Resource dependence patterns,goal change,and social value in nonprofit organizations: does goal change matter in nonprofit management?

Abstract

Resource acquisition is an important factor for the survival and success of nonprofit organizations. Nonprofit organizations are not free from the demands of potential funders and they experience involuntary goal changes in competitive environments. This article investigates the relationships among resource dependence patterns (resource dependency, resource competitiveness, and resource diversity), goal change, and social value in nonprofit organizations. The findings suggest that competition for financial resources (resource competitiveness) is positively associated with goal change in nonprofit organizations. Goal change in an environment of high resource competitiveness has a negative effect on social value. On the other hand, the empirical findings show that a diversified or balanced revenue structure (high resource diversity) helps nonprofit organizations to maintain their social value.

Points for practitioners

This study shows that frequent goal change can damage social value in the nonprofit sector. This can be interpreted as indicating that the involvement of external stakeholders makes it difficult to attain social value in that the demands of potential donors are a major cause of goal change in nonprofit organizations. To alleviate this problem, a nonprofit organization should try to reduce its dependency on one or a few financial resources for its autonomy and social value. In the mid- and long-term view, nonprofit organizations should enhance their financial independence in order to ensure their survival and success, as well as to improve their social value.

Keywords

goal change nonprofit management nonprofit organizations resource dependence patterns social value

Introduction

Today, organizations struggle to maintain their success solely by improving the efficiency of their internal management. Previous studies have indicated that organizations should have the ability to acquire valued resources in order to attain organizational goals and to boost organizational functionality (Yuchtman and Seashore, 1967). In particular, the dependence on the external environment is vital to the success and continuation of nonprofit organizations (NPOs). Many NPOs are likely to show relative weak fiscal independence because their activities and priorities are primarily directed at realizing public and social values rather than making profit. Many NPOs acquire the needed resources from external resource providers such as individuals, parent NPOs, corporations, and governments.

Currently, citizens ask NPOs to show a high level of accountability and more visible performance. Clear, measurable, and consistent organizational goals may help NPOs to boost their management and performance. However, it is not easy for NPOs to have clear, measurable, and consistent goals due to the following reasons. First, NPOs pursue social and economic values simultaneously, which can render organizational goals vague and complex. Second, the environmental context can influence organizational goal-setting in NPOs. Many NPOs show a heavy dependency on external resource providers and stakeholders from both the public and private sectors.

Resource acquisition is closely associated with the survival, development, and success of NPOs. Diverse internal managerial factors are important, but obtaining available resources and their appropriate utilization are also important for improving organizational efficiency and effectiveness. Obtaining resources can affect the change, setting, and achievement of goals and mission in NPOs. Many NPOs depend on external stakeholders to obtain the needed resources. NPOs offer general citizens public goods and services with or on behalf of the public sector. Realizing social value by doing good business is the basic reason for NPOs’ existence. Contemporary society requires NPOs to not only do good business, but also do it well. In particular, a variety of stakeholders, including external resource providers, expect NPOs to achieve high efficiency and better performance when they realize social value (Carman et al., 2008). Recently, external funders have frequently requested NPOs to change their organizational goals or missions for the sake of high efficiency and better performance.

NPOs are not free from the various demands of external resource providers, that is, NPOs are more likely to experience involuntary goal change through requests by governments and big business firms as strong funders. Specifically, this study assumes that the resource dependence patterns (RDPs) of NPOs through interactions with the environment significantly affect NPOs’ goal change and ability to achieve social value. This study verifies how frequent goal changes through external funders’ requests and external pressures affect the realization of social value in NPOs. This study reveals the difficulties faced by NPOs in trying to maintain their public and social missions when faced with the strong environment pressures accompanying financial resource acquisition.

In the following section, this study introduces the three dimensions of RDPs (resource diversity, resource dependency, and resource competitiveness) and discusses goal change and social value in an organization. Next, this study presents six hypotheses for the relations among RDPs, goal change, and social value. Brief information is then provided on the measures of variables, the data, the statistical method, and the empirical findings. Finally, the theoretical and practical implications of the study results are discussed.

