Toward a Reassessment of the Role of Rank-and-File Stakeholders in Nonprofit Organizations

Abstract

This study examines the relationships between the influence of different stakeholders and mission-based strategic planning, community development, and economic effectiveness. Our purpose is to highlight the unique and incremental contribution of rank-and-file stakeholders, that is, stakeholders without any specific grade or status, such as nonboard volunteers or beneficiaries. We analyze reported data from 227 nonprofit organizations (NPOs) using structural equation modeling and bootstrap mediation analysis. Our results show that when rank-and-file stakeholders manage to remain influential, strategic planning tends to be more directly rooted in the mission, which contributes to both perceived community and economic effectiveness. These results are discussed with regard to the utility, legitimacy, and urgency of more direct forms of democratic governance giving rank-and-file stakeholders the power to contribute to mission-based strategic planning.

Keywords

rank-and-file stakeholders perceived community effectiveness perceived economic effectiveness mission-based strategic planning mission drift

The participation of grassroots volunteers and beneficiaries usually develops during the first stage of nonprofit organizations’ (NPOs) creation (Kelley, Lune, & Murphy, 2005; Kreutzer & Jager, 2011; Rothschild & Stephenson, 2009; Valeau, 2015). These rank-and-file stakeholders, that is, stakeholders without any specific grade or status, provide the initial momentum for community effectiveness that is, a unifying and mobilizing sense of belonging to their NPO at the field level (Mintzberg, 1983; Valeau, 2015; Yu, 2012). Nevertheless, over time, the influence of rank-and-file stakeholders tends to decline. NPOs often hire skilled paid workers in order to attract new funders and increase their activity (Kreutzer & Jager, 2011; Martinez, 2009; Reid & Karambayya, 2009). NPOs are expected to develop professionally and get more formally organized (Hwang & Powell, 2009; Pache & Santos, 2010; Verbruggen, Christiaens, & Milis, 2011). They rationalize their development through strategic management and planning (Medley & Akan, 2008; Morrison & Salipante, 2007; Reid & Karambayya, 2009). They monitor, account for, and report their economic effectiveness to their funders (Verbruggen et al., 2011).

A long series of case studies has shown that focusing exclusively on increasing revenue and cutting costs often leads to a loss of sense of the long-term mission (Kelley et al., 2005; Kreutzer & Jager, 2011; Martinez, 2009; Rothschild & Stephenson, 2009; Yu, 2012). Jones (2007) analyzes this risk in terms of mission drift. Mission-based strategic planning, a construct we develop for the purpose of this study, combines Mintzberg’s (1983) approach where the mission precedes and inspires action, and Bryson’s (1988) development of strategic planning in the context of NPOs, which highlights the importance of turning mission and goals into programs and projects. Mission-based strategic planning ensures that all strategic decisions contribute to the achievement of the NPO’s core mission, while at the same time respecting its underlying values (Bryson, 1988; Dartington, 1998; Jones, 2007; Mintzberg, 1983). Mission-based strategic planning would, therefore, contribute to both economic and community effectiveness.

Early prescriptive literature first considered that balancing economic and community effectiveness through mission-based strategic planning was the main role of the board (Carver, 1990; Drucker, 1990; Houle, 1997; Ingram, 1989). However, more recent literature has shown that, in practice, this does not necessarily happen. Resource dependency in particular explains why boards might give some stakeholders’ expectations and demands priority over those of others (Mitchell, Agle, & Wood, 1997). Funders’ external institutionalized demands to improve economic effectiveness often tend to take over (Cornforth, 2004; Pache & Santos, 2010; Verbruggen et al., 2011). As boards may not always be able to guarantee the aspired balance between economic and community effectiveness, more research is needed to understand the factors that could help NPOs to develop economically without losing the sense of their mission and their initial community effectiveness.

In this study, we argue that a reassessment of the influence of rank-and-file stakeholders may be one of the keys to maintaining a sense of mission in the long-term. This general hypothesis reconnects with the roots of “associationism” (Laville, 2017) and draws on solidarity economy and civil society approaches to the nonprofit sector (Laville, 2017; Laville, Young, & Eynaud, 2015, Valeau, 2015). These approaches view NPOs as organized action by the population and for the population to address social, economic, and democratic issues. The participation of volunteers and beneficiaries in the production of services blurs the lines between the helpers and the helped and contributes to collective empowerment and emancipation. In sum, we suggest that maintaining the influence of rank-and-file members during the professionalization process may guarantee a better balance between economic and community effectiveness.

