care privatization), and related constituent concerns when considering CSPs. In doing so, legitimacy losses may be avoided by decreasing the likelihood of constituent protest.

Other interviewees also preferred philanthropically oriented CSPs over more integrated partnership forms, but for reasons related to organizational distinctiveness:

“Philanthropic partnerships are more preferable. We need to be careful and make sure that the collaboration does not become too business-focused. We want people to distinguish us in the third sector from the corporate world. Due to our public service ventures the line is becoming increasingly blurred. We don’t want people to perceive us as a private service producer, but want to keep our own profile. Because we won’t operate according to private sector principles, we need to be strong in a partnership. This is most feasible in project based partnerships.” (managing director)

The statement by the managing director also highlights the aspect of power. In line with theory, the director implies that there is a power difference in favor of the corporate sector, which could be utilized to impose business principles onto the NPO. The assumption is that to resist this tendency the NPO should stay in control which in practice is best realized in projects. The power imbalance was also the main concern of the development manager, who felt that:

“ . . . we would run an extreme risk of losing our image and credibility if we entered into a large, deep relationship with a company. [. . .] Much competence is needed to evaluate a company—their ethics, trustworthiness, etc. Those are risk evaluations that probably people in the commercial world can do, but we don’t have that kind of competence in our house. I also think companies are very skilled in this respect while we are not, so in a partnership we would easily come second. They know how to act to lure NPOs into it and can use it to their own advantage as much as possible.” (development manager)

Valor Martínez (2003) suggested that NPOs should conduct screenings as a strategy to hedge risks associated with CSPs, but the quotation above shows that NPOs might not possess the necessary resources and capabilities for such a task. Hence they might easily buy a pig in a poke.

In sum, both survey and interview findings support Proposition 2, suggesting that integrative CSPs pose higher legitimacy risks for NPOs than transactional or philanthropic.

According to the survey results, most constituents evaluated NPO brand licensing as highly disadvantageous and the overall statistical result for NPO brand licensing was significantly negative (see “brand licensing” in appendix Table 2). This finding supports Proposition 3. Likewise, interviewees also described corporate branding and brand licensing in highly negative terms.

“I could for instance never imagine that children in our daycare centers would run around in branded t-shirts. Over my dead body!” (development manager)

“We are not particularly keen on companies using us as a reference. There are quite frequently requests which we turn down. [. . .] It is important that we stay in control, because if our name appeared in the wrong context it would damage our image and brand” (managing director)

“If our brand gets associated with the cold business world, the public could lose its trust in the organization. Imagine if the company suddenly fired 1,000 people or something similar.” (association manager)

It is evident that the NPO’s brand is seen as a strong representation of the organization’s identity and the fear of corporate misuse is tangible. The private sector is described as “cold” in clear contrast to the NPO’s own core values of care and compassion. The notion of tainted values thus seems to play a role in discouraging the NPO from selling its brand. Moreover, because the organization’s activities and programs are characterized as “evidence based,” the NPO must refrain from endorsing particular companies and their products.

Whereas Proposition 4a follows the logic of the common culture approach, Proposition 4b is based on the emergent culture perspective. Respondents were asked to indicate whether or not value and product/service symmetry matters in the selection of a CSP partner. 97% of the respondents are of the opinion that the NPO should only engage with corporate partners that have the same or similar values as the NPO. A clear majority of respondents, nearly 85%, also think that the potential corporate partner’s products or services should match those of the NPO. Several of the interviewees also spoke in favor of the common culture proposition.

“I think the biggest problem of working with companies is that the NPO has some strategic goals and principles that it operates according to and companies have their own—so how do these fit? We should find a company with the same values and interests, so we don’t need to compromise too much. If one selects the wrong company at the start there could be problems, but if the relationship is sound and based on mutual interest I think there are no big risks.” (research director)

“We would not invest in companies in the tobacco industry or even hamburger chains, because we believe that is not the kind of food that should be promoted. So when we enter into a partnership it is important for us that there are some shared values.” (Managing director)

“We work within a certain service sector related to health and care, so it’s mostly a question of that sector in terms of products. Tobacco, alcohol, and similar companies are not at all interesting. ” (public service manager 1)

”We do not want to work with companies that have a completely different set of values than our organization. Our core values are competence, commitment, and care and we work according to these values. Humanism and kind treatment are essential. We are also concerned about the environment so we should make sure to work with companies that have the right values in such questions.” (public service manager 2)

Only one of the interviewees took a different approach to partner selection:

“A couple of years ago I met a Dutch colleague who told me that they enter into partnerships with any company, as long as the company does not make demands on them. If they just give money and don’t require disproportionate visibility, then who are they to judge? I was impressed by him. Who can draw the line really?” (association manager)

However, despite being aware that there are alternative approaches to CSPs, the association manager also came to the conclusion that the NPO would start with “someone safe, someone that produces products that we need in our daily work.”

Case evidence speaks in favor of the common culture rather than the emergent culture approach. It can reasonably be assumed that this orientation is due to perceived power differences between the private and the nonprofit sector, due to which an “emergent culture” and possible collective identity would be strongly business-oriented.

Although the majority of survey respondents believed that there should be a match between the cause and the company’s products, one of the interviewees had a strong counter argument. According to the development manager, it would be ethically more problematic to work with a company from the health care sector.