Brief overview of Korean NPOs

The growth of the nonprofit sector is closely related to the democratization of the political system and the consolidation of the free-market economy. Until the mid-1980s, the number of Korean NPOs was very small¹ and most NPOs were government-friendly because Korea was still an authoritarian state. The role and number of NPOs have increased rapidly since the democratization of the political and social environments. As of 2017, 13,741 NPOs were registered in 34 central government departments and 17 local governments.

It is not easy to estimate the contribution of the nonprofit sector to the national economy because Korea does not have fully mature official statistics for NPOs. In two recent studies, Kim and Kim (2015) measured the final consumption expenditures of nonprofit institutions serving households (NPISHs) against gross domestic product (GDP) between 1971 and 2010. NPISHs are goods and services purchased by nonprofits to serve households and it is a good proxy for understanding the size of the nonprofit sector (Kim and Kim, 2015: 245).

As of 2010, NPOs accounted for 1.44% of GDP in Korea (see Figure 1). Since the collapse of the authoritarian regime and the advent of democratization in 1987, the role of NPOs in the Korean economy has rapidly increased. NPOs’ contribution to GDP steadily increased between 1991 and 2010, increasing from 0.87% to 1.44% in Korea. Social welfare expenditures spurred the fast growth of the Korean nonprofit sector, and the demand for social welfare services rapidly increased because of the end of military-backed government and the inauguration of civilian government in the early 1990s (Kim and Kim, 2015).

Figure 1.

NPOs’ contribution to GDP and the economic growth rate in Korea.

The big difference between Korean nonprofits and those in other countries is the high government funding dependence of Korean NPOs. About 68% of nonprofit funding comes from the governmental sector in Korea. On average, the dependency on governmental funding was 32%; on the other hand, financial dependency on the private sector accounted for about 43% in 12 NPOs, including in Japan, Canada, and Australia (Salamon et al., 2013: 10).

Dimensions of RDPs in organizations

An organization cannot survive without resources. A resource is described as “any inducement it can provide to others in order to get them to contribute to the organization” (Sheppard, 1989: 59). This study mainly focuses on financial resources to analyze NPOs’ RDPs due to data limitation. RDPs influence organizational behavior and structures. For this study, RDPs are defined as “the appearance of the resource inflow” (Lan, 1991). This study uses three dimensions of RDPs: resource diversity (Pfeffer and Salancik, 2003); resource competitiveness; and resource dependency (Lan, 1991).

Resource diversity is about the degree of concentration or deconcentration of the resource inflow (Pfeffer and Salancik, 2003). NPOs that show a diversified revenue structure are likely to have various funders and stakeholders. NPOs with diversified and deconcentrated revenue structures may be constrained by the voices of diverse resource providers, whereas NPOs with concentrated revenue structures may have a centralized and unitary decision-making process and few organizational goals and missions.

Resource competitiveness refers to the degree of competitiveness for acquiring resources from the external environment. For example, NPOs show a high level of resource competitiveness when they face severe competition from other organizations to obtain the needed resources. Keen competition has recently arisen for obtaining financial resources among NPOs and the capacity of resource acquisition in NPOs is an important factor that can influence an NPO’s success and survival.

Resource dependency is about where resources come from (Lan, 1991) and it can strongly influence the goals, missions, and roles of organizations (Salamon, 1987). Governments are still potential and important funders even though contemporary NPOs obtain financial resources from diverse resource providers. An NPO has a high level of resource dependency when it heavily depends upon funding sources from the public sector in this study.

Goal change in organizations

An organization is distinguished from other social groups or entities in that it has specific purposes or goals (Perrow, 1972). Pursuing goals is a critical element for influencing organizational behaviors, structures, outcome, and survival in NPOs. An organizational goal can be conceptualized as “a condition that an organization seeks to attain” (Rainey, 2014: 150). Better organizational performance is directly or indirectly related to what organizations accomplish.