We empirically examine whether NPOs where rank-and-file stakeholders manage to remain influential, that is, have the capacity to make the NPO “do things it would not otherwise do” (Dahl, 1961), have a strategic planning orientation that is more focused on the mission, leading them to develop a higher level of community effectiveness and possibly achieve better economic results. In doing so, we contribute to previous literature in three ways. First, we extend the stakeholder approach to NPO effectiveness (Enjolras, 2009; Herman & Renz, 1997, 2004, 2008; Lecy, Schmitz, & Swedlund, 2012) by reintroducing grassroots volunteers and beneficiaries as forgotten yet useful stakeholders, and by focusing on their community contribution in a more specific and concrete approach to social effectiveness (see Santos, 2012). Second, our concept of mission-based strategic planning reconnects previous research on professionalization promoting the use of strategic management tools (Hwang & Powell, 2009; Medley & Akan, 2008; Morrison & Salipante, 2007) with studies pointing out the importance of keeping to the mission (Dartington, 1998; Jones, 2007; Mac Donald, 2007; Ramus & Vaccaro, 2017). Third, by relating the influence of rank-and-file stakeholders to economic effectiveness, we bring a new argument which supports the utility of combining representative democracy embodied by the board (Buse, Berstein, & Bilimoria, 2016; Houle, 1997; Ingram, 1989) with elements of direct democracy empowering rank-and-file stakeholders (Chatelain-Ponroy, Eynaud, & Sponem, 2015; Coule, 2013; Haugh, 2007; Kreutzer, 2009; Rothschild & Stephenson, 2009; Schachter, 2011).

This study was conducted in France with 227 NPOs registered under the 1901 Law on Associations.¹ The French nonprofit sector counts 1.3 million organizations. 150,000 of these employ 1.8 million paid workers (Bazin, Duros, Legrand, Prevostat & Malet, 2017). Over the past two decades, like everywhere else in the world, part of the sector has embraced the “social entrepreneurship” model adopting a market approach to the acquisition of resources for social purposes (Fraisse, Gardin, Laville, Petrella, & Richez-Battesti, 2015; Petrella & Richez-Battesti, 2016). However, another part of this sector is still rooted in the “solidarity economy movement” through which numerous NPOs seek to bring about social change (Laville, 2017; Valeau & Boncler, 2013). They regularly debate and reassess the sense of their missions during general assemblies open to a large range of stakeholders (Chatelain-Ponroy et al., 2015). Many of these NPOs still manage to obtain some financial support from private donors and local councils that consider their contribution to be crucial for the public good (Archambault, 2001; Cumming, 2008). The French nonprofit sector is, therefore, an excellent context in which to test our hypotheses regarding the influence of rank-and-file stakeholders.

The remainder of the article is organized as follows: first, we present the literature review and the research hypotheses. We then present the method and results. Finally, the findings are discussed in light of the literature review.

Theoretical Background and Hypotheses

A Stakeholder Approach to Multidimensional Effectiveness

Different scholars have proposed various inventories of dimensions of NPO effectiveness (Jun & Shiau, 2012; Kanter & Summers, 1987; Lecy et al., 2012; Sowa, Selden, & Sandfort, 2004), yet most of them can be related to a dual model combining, on one hand, a broad and long-term community appropriation, and on the other, more accurate but short-term input output measures (Ebrahim & Rangan, 2010; Jun & Shiau, 2012; Kanter & Summers, 1987). In this study, as defined in the introduction, we address these two dimensions in terms of community and economic effectiveness.

However, effectiveness remains an empirical challenge as most scholars also agree that different stakeholders often give different levels of importance to these different dimensions, and, as a result, often make different judgments about the effectiveness of the same NPO (Ebrahim & Rangan, 2010; Herman & Renz, 1997, 2004, 2008; Jun et al., 2012; Kanter & Summers, 1987; Lecy et al., 2012). While at first these judgments were viewed as forms of bias that did not reflect objective effectiveness, recent research has started to consider these perceptions as a measure of effectiveness in its own right (Jun & Shiau, 2012; Lecy et al., 2012; Willems, Jager, & Faulk, 2016).

Drawing on Herman and Renz’s (1997, 2004, 2008) seminal work, the stakeholder approach to NPO effectiveness extends this perceptual conception by further showing that, depending on their experience, their feelings, and their goals, different stakeholders develop and support different views about what should constitute their NPO’s effectiveness (Cornforth, 2004; Dartington, 1998; Enjolras, 2009; Herman & Renz, 1997, 2004, 2008; Reid & Karambayya, 2009; Valeau, 2015). Willems et al.’s (2016) contribution in terms of reputation and legitimacy management reconnect subjective and objective approaches by highlighting a form of self-fulfilling subjective concept according to which individuals and groups are more likely to provide their resources and active commitment to an NPO that they believe to be effective.

In this study, we refer to rank-and-file participants as NPO stakeholders without any specific grade or status, in contrast to board members and paid workers. We base the inclusion of beneficiaries in this group, along with volunteers working at the grassroots level, on a “solidarity economy” and “civil society” approach (Laville, 2017; Laville, Young, & Eynaud, 2016; Valeau, 2015) focusing on their participation in the production of the services they benefit from. In practice, beneficiaries do not necessarily become volunteers, but can be included as members of the general assembly or simply consulted on a regular basis before making important decisions. The term “members” should be taken here in a broader “stakeholder” sense to include individuals or groups that “have a stake in or claim on” the organization (Freeman, 1984) regardless of whether or not they have formal membership status. As shown by numerous studies (Kelley et al., 2005; Kreutzer & Jager, 2011; Rothschild & Stephenson, 2009; Valeau, 2015), during the first stage of NPOs’ development, volunteers working in the field and beneficiaries are often in close contact with one another in the field where they discuss the mission and actions of the NPO.