“I think it would be ethically challenging to work with a company in the health care sector, like a pharmaceutical company because we share the same clients who are to some extent dependent on the company. This is ethically much worse than working with for instance a company in the forest industry with products that have nothing to do with our clients.” (development manager)

Although some empirical studies suggest that product/cause fit is generally advantageous (Lafferty, Goldsmith, & Hult, 2004), ethical tensions may be particularly evident in the health care sector. However, there is not enough evidence from the case in support of Proposition 4b, according to which CSP type would be more important than perceived fit.

Summary of Findings

In conclusion, Propositions 2, 3, and 4a were supported by evidence from the case. Although findings did not contradict Proposition 4b, there is not enough evidence that supports it to draw any conclusions. Proposition 1 was not supported by case evidence. On the contrary, evidence speaks against Proposition 1, as the case suggests that CSPs may threaten NPO legitimacy by challenging core values and central identity traits of NPOs (like independence and philanthropic orientation). No evidence was found in favor of the claim that NPOs would be seen as more credible and legitimate by working with companies. This finding suggests that NPOs may have more to lose than gain from CSPs, thereby challenging the win-win rhetoric that permeates most of mainstream partnership literature and supports studies claiming that the “feel-good discourse” has overshadowed important risks and tensions (Buse & Harmer, 2004; Rundall, 2000; Tuckman & Chang, 2006; Utting & Zammit, 2009).

Integrative CSPs appear to be particularly risky mainly due to power asymmetry. To protect their identity and legitimacy, evidence suggests that NPOs should opt for either philanthropic or transactional partnerships. To be able to steer the partnership in the right direction, which is essential both to avoid mission drift and wasted resources, NPOs should strive to stay in control of the partnership. Project-based social partnerships focusing on the NPO’s target area may be the most appropriate in this sense, because they require relatively little management capabilities but much expertise in social or environmental issues. Moreover, evidence point in favor of short-term partnerships rather than long-term alliances.

The fact that integrative CSPs were found to be more risky for the NPO and should be avoided is somewhat of a paradox. Not only are these the kind of partnerships that companies are, at least rhetorically, increasingly interested in, but they have also been argued to have the most transformative potential (Kourula & Halme, 2008). Longer term “boundaryless” partnerships are also a prerequisite for the kind of knowledge transfer that is required for joint innovations (Holmes & Smart, 2009).

The findings of this study substantiate recent scholarly concern that (subtle) NPO co-optation is a likely outcome of CSPs due to power imbalances in favor of the company and a loss of NPO autonomy (Baur & Schmitz, 2012; Laasonen, Fougère, & Kourula, 2012). Co-optation occurs when an organization consciously or unconsciously follows the dominant organization’s lead, and in doing so inevitably compromises its own identity. In the case of CSPs co-optation silences NPO critique and discourages confrontational tactics employed by NPOs against the corporate sector. In contrast to Baur and Schmitz (2012, p. 13), who argue that NPO co-optation is most likely in the case of sponsorships due to financial resource dependence, when the NPO is involved in certification and labeling of corporate activities, or when there are personal bonds between the partner organizations, this study proposes that the identity and autonomy of an NPO are mostly at stake in integrative CSPs in which power imbalances become more pronounced.

This article further suggests that to protect their legitimacy and prevent co-optation, NPOs should avoid co-branding campaigns and licensing of their brand to a company. Although participation may alleviate their resource scarcity, there are high reputational risks. The NPO may be discredited if the company misuses the brand.

Finally, with regard to partner selection, the case supports the common culture approach which suggests that NPOs should look for a corporate partner that is similar at least in terms of values. Whether or not there should be a “fit” between the cause and the company’s products is still somewhat unclear because, particularly in an area such as health care, there may be ethical tensions where the NPO and the company share the same clients. The emergent culture approach promoted by Parker and Selsky (2004) appears to favor the company rather than the NPO.

All in all, based on this study, the author is inclined to agree with Young (2002, p. 18), who states that:

“In some arenas at least, nonprofits risk becoming appendages of business and losing their special character and social value. The viability of nonprofit institutions in the long run rides on addressing their ability to be accountable to themselves as they work within the dynamic framework of business-nonprofit relations.”

Limitations and Suggestions for Future Research

Because the case indicated that there is an impending legitimacy risk for NPOs that engage in CSPs, future studies should pay more attention to partnership implications for NPOs and civil society as a whole. At the moment, research related to the commercialization of the nonprofit sector is separate from the stream of research focusing on CSPs between companies and NPOs. There is, however, a clear link between the two. A fruitful avenue for future research would be to bridge the two bodies of research.

The fact that this article is based on a single case study means that the generalizability of results is quite limited. According to Flyvbjerg (2006, p. 226), however, “formal generalization, whether on the basis of large samples or single cases, is considerably overrated as the main source of scientific progress.” Nonetheless, future research should expand the scope of the study to determine the applicability of the results in other contexts. Cross-national comparisons would also be interesting, because the nonprofit sector differs from country to country (Salamon, Hems, & Chinnok, 2000).

A further limitation of the study is the focus on hypothetical, rather than existing, CSP scenarios. Future research should study NPOs that have been involved in CSPs over a period of time and investigate potential legitimacy effects and legitimacy management strategies employed. It would also be interesting to explore actual NPO identity alterations as a result of CSPs.

Finally, not all stakeholder groups of an organization may share the same opinion of what is legitimate organizational behavior. This study reflects the attitudes of the board and members of an NPO, both of which can be considered part of the NPO’s network of key stakeholders. Future research should expand the scope of this study by including additional constituent groups.