An organization can experience changes, revisions, renunciations, and modifications of organizational goals due to diverse reasons. First, the existing literature has focused on the negative aspects on goal change, that is, goal displacement (Bothe and Meier, 2000). At the organizational level, goal displacement (goal displacement is also called means–end inversion) occurs when the official and substantive goals are neglected in favor of the means as ends in organizations (Warner and Havens, 1968: 541).

Three factors—vague organizational goals, red tape, and quantitative-oriented performance measurement—can result in goal displacement at the organizational level. Organizational members are more likely to redefine their goals in an attempt to attain abstract and ambiguous organizational goals. In organizations, ineffective and unnecessary procedures, rules, and regulations can lead to means–end inversion because managers force organizational members to adhere to the set procedures, rules, and regulations. Contemporary public administration requires an organization to present measurable and specified goals. Adherence to functional and quantitative goals may displace primary and qualitative goals in organizations. Goal displacement often induces the pathology of bureaucracy.

Initial organizational goals are changed or replaced by new alternative ones because of various reasons besides goal displacement as means–end inversion. For example, organizations consider goal change when the needs of major customers are changed or potential stakeholders, such as powerful resource providers or politicians, request them to change organizational goals or missions. Goal change is the deliberate diversion of organizational goals. Warner and Havens (1968) labeled this kind of goal change as goal diversion; however, this article uses the term “goal change” for describing this situation. The achievement of new goals is more important than achieving existing ones when goal change occurs at the organizational level. In particular, NPOs with a high dependence on the environment are likely to experience goal change because of the demands of external resource providers.

Social value and the nonprofit sector

The principal value delivered by the nonprofit sector is the achievement of social purposes and the satisfaction of donors’ desires (Moore, 2000: 186). In general, NPOs realize social value through achieving their goals. Resource providers’ desires, including the government, are also important to NPOs’ survival as they often request that NPOs change their goals. Sometimes, such goal changes may damage realizing social value in NPOs.

In the nonprofit sector, there is no clear-cut understanding of social value. Social value can be differently conceptualized by academic, temporal, and spatial contexts. The pursuit of social value is closely associated with public concern and the public sphere, which is formulated by many people. Public concern can be described as the shared concerns among a majority of members of society (Han and Seo, 2014). Also, social value is directly connected to the realization of the public or social interest (Bozeman and Bretschneider, 1994). Public or social interest can be conceptualized as the general or collective interests of the social community or the attainment of goals desired by a majority of members of society. Social value is defined by efforts to guarantee a basic quality of life and to enlarge universal public services in diverse civic life spheres. In addition, the consideration of social minority groups is as important as that of the social majority group.

Every contemporary organization entails an element of social value to some degree. All modern organizations entail some degree of realizing social value and public scrutiny (Bozeman, 2004). In general, NPOs can be conceptualized as private organizations that provide public and social services and goods without the distribution of profits to organizational members. In this respect, the main roles and works of NPOs contribute to a variety of social values. The United Nations (2003: 15) also points out that the involvement of public goods is one of the common features of NPOs.

Hypothesis development

RDPs and goal change

Goal or mission changes are closely associated with revenue volatility in NPOs. Revenue volatility is conceptualized as “substantial year-to-year variation of revenue inflow” (Froelich, 1999: 252). Goal change in NPOs occurs when donors want to change an NPO’s provision of services (Macedo and Pinho, 2006) or NPOs want to take advantage of newly available funding sources (Billis and Harris, 1992). In particular, an NPO with a weak revenue structure may seriously consider the needs of external funders in order to obtain adequate financial resources.

Private funding sources, such as donations from individuals and corporations, are regarded as more unpredictable and unstable than government funding (Boris and Odendahl, 1990; Useem, 1987). Salamon (1987) suggests that empirical evidence does not support claims of goal changes in government–nonprofit relations when NPOs depend heavily upon government funds. On the other hand, goal change appears to be higher when NPOs obtain their funding from private donors or contributors. Due to a recent emphasis on economic value, private funders request NPOs to improve efficiency in nonprofit management (Macedo and Pinho, 2006). It may influence goal setting and change in NPOs. Thus, the research postulated the following hypothesis:

H1: NPOs with high dependency on government funding are less likely to experience organizational goal change.