The remainder of this theoretical section presents a series of hypotheses regarding the relationship between the influence of different stakeholders and the development of these two dimensions of effectiveness. We examine both direct relationships and indirect relationships based on the mediating effect of mission-based strategic planning, a pivotal concept that reflects NPOs’ capacity to keep their action rooted in a mission.

The Effect of Rank-and-File Stakeholders’ Influence on Community Effectiveness

A community can be defined by the strength of social bonds among members (Durkheim, 1893; Granovetter, 1973). “Effectiveness” is a management concept that refers to the process of using available means of action to achieve a targeted output (Lecy et al., 2012). Thus, “community effectiveness,” which is at the heart of this article, refers to NPOs’ capacity to maintain and develop social bond with stakeholders, in and around them, and in doing so make them feel part of the same community. In practice, in modern democratic spaces such as NPOs (Laville, Young, & Eynaud, 2015; Rothschild & Stephenson, 2009; Valeau, 2015), community building and the development of social bonds mainly depends on communicative speech acts addressing the sense of the goal and values of the community making stakeholders feel understood, respected, and included (Fraser, 1990; Habermas, 1989).

The majority of studies adopting a stakeholder approach to NPO effectiveness considers rank-and-file stakeholders to be central to community effectiveness (Hafsi & Thomas, 2005; Kelley et al., 2005; Rothschild & Stephenson, 2009; Yu, 2012). According to Valeau (2015), rank-and-file stakeholders are particularly influential during the first stage of NPO development: “the grassroots community stage.” At this stage, NPOs function similarly to a traditional community based on “mechanical solidarity” (Durkheim, 1903). Mechanical solidarity refers to an egalitarian-based socialization process (Rothschild & Stephenson, 2009) in which existing members recruit and transmit the culture, norms and values to potential new members through direct interactions. This community-building phase is described in a number of case studies (Gawell, 2013; Kelley et al., 2005; Kreutzer & Jager, 2011; Rothschild & Stephenson, 2009; Yu, 2012) where rank-and-file stakeholders are shown spending a lot of time and energy engaged in speech acting, informal discussion, attending in formal assemblies, making contact with the population to recruit new volunteers and beneficiaries, and turning weak links into strong ones (Granovetter, 1973). As described by Rothschild and Stephenson (2009) and Yu (2012), these rank-and-file stakeholders favor organizations that are, at their core, collectivist, egalitarian, and inclusive. Such activities and their outputs correspond to what we define as community effectiveness. According to Valeau (2015), this community development can continue over time, even when NPOs professionalize. Our hypothesis is that the influence of rank-and-file stakeholders is the key to this continuation: rank-and-file stakeholders will use their influence to promote direct and egalitarian modes of socialization (Durkheim, 1893; Granovetter, 1973; Habermas, 1989), maintain the community spirit of their beginnings, and further develop community in and around the organization. They will ensure that community effectiveness remains a priority for the NPO. We, therefore, predict that this direct relationship between the influence of rank-and-file stakeholders and community effectiveness will remain constant across the size and age of the NPOs studied:

Hypothesis 1: The influence of rank-and-file stakeholders has a direct and positive effect on NPOs’ perceived community effectiveness.

The Effect of Paid Workers’ and Funders’ Influence on Perceived Economic Effectiveness

The stakeholder approach often associates the development of economic effectiveness with the arrival of a new breed of paid worker hired on the basis of its management skills. Paid workers are often seen as the executive of NPOs (Houle, 1997). Their role consists of translating the mission into action (Axelrod, 1994; Drucker, 1990; Houle, 1997; Mintzberg, 1983). However, more recent new institutionalist approaches attribute the rise of this new breed of paid worker in NPOs to pressure exerted by funders (Hwang & Powell, 2009; Pache & Santos, 2010; Reid & Karambayya, 2009; Verbruggen et al., 2011). Thus, as described by Hwang and Powell (2009) external stakeholders such as government and philanthropic funders have led the charge for greater efficiency and accountability in the nonprofit sector. Pache and Santos (2010) explain that skilled paid workers are hired in order to bring the skills necessary to answer these demands in terms of economic effectiveness and accountability. Case studies of the past decade provide a series of illustrations of the recruitment of a new generation of paid workers replacing the amateur volunteers. (Hafsi & Thomas, 2005; Kelley et al., 2005). As an example, Cumming (2008) describes how French nongovernmental organizations (NGOs) began replacing the “old guard” with “managers and career-minded recruits, who are explicitly interested in results and professionalism and who are not scarred by any of the ideological battles of the past.” (Cumming, 2008, p. 390). Given the above, we formulate the following hypothesis:

Hypothesis 2: The influence of paid workers and funders has a direct and positive effect on NPOs’ perceived economic effectiveness.

Mission-Based Strategic Planning

Early literature, for instance Kanter and Summers (1987), recommends that NPOs work toward both community and economic effectiveness that is, to do well while doing good. However, NPO literature from the past two decades has shown that such a balance is particularly difficult to find (Rothschild & Stephenson, 2009; Valeau, 2015). Numerous case studies, for instance, Kelley et al. (2005), Kreutzer and Jager (2011), or Yu (2012), identify a main tension between the formal practices and professional standards often introduced by paid workers to meet external stakeholders’ demands, and the values initially set by its community base. Highly professionalized NPOs tend to lose their grassroots legitimacy (Yu, 2012), in other words their community effectiveness declines. These studies often conclude with the necessity of reanchoring NPOs’ strategic management in its primary mission (Dartington, 1998; Ebrahim & Rangan, 2010; Jones, 2007). This proposal requires a more accurate definition of what the mission represents in the context of NPOs.

According to Campbell and Yeung (1991), defining and redefining the mission is the first step to strategic management for any organization. However, in the context of NPOs, mission plays a more specific role (Dartington, 1998; Mintzberg, 1983). Referring to NPOs as “missionary organizations,” Mintzberg (1983) considers NPOs to be a specific type of organization in which mission defines and legitimates its existence.² Concretely, the mission consists of a series of statements forming a system of ideas (Mintzberg, 1983) and prosocial values (Ramus & Vaccaro, 2017) leading to a moral judgment on the wrongness of a given situation faced by a given population. Drawing on this judgment, NPOs identify a no longer acceptable problem that needs to be solved urgently (Kanter & Summers, 1987; Mintzberg, 1983; Salamon & Anheier, 1992). The mission sets the NPO’s primary task that is, minor or major changes that are the core of its contribution to society (Dartington, 1998). The above elements do not exclude the possibility of the mission evolving and further developing over time, often through applying the same core values to other areas or problems. What Mintzberg (1983) specifically pointed out that there is a risk of a loss of a sense of mission giving rise to a political arena.

However, the mission needs to be translated into goals and action (Bryson, 1988). The statements defining an NPO’s mission often remain very inclusive and somehow unattainable (Kanter & Summers, 1987; Lecy et al., 2012; Mintzberg, 1983; Sowa et al., 2004). Thus, Bryson (1988) and Mac Donald (2007) insist on the necessity of sustaining the innovation process through the development of new projects. More specifically, Bryson (1988) introduces a series of recommendations aimed at helping NPOs to assess their current situation and develop strategic planning. NPOs first have to develop a mission statement that takes into account key stakeholders’ interests, the strengths and weaknesses of the organization and the opportunities and threats presented by the external environment. The strategic planning process then leads to the implementation of new programs and projects. In this study, drawing on Mintzberg (1983) and Bryson (1988), we consider that mission-based strategic planning, that is, the capacity to use strategic planning to develop an updated version of the mission in the form of new projects, constitutes an important step toward preventing or correcting mission drift, potentially leading to both community and economic effectiveness. Mission-based strategic planning aims at finding a fine balance between the need to keep action rooted in the mission and the necessity of turning mission into concrete action.

Mission-based strategic planning helps to keep the community together. From the point of view of NPO stakeholders, the mission is a “truth” that they share between them and want to share with people around them (Mintzberg, 1983). Thus, the mission can be seen as a form of sensemaking that will “inform and constrain the identity and action” of stakeholders (Weick, Sutcliffe, & Obstfeld, 2005, p. 409). It promotes an integrative culture made up of common values, beliefs, and goals driving collective action (Bryson, 1988; Kreutzer & Jager, 2011; Mintzberg, 1983). Mintzberg (1983) concludes his chapter on missionary organizations by stating that the loss of the mission gives rise to a political arena in which actors are motivated by self-interest. Thus, mission is a powerful tool to building a common identity and developing community in and around the organization. In other words, rooting strategic planning in the mission contributes to community effectiveness.

Mission-based strategic planning can also contribute to economic effectiveness. Beyond community building, the call of the mission leads to organized action. It constitutes a strategic tool and the first step toward strategic planning of economic development (Campbell & Yeung, 1991; Mintzberg, 1983). Jones (2007, p. 306) concluded that “the multiple sources of mission drift cry out for a control mechanism, some way of keeping nonprofits targeted on their announced objectives.” These control mechanisms can be related to long-range planning, which consists of establishing stepping goals rooted in the mission and which then allow for the monitoring of its achievement (Hwang & Powell, 2009; Morison & Salipante, 2007; Medley & Akan, 2008). The literature often depicts the mission and associated projects as cornerstones of nonprofit management (Bryson, 1988; Mac Donald, 2007; Ingram, 1989; Mintzberg, 1983). According to Mair, Battilana, and Cardenas (2012) and Santos (2012), and illustrated by Cumming (2008), Ramus and Vaccaro (2017), and Yu (2012), this connection between economic activities and the mission brings a specific legitimacy to NPOs, allowing them to attract and retain funders in search of a meaningful contribution (Cumming, 2008).