What an organization does is an important yardstick for deciding whether or not external resource providers decide to invest their money in an organization. Some donors provide financial resources to NPOs without any strings attached, whereas some external stakeholders often exercise some influence on NPOs’ behavior and actions by supporting financial resources. In particular, some potential resource providers may require the acceptance of new criteria or missions by NPOs. NPOs should satisfy strong external funders’ desires, dissatisfactions, and complaints related to their work because the needed resource acquisition heavily influences the success and survival of NPOs. New criteria and missions by resource providers can result in goal conflicts or changes in NPOs. An NPO is vulnerable to the demands of goal change by resource providers or external stakeholders when it has a weak revenue structure or has to compete with other NPOs to obtain the needed financial resources. Therefore, the following hypothesis is postulated:

H2: NPOs with high resource competitiveness are more likely to experience organizational goal change.

Currently, many NPOs acquire the needed financial resources from diverse external resource providers. Organizations use a diversification strategy when they want to reduce their high dependence on a few external resource providers and stakeholders (Froelich, 1999). Diversification is a strategy of “avoiding the domination that comes from asymmetric exchanges when it is not possible to absorb or in some other way gain increased control over the powerful external exchange partner” (Pfeffer and Salancik, 2003: 127). NPOs are reluctant to be subjected to concentrated resource dependence by one or a few strong external funders in order to preserve their organizational autonomy (Froelich, 1999) and prevent organizational goal or mission changes. The following hypothesis is postulated:

H3: NPOs with high resource diversity (diversified revenue structure) are less likely to experience organizational goal change.

Goal change and social value

The attainment of social value is the core value of NPOs, although there is no clear consensus on the concept of social value. Almost all NPOs’ missions or goals reflect realizing social value. NPOs can reify social value by providing diverse social goods and services to local communities and general citizens. However, every external funding resource may have some constraints, such as revenue volatility or goal change (Moulton and Eckerd, 2012). It is difficult for NPOs to maintain their autonomy in a very competitive environment.

External resource providers can make various demands of an NPO that are unrelated to social value. The demands of external funders often conflict with social value and NPOs’ core values. In many cases, the demands of external and potential funders are closely associated with enhancing efficiency or productivity in NPOs. Such external pressures are more likely to strengthen when there are frequent goal changes in NPOs. Thus, the following hypothesis is postulated:

H4: NPOs with frequent goal changes are likely to experience the undermining of social value.

RDPs and social value

The fundamental role of NPOs is to provide public goods and services to the public in place of the public sector. NPOs pay more attention to realizing social value when they show high dependency on government funds. Froelich (1999: 256) notes that the initial and core missions of NPOs is actually driven by government priorities beyond the area of goal change. Core missions of NPOs are not seriously changed by government funds, such as government grants and contracts, even though the government often forces mission drift on NPOs (Liebschutz, 1992). Basically, dependency on government funding and maintaining social value may have a positive relation because social value is a core value of both the government and NPOs. Thus, the following hypothesis is postulated:

H5: NPOs with high resource dependency on government funding are likely to strengthen the realizing of social value.

A diversified revenue structure can help NPOs maintain their autonomy and independence from resource providers and external stakeholders. It is difficult for a few resource providers to exert strong influence on nonprofit management under a diversified revenue structure. In general, NPOs seek financial resources from a variety of funding sources in order to maintain their missions in a competitive resource environment (Pfeffer and Salancik, 2003). A high level of resource diversity may contribute to preserving organizational autonomy and social value as a core value of NPOs. Hence, the following hypothesis is postulated:

H6: NPOs with high resource diversity (diversified revenue structure) are likely to strengthen the realizing of social value.