The Prescriptive Approach to the Role of the Board

The strategic approach to the board mainly relies on prescriptive literature defining what its role should be. This approach to the board was established during the 1990s through a series of best-selling books by authors such as Drucker (1990), Houle (1997), Axelrod (1994), and Carver (1990). These principles have been institutionalized as the “ten basic responsibilities of nonprofit boards” issued by the National Center for Nonprofit Boards (Ingram, 1989). These books introduce a series of rules focusing on the role of the board in guaranteeing effective achievement of the mission. This prescriptive approach to nonprofit boards is not fundamentally different from that adopted in relation to company boards (Houle, 1997). Thus, according to Ingram (1989, p. 3), “in addition to ensuring that the organization has a modern statement of what it is, represents, and does, the board should periodically review the statement’s adequacy, accuracy, and viability.” From this viewpoint, the role of the board is to set the strategy of the NPO (Axelrod, 1994; Houle, 1997). Drucker (1990) recommends that the mission should be reflected in decisions that will be communicated to all stakeholders. According to Ingram (1989), the board should turn these decisions into action plans. This prescriptive literature thus believes that strong and influential boards should use their influence to promote a strategic planning based on the mission and that such transformation should, in turn, help the board to gain credibility through community and economic effectiveness. However, the role of the board in the implementation of formal strategic planning and the latter’s effect on mission success have not received much attention from empirical research (Stone et al., 1999). Further studies are, therefore, needed in this area to empirically test these arguments from prescriptive literature; we thus formulate the following hypothesis:

Hypothesis 3: Mission-based strategic planning mediates the positive effect of the influence of board members on perceived community effectiveness and perceived economic effectiveness.

Reassessing the Role of Rank-and-File Stakeholders

However, according to Cornforth (2004), a large part of the above literature remains too prescriptive and oversimplifying. The renewed approach to NPO governance developed over the past decade does not completely deny the role of the board, but points out the influence other stakeholders can have on strategic management as part of a broader contingency framework (Callen, Klein, & Tinkelman, 2010; Cornforth, 2004; Ostrower & Stone, 2010; Pache & Santos, 2010; Verbruggen et al., 2011). Drawing on resource dependence theory (Pfeffer & Salancick,1978) and new institutional theory (DiMaggio & Powell, 1983), the renewed approach to NPO governance shows that board tends to comply to the professional norms and organizational behaviors expected by external stakeholders holding the resources they need (Callen et al., 2010; Cornforth, 2004; Ostrower & Stone, 2010; Pache & Santos, 2010; Verbruggen et al., 2011).

The stakeholder approach to NPOs usually integrates rank-and-file stakeholders according to an ethical principle: taking part in the governance of their NPO is their right as stakeholders (Defourny & Nyssens, 2010; Enjolras, 2009). Drawing on Freeman’s (1984) theory, the legitimacy of the voice of rank-and-file stakeholders is almost unanimously recognized. This stakeholder approach promotes a governance including all groups directly or indirectly concerned by the activity of the organization. According to Freeman (1984), all stakeholders have “a right not to be treated as a means to some end, and therefore, must participate in determining the future direction of the firm in which they have a stake” (Freeman, 1984, p. 39). Schachter’s (2011, p. 703) definition of direct democracy in NPOs gives the same concrete criteria: “by democratic I mean a system where members have the final say over at least some important decisions.”

In practice, the power left to, or gained by rank-and-file stakeholders over strategic management varies tremendously from one NPO to another. Although, as theorized by new institutionalist approach, the importance given to external stakeholders such as funders (Hwang & Powell, 2009; Kelley et al., 2005; Kreutzer & Jager, 2011; Pache & Santos, 2010; Verbruggen et al., 2011) often limits the attention given to rank-and-file stakeholders’ demands, their empowerment is still possible. Their participation in strategic planning can be rather informal, providing a bottom-up input to emergent strategies (Morrison & Salipante, 2007; Yu, 2012), or more formal (Chatelain-Ponroy et al., 2015; Kreutzer, 2009).

In this research, we seek evidence of the utility of a reinforcement of the power of rank-and-file stakeholders. Our proposition is twofold: first, given their commitment (Kelley et al., 2005; Kreutzer & Jager, 2011; Yu, 2012), we argue that their influence will contribute to maintaining strategic planning rooted in the mission; second, this will contribute to strengthening community (Coule, 2013; Haugh, 2007; Rothschild & Stephenson, 2009; Schachter, 2011), and also inspire other stakeholders, including certain funders (Campbell & Yeung, 1991; Cumming, 2008; Malloy & Agarwal, 2010; Mintzberg, 1983). Figure 1 provides an overview of our research model and includes the following hypothesis:

Hypothesis 4: Mission-based strategic planning mediates the positive effect of the influence of rank-and-file stakeholders on perceived community effectiveness and perceived economic effectiveness.