Research design

Data collection and sample

The survey targeted 593 NPOs registered with the Korean central government in 2010 and located in the capital area² comprising Seoul, Incheon, and Gyeonggi. Organizations based in the capital area were surveyed in order to control economic conditions and geographical factors. The unit of analysis was the organization and the data were gathered by an online survey³ between January and February 2011. In the surveyed NPOs, regular staff members, including financial officers and executive directors, answered the survey questionnaire. Of the 593 organizations, 179 responded, for a response rate of 30.2%.

Measurement of the five main variables

The three variables of RDP—resource dependency, resource competitiveness, and resource diversity—were measured using the method reported by Seo (2011). This research presents four funding sources for helping the activities of NPOs:

Resources from the public sector.

Contributions from the private sector.

Funds from the commercial activities of an NPO.

Other resources.

Resource dependency is the proportion of governmental funds over the NPO’s total funds. For example, NPOs show a high level of resource dependency when they heavily depend upon grants from governments. Resource dependency is calculated by the following formula:

Resource dependency on government = (Total amount of funds from the public sector)/(Total amount of funds from the government, private sector, NPOs, and others)

A resource diversification strategy is important for NPOs’ success and survival. The resource diversity of an NPO is highest when it uses the aforementioned funding sources evenly. In detail, resource diversity is measured by the basic formula outlined in Figure 2 (Lan, 1991: 78). Resource diversity is highest when an individual NPO depends upon all four resources evenly. The degree of resource diversity is 100 if an NPO’s dependence on each funding source is 25% exactly.

Figure 2.

Basic formula for resource diversity.

Resource competiveness is the degree of competition when an NPO obtains financial resources from a variety of stakeholders and resource providers. This research depends on a perceptual measure to determine resource competitiveness. Resource acquisition from very few funding sources may have a negative effect on nonprofit management. This study uses the following question: to what extent does your organization compete with other organizations for obtaining financial resources? Table 1 reports information on the survey items for goal change and social value. In particular, three survey items were combined for the measures of goal change and social value. A seven-point scale was used to measure resource competitiveness, goal change, and social value.

Table 1.

Survey items for goal change and social value.

Elements	Items or measurements
Goal change	Your organization changes goals or missions frequently. Your organization changes organizational goals before they are achieved. Your organization has conflicts among goals or missions.
Social value	Your organization’s work responds to community’s demands. Your organization considers benefits for social minorities. Outputs or outcomes of your organization respond to public interest.

Statistical modeling

Two statistical methods were employed. First, the latent constructs of goal change and social value were estimated through confirmatory factor analysis (CFA). Second, the hypothesized model was tested using structural equation modeling (SEM) with the maximum likelihood (ML) estimation method using AMOS 18. Figure 3 shows the SEM for the hypothesized model.

Figure 3.

SEM for hypothesis tests.

Results and findings

Measurement validation and descriptive statistics

Regarding the model fit of the hypothesized model, several goodness-of-fit indices (see Table 2) confirmed the acceptable fit in general terms of the research model. For example, relative chi-square (chi-square/degrees of freedom ratio) was about 2.54 (less than 3.0 is acceptable) and the comparative fit index (CFI) was .904 (greater than .90 is considered a good fit). On the other hand, both the root mean square error of approximation (RMSEA) and non-normed fit index (NNFI) were moderately acceptable in this model.⁴

Table 2.

Overall fit indexes from SEM analysis.

Model (N = 179)	df	χ²	χ^2/df	GFI	NNFI	CFI	RMSEA
Suggested cut-off values	–	–	<3	>.90	>.90	>.90	<.08
Model score	33	53.266	1.983	.938	.833	.904	.083

Table 3 shows descriptive information on the five main variables. About two-thirds of the funds of the surveyed NPOs were from the public sector. The degree of resource competitiveness was moderate in the surveyed organizations. The minimum value of resource diversity is about 56.70 when an NPO depends on only one type of funding source⁵ in the presented formula. The degree of resource diversity was not high because approximately 25% of the surveyed organizations used only one type of funding source.

Table 3.

Descriptive statistics.

Variables	N	Mean	St. dev.	Min.	Max.
Resource dependency	179	.68	.347	.00	1.00
Resource diversity	179	65.29	8.849	56.70	92.35
Resource competitiveness	179	4.07	1.628	1	7
Goal change factor score	179	.000	1.00	−1.867	2.746
Social value factor score	179	.000	1.00	−5.146	.9081

The ages of the NPOs, as shown in Table 4, show narrow variability. Of the total number of nonprofits, 120 are over 10 years old. This is an unexpected result because the history of the Korean nonprofit sector is short. The democratization of the Korean political system at the end of the 1980s was the trigger for the formation of nonprofits by citizens’ voluntary participation (Jung, 2003; Jung and Moon, 2007; Lim et al., 2009; Mhin, 2003). The number of regular staff of the 179 NPOs shows wide variability. More than 40% have fewer than six regular staff members; the mean is 9.63 members and the standard deviation is 5.26.

Table 4.

Age of organization and number of regular staff (N = 179).

	N of orgs	Percent		N of staff	Percent
Fewer than 2 years	10	5.6	Less than 6	80	44.7
2 to 4 years	10	5.6	7 to 9	32	17.9
5 to 7 years	14	7.9	10 to 12	17	9.5
8 to 10 years	21	11.7	13 to 15	11	6.1
Over 11 years	124	69.3	Over 16	39	21.8

There is wide variation in terms of the origins of nonprofits’ financial resources. About 75% of the surveyed organizations receive financial resources from the public domain. Some NPOs obtain their resources from profits from foreign exchange, interest on deposits, and founders’ assets. This study tested the reliability or internal consistency among the survey items for goal change and social value using Cronbach’s alpha. Both goal change and social value had an alpha value of .7 or above. CFA and reliability tests were conducted for goal change and social value because they consist of multiple items (see Table 5). The z-score was calculated using the obtained factor loadings.

Table 5.

Factor analysis and reliability test for goal change and social value.

	Eigenvalue	Factor loadings
Social value (Cronbach’s α = .803)
Social value 1	2.176	.866
Social value 2	.455	.831
Social value 3	.369	.858
Goal clarity (Cronbach’s α = .713)
Goal change 1	1.525	.805
Goal change 2	.898	.599
Goal change 3	.577	.792

Analysis of results

Table 6 presents the testing results for the six hypotheses using SEM. The model was free from multicollinearity among the study variables. The data did not support Hypothesis 1, which posits a negative relationship between resource dependency and goal change. High dependence on governmental funding showed a negative relation with goal change; however, this relationship was not statistically significant.

Table 6.

The results of structural path modeling.

	Path coefficients	S.E.	C.R.
H1: ResDep → goal change	.195 (.117)	.140	1.391
H2: ResCom → goal change	.161 (.454)**	.051	3.185
H3: ResDiv → goal change	−.067(−.091)	.060	−1.114
H4: Goal change → social value	−.465 (−.260)**	.169	−2.748
H5: ResDep → social value	.289 (.097)	.263	1.098
H6: ResDiv → social value	.249 (.188)*	.116	2.149
Organizational size → goal change	−.003 (−.009)	.021	−.128
Organizational age → goal change	−.019 (−.040)	.035	−.554

Notes: Standardized path coefficients are in parentheses. n = 179. *p < .05; **p < .01.

The results from Table 6 confirm Hypothesis 2, which states that competition for obtaining financial resources leads to goal change in NPOs. External resource providers request that NPOs accept their demands. The demands of external stakeholders can lead to shifting NPOs’ priorities or goals and can reduce the autonomy of nonprofit management.

The data did not support Hypothesis 3, which posits a negative relationship between resource diversity and goal change. High resource diversity (diversified and balanced revenue structure) showed a negative relation with organizational goal change; however, it was not statistically significant. This may be due to a skewed distribution of resource diversity in the surveyed NPOs. As mentioned earlier, the value of resource diversity was 56.70 when an organization has only one type of funding source. About 25.7% of surveyed organizations (46/179) depend upon only one type of funding source (mode = 56.70). The heavy imbalance of funding sources makes it difficult to understand the relationship between resource diversity and goal change in NPOs.