Figure 1.

Research model.

Method

Sample and Participants

This study was conducted in France with NPOs registered under the 1901 law on associations. The latter states in particular that paid workers cannot become members of the board. Our sample did not include any cooperatives or mutual organizations, the latter being regulated by other legislations. The French nonprofit sector counts 1.3 million organizations. 160,000 of these employ 1.8 million paid workers (Bazin, Duros, Legrand, Prevostat, & Malet, 2017). Much of this sector remains rooted in the “solidarity economy movement” (Laville, 2017) inspired by activism defending NPOs’ vocation to bring about social change in and around them. Initially largely reliant on public funding (Archambault, 2001), over the past two decades, another part of the sector has embraced the “social entrepreneurship” model adopting a market approach to the acquisition of resources for social purposes (Fraisse et al., 2015; Petrella & Richez-Battesti, 2016; Valeau & Boncler, 2012).

Data collection was conducted in partnership with the French Nonprofit Movement.³ Created in 1992, this umbrella organization is the largest of its kind in France. It includes 700 federations and 500,000 NPOs of different sizes operating in different sectors of activity. This organization aims to defend and promote nonprofit activities and is a recognized interlocutor in the discussion of laws and national policies regulating nonprofit initiatives. We chose this organization because it provided broad access to all kinds of NPOs and had no political affiliations. Through its website, the French Nonprofit Movement provides technical and legal advice along with all kinds of information about ongoing events and conferences. This website also constitutes a popular public space where ideas and practices are debated.

A link to our questionnaire was made available on the French Nonprofit Movements’ website, our data collection method was, therefore, in the form of a “web survey.” The use of web surveys for research purposes has become more common over the past 15 years (Callegaro, Manfreda, & Vehovar, 2015). This method presents not only major advantages, but also disadvantages with respect to the objectives of our study (Callegaro et al., 2015; Duffy, Smith, Terhanian, & Bremer, 2005). One of the key issues concerns the sampling method: web surveys give access to widespread populations but provide nonprobability self-recruited samples (Norman & Russell, 2006). According to Callegaro et al. (2015), while this sampling method may be problematic for descriptive statistics aiming to account for the general characteristics of the parent population, it is adequate for causal research designs like ours. In the case of causal models, it is important to ensure a sufficient representation of different categories constituting different control variables. For the purpose of the present study, we needed sufficient data for NPOs that were different in terms of size, tenure, and sector, to demonstrate that the causal structure identified remains constant across these control variables. Self-recruited samples also bring a higher risk of social desirability biases that requires specific attention (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003).

In total, 251 paid workers and board members filled out our questionnaire on the behalf of their NPO. However, 24 responses had to be removed because of the number of missing answers. The final sample counted 227 NPOs, thus reaching the standard threshold number required for structural equation modeling (SEM; Kline, 2011). To demonstrate the invariance of the structure of causal relationships examined across control variables such as size, sector, and date of creation, a large enough representation of each category is required rather than a representation of the parent population itself (Raines-Eudy, 2000). While the French nonprofit sector includes a large majority of organizations without any paid workers (86%) or only one to two paid workers (44% of 14% of NPOs with paid workers), the range of our sample is as follows: no paid workers (17.9%),⁴ from 1 to 2 (21.9%), 3 to 4 (17.9%), 5 to 9 (14.4%), 10 to 49 (19.4), 49 to 249 (4.5), equal or superior to 250 (4.0%). This structure allowed us to control the validity of our model across sizes. Regarding the two other control variables, sector and age of the NPO, our sample did not significantly differ from the structure of the parent population and provided a good representation of different categories. Our sample included NPOs from all sectors of activity (the percentage of the overall sector is provided in brackets): NGOs and advocacy (9.5% [9.9%]), social action and health (18.7% [18.7%]), education (14.4% [8,0%]), sport (13.4% [27.3%]), culture (15.3% [18.3%]), leisure (12.8 [11.2%]), economy and local development (11.5% [5.8%]), and others (4.5% [0.8%]). Regarding NPO age, 11.5% were created less than 10 years ago, 10 to 19 years ago (25.1%), 20 to 29 years ago (23.9%), 30 to 39 years ago (10.3%), 40 to 49 years ago (10.3%), and over 50 years ago (18.9%). The average duration of activity is 26 years for the French nonprofit sector as a whole and 28 years for our sample.

Measures

Our measures of perceived NPO effectiveness draw on Herman and Renz’s “Organizational Effectiveness Judgements” questionnaire (Herman & Renz, 2004, Appendix C, p. 704). We introduced our items with the following question: “Compared to other nonprofit organizations in your sector of activity, would you say that yours is effective in terms of . . . .” However, as established in the theoretical section, perceived economic and perceived community effectiveness are different in nature: economic effectiveness combines different domains of management; community effectiveness addresses the quality of the relationships developed with different noncontractual stakeholders. Perceived economic effectiveness was measured with four items from Herman and Renz’s (2004) study items regarding “finance,” “general management,” “lobbying,” and “human resources management.” Perceived community effectiveness was measured with six items assessing the quality of the relationship with volunteers, beneficiaries, users, individual donors, and the population in general. Drawing on Habermas’ (1989) speech-act approach to community building, we asked the respondent to assess the “effectiveness of their communication” with each of these stakeholders. Respondents rated on 7-point scales the degree to which they agreed or disagreed with each statement (1 = strongly disagree, 7 = strongly agree). Economic and community effectiveness measures both had a good reliability with Cronbach’s alphas of .75 and .83, respectively.

Our mediation variable, that is, mission-based strategic planning, was measured with a series of five questions regarding the NPO’s capacity to develop new projects related to its mission: definition of the mission, implementation of the mission, monitoring the achievement of the mission, conception of new programs, launching of innovative programs. This part of our questionnaire draws on Ingram’s (1989) “Self-Assessment for Nonprofit Governing Boards Questionnaire” used by Herman and Renz (2004) (Appendix D, p. 704). Some questions, for instance the one related to “program selection consistent with mission and program monitoring,” were split into two distinct questions. Furthermore, while Herman and Renz (2004, p. 704) introduce this series of questions in terms of “elements of board effectiveness,” our purpose being to measure the input from various stakeholders, we introduced these questions referring to the NPO overall rather than the board. As for economic and community effectiveness, respondents were asked to assess their NPO “compared with the other nonprofit organizations of your sector of activity.” Our mission-based strategic planning construct presents a good reliability (α = .90).

The independent variables concerned the influence of 11 stakeholders corresponding to 4 groups. Members, nonboard volunteers, beneficiaries and users formed the rank-and-file stakeholders group (α = .82). The president of the board, and members of the board constituted the board group (α = .79). The third group was constituted of paid workers (α = .77); private funders, individual donors, public funders, and other nonprofit partners represented the funders group (α = .70). Drawing on Dahl’s (1961) approach to power and democracy, our questionnaire measured the influence of these different stakeholders through the following question: “Would you say that the following stakeholders influence your NPO’s general orientations?.” Respondents were asked to rate the different stakeholders involved from 1 = not influent at all to 5 = very influent.

Data Analysis

Before conducting our analyses, we first needed to evaluate the importance of common method biases (Podsakoff et al., 2003). Given the perceptual nature of our concepts and the fact that these concepts were assessed by the same self-recruited respondents, we had to check that common method biases, such as social desirability, remained at an acceptable level. Following Podsakoff et al. (2003), we used the Harman’s single-factor test (first technique, pp. 890-892). This test involves examining the unrotated principal component analyses (PCAs) to evaluate whether or not one general factor accounted for the majority of the total variance explained. Under a 50% threshold, method biases can be considered as acceptable. We then tested our measurement model with a confirmatory factor analysis. The reliability of each construct was measured using Cronbach’s alpha. We then tested the different hypotheses using SEM. The mediating effects involved in Hypotheses 3 and 4 were tested using the bias-corrected bootstrap analysis. Finally, we conducted a series of z scores to test for moderation effects of factors such as the status of the respondent, the date of creation and the size of the NPO.

Results

Common Method Bias, Measurement Model, and Control Variables

We ran a Harman’s single-factor test (Podsakoff et al., 2003) to evaluate the importance of common method biases. The highest loading factor accounted for 26.9% of a total variance explained of 72.8%. As this general factor accounted for less than 50% of the variance, we can conclude that common method biases remain limited and does not prevent us from performing further analyses.

In line with Anderson and Gerbing’s (1988) and Klines’ (2011) recommendations, we also performed a confirmatory factor analysis to confirm the properties of the measurement model, using SEM with AMOS. The results show that the hypothesized 7-factor model including four groups of stakeholders, one mediation variable of mission-based strategic planning, and two forms of effectiveness, presented a good fit χ² = 528.5, df = 286, p = .000, comparative fit index (CFI) = .92, nonnormed fit index (NNFI) = .90, root mean square error approximation (RMSEA) = .061, Akaike information criterion (AIC) = 712.7. This model outperforms any of the other tested models on all the indices.

We conducted a series of z score tests (Table 1) to examine whether control variables such as the status of the respondent, NPO size, tenure and sector of activity would moderate the strength of the relationships (β) between the different variables in our final model (Kline, 2011). We compared the strength of the relationships among variables between executive paid worker and board member respondents, between NPOs created less than 10 years ago with NPOs created more than 10 years ago, between small NPOs (< 10 paid workers) and larger NPOs (> 10 paid workers), and finally between NPOs working in the social and health sector, and those working in culture, sport and leisure. Out of the 36 z scores thus examined, 35 remained under the 1.92 threshold (ranging from .07 to 1.85) and were, therefore, nonsignificant for a 5% probability of error. The only significant z score (z score = 2.80**) concerned the relationship between mission-based strategic planning and community effectiveness, depending on the sector of activity (NPOs working in social and health sector versus the culture, sport, and leisure sector). However, taking a closer look at the difference between the β, we can see that both remain significant, the β for NPOs working in the social and health sector being even stronger than for culture, sport, and leisure (β1 = .288, p < .01; β2 = .693, p < .01). Based on the data provided in Table 1, we can, therefore, conclude that that all hypothesized relationship remain significant across size, tenure, and domain.