Table 6 shows that frequent goal changes are negatively associated with social value in NPOs (Hypothesis 4). Organizational goals can change for various reasons. For example, a crisis, the introduction of new technology and more efficient methods, the will of the leader, and the identification of new opportunities are all potential factors that can cause goal change in an organization. The result reveals that NPOs had experienced a significant level of organizational goal change. About 30% of the NPOs (42/179) stated that they had experienced organizational goal change before organizational goals were achieved. About 15% of respondents (26) thought that their organization changed goals or missions frequently. About 12% of the NPOs surveyed answered that their organization has some conflicts among organizational goals or missions.

The data did not confirm Hypothesis 5, which states that a high dependence on government funding is positively associated with social value. This failure to show a statistically significant result on H5 is surprising because governments request that NPOs realize social value as a necessary condition for providing resources. This may be because of the government’s strong emphasis on the economic efficiency and better performance of NPOs, as well as the small sample size (N = 179).

The results from Table 6 support Hypothesis 6, which posits a positive relationship between resource diversity and social value. The degree of resource diversity was the highest when NPOs relied on all four funding sources evenly (RDiv, RGov, RPri, and ROth) (see Figure 1). A diversified revenue structure through various resource providers is a good way of “avoiding the domination that comes from asymmetric exchanges” (Pfeffer and Salancik, 2003: 127). A balanced revenue structure (high resource diversity) can help to maintain organizational autonomy. Age and size of organizations are not statistically significant, although this study assumed that the two control variables affect organizational goal changes in NPOs.

Discussion

In general, dependence on public support may contribute to important value preservation in the nonprofit sector (Moulton and Eckerd, 2012). However, the type of government-aid project for NPOs has been continuously changed according to the inclination of the regime. The Korean government has provided NPOs with financial resources through competitive public contest. For example, the administration of Korean President Roh Moo Hyun showed relatively low involvement in decisions on the type of government-aid project, whereas the type of government-aid project was changed into a business model that realized the regime’s major projects under the Lee Myung-bak government (Park et al., 2011).⁶ Under such circumstances, Korean NPOs may try to change their goals or missions in order to participate in government-aid projects for NPOs.

Heavy competition for obtaining resources can make it difficult for NPOs to attain their core missions and can also lead to serious organizational goal changes. Contemporary NPOs willingly take a variety of risks in order to obtain the needed resources from external funders. NPOs with weak financial stability are more likely to take risks for their survival. Also, innovative NPOs tend to accept various external changes more positively for their success or survival (Seo and Kim, 2015). Kelly’s (1998) study reveals that a quarter of surveyed NPOs⁷ changed their organizational goals or priorities in order to obtain financial resources from external resource providers.

Frequent goal changes at the request of strong resource providers, including the public sector, make NPOs realize social value. External or environmental pressures can lead NPOs to change their priorities or goals. Even organizational goal change by external or environmental pressures does not matter greatly as long as there is strong agreement on or sympathy with the goal change among organizational members. On the other hand, goal change by external pressures may have a negative effect on nonprofit management when organizational members do not sympathize with the necessity of the goal change.

The results showed that goal changes caused by competition for obtaining financial resources, diverse environmental pressures, and the demands of external resource providers do not contribute to enhancing social value and nonprofit management. Potential funders, such as the government, frequently request that NPOs change their goals, missions, or priorities for improving efficiency and performance; however, the findings suggest that such behaviors by external funders do not have a positive effect on boosting social value in NPOs.

Organizational autonomy through a highly diversified revenue structure may contribute to preserving social value in NPOs. Provan, Beyer, and Kruytbosch (1980) point out that the autonomy of NPOs over their managerial works is rather weak when the dominant umbrella organization United Way controls their critical resources. In general, NPOs try to break away from the concentrated revenue structure of one or a few powerful external funders or to escape from a severely competitive environment for obtaining resources in order to maintain or increase their autonomy.