Table 1.

-Z Scores for Control Variables.

Pathways	Status	Age	Size	Sector
Influence of members of the board → mission-based strategic planning	−0.51	0.47	1.13	−0.18
Influence of rank-and-file stakeholders → mission-based strategic planning	−0.83	−0.61	0.07	1.03
Influence of paid workers → economic effectiveness	0.50	−0.15	0.31	1.27
Influence of funders → community effectiveness	−1.45	1.63	−0.15	0.52
Influence of rank-and-file stakeholders → community effectiveness	−0.57	−0.56	−0.92	1.79
Mission-based strategic planning → community effectiveness	0.19	1.36	0.05	2.80**
Mission-based strategic planning → economic effectiveness	0.49	−1.11	0.18	−0.95
Influence of paid workers → mission-based strategic planning	0.24	1.85	0.78	−0.86
Influence of members of the board → community effectiveness	1.06	1.14	1.79	−0.26

Note. z scores superior to 1.92 indicate a significant difference in the beta (*p < .05; **p < .01).

Structural Equation Modeling

Table 2 reports descriptive statistics and correlations for the study variables. As none of these bilateral correlations exceeded .70, there is no risk of multicollinearity. We can, therefore, carry out the SEM analysis. We tested our research model following the SEM method with AMOS, using the covariance matrix (Kline, 2011). Our model yielded a good fit to the data (χ² = 590.18, df = 303, p = .000, CFI = .91, NNFI = .89, RMSEA = .065, AIC = 740.18). Nevertheless, it was necessary to test for the existence of a nested model providing a better fit (Anderson & Gerbing, 1988; Kline, 2011). The final model permitted us to discard two nonsignificant links between funders and external partners and economic effectiveness, and between paid workers and community effectiveness. We then added two expected significant relationships: a positive relationship between paid workers and mission-based strategic planning, and a negative relationship between board members and community effectiveness. This final model also includes two extra links: one between external partners and community effectiveness, another one between board members and community effectiveness. This final model presents the following fit (χ² = 581.6, df = 303, p = .000, CFI = .91, NNFI = .90, RMSEA = .064, AIC = 731.61).

Table 2.

Descriptive Statistics and Bilateral Correlations.

	M	SD	1	2	3	4	5	6	7
1. I. Rank-and-file stakeholders	5.48	1.35	—	—	—	—	—	—	—
2. I. Board	6.04	1.18	.30**	—	—	—	—	—	—
3. I. Paid workers	5.30	1.34	.20**	.08	—	—	—	—	—
4. I. Funders	2.58	1.31	.34**	.10	.21**	—	—	—	—
5. MBSP	5.45	1.32	.27**	.25**	.17**	.11	—	—	—
6. P. Community effectiveness	4.09	1.28	.38**	.10	.14*	.07	.53**	—	—
7. P. Economic effectiveness	4.57	1.39	.16*	.11	.42**	.24**	.51**	.40**	—

Notes: I: influence; Board: board members; MBSP: mission-based strategic planning. *p < .05 ; **p < .05

Figure 2 displays the final research model. Fully confirming Hypothesis 1, the influence of rank-and-file stakeholders is directly related to community effectiveness (β = .367, p < .001). Hypothesis 2 was partially validated with the influence of paid workers being related to economic effectiveness (β = .200, p < .01), while the influence of funders and rank-and-file stakeholders was not associated with economic effectiveness (β = .135, p = n.s.). Unexpected negative relationships with community effectiveness were found for the influence funders and external stakeholders (β = −.174, p < .05) and for the influence of board members (β = −.129, p < .05). Hypothesis 3 regarding the relationship between the influence of board members and mission-based strategic planning, and Hypothesis 4 between the influence of rank-and-file stakeholders and mission-based strategic planning were also both validated (β = .147, p < .05; β = .191, p < .01, respectively), while a similar influence was also unexpectedly found for paid workers (β = .170, p < .05). Hypotheses 3 and 4 postulating a relationship between mission-based strategic planning and community and economic effectiveness were also both fully confirmed (β = .494, p < .001; β = .385, p < .001, respectively).

Figure 2.

Final model.

Bootstrap Analysis

Finally, we conducted a series of bootstrap analyses (Preacher & Hayes, 2008) to assess the mediating effects introduced in Hypotheses 3 and 4. Table 3 shows that the two mediating effects of mission-based strategic planning between