Conclusion

External and potential resource providers frequently ask NPOs to accept their demands, which may be linked to high efficiency and better performance. Contemporary NPOs obtain needed resources from external funders and are not free from their various demands based on providing resources. NPOs should show evidence of performance to diverse external funders, such as governments, parent NPOs, foundations, and individual donors, in order to obtain financial resources and political support. In fact, as strong resource providers, governments apply performance-based contracting and use objective performance indicators for NPOs (Heinrich and Choi, 2007).

This study explores how NPOs’ resource dependence on the external environment affects goal change and social value. A structural path model was formed by linking the three dimensions of RDPs (resource dependency, resource competitiveness, and resource diversity), goal change, and social value. The model showed that resource competitiveness may be a good variable to explain the degree of goal change in NPOs. A very competitive environment for acquiring financial support may result in organizational goal changes in NPOs.

The empirical results show that frequent goal change can damage social value in the nonprofit sector. This can be interpreted as indicating that the involvement of external stakeholders makes it difficult to attain social value in that the demands of potential donors are a major cause of goal change in NPOs. The findings reveal that the diversified revenue structure is positively associated with social value. This may be because resource diversity contributes to maintaining organizational autonomy against diverse environmental pressures.

Realizing social value, or doing good business, is an incontrovertible value of NPOs. To realize social value, NPOs’ autonomy and independence should be appropriately guaranteed even though the environment for obtaining financial support is very competitive. Financial and political support from external stakeholders is very important for the success and survival of NPOs; however, such support is not always good to them. Some potential resource providers believe that their demands improve both organizational efficiency and social value in NPOs. On the contrary, this study reveals that such involvement of potential funders can have a negative effect on social value in the nonprofit sector. In this study, the government as a potential funder has a negative effect on realizing social value in Korean NPOs.⁸ Maintaining a proper distance between external resource providers and NPOs is better than over involvement to keep social value in NPOs.

NPOs are not controlled by their resource dependency (Pfeffer and Salancik, 2003). To maintain their autonomy and social value, NPOs should retain the initiative in organizational management. Under a very competitive environment to obtain financial resources, NPOs have to try to have a balanced revenue structure in order to maintain social value. Diversification of the revenue structure can help maintain autonomy and social value (Gronbjerg, 1993). In the short-term view, an NPO should try to reduce its dependency on one or a few financial resources for its autonomy and social value. In the mid- and long-term view, NPOs should enhance their financial independence in order to ensure their survival and success and to improve their social value.

Future research and limitations

This study has some limitations. First, the findings may be controversial due to the cross-sectional research design. Research data should be accumulated to examine the relationship among RDPs, goal change, and social value in NPOs. Second, the conceptualization and measurement of resource competitiveness should be elaborated further in future research. This study used a perceptual indicator to measure resource competitiveness, goal change, and social value; these were conceptualized and measured by depending upon the respondent’s perception. Third, this study may be subject to common instrument bias in that the same respondents were surveyed regarding perceptions of goal change, competitiveness, and social value.

Some suggestions for future studies are related to the extension of the research variables. First, this study refers to the importance of organizational autonomy by exploring the direction of the relationship between resource diversity and social value. However, organizational autonomy was not used as a research variable. Empirical consideration on the relationship between autonomy and social value can offer more elaborated and richer findings in future research. Second, this research shows that goal changes caused by the competitive environment for obtaining financial support may damage social value in NPOs. However, various factors can affect organizational goal change even though the present study mainly focused on organizational goal change induced by external funders. For example, future research will obtain more sophisticated findings and implications when it also considers the influence of goal change by various internal factors on social value in NPOs.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship and/or publication of this article: This research was supported by the Daegu University Research Grant, 2017.

Notes

JungWook Seo is Assistant Professor in the Department of Public Administration in Daegu University, South Korea. His academic interests are public/nonprofit management, social security, and welfare policy. He has recently published in International Review of Public Administration and Nonprofit Management & Leadership.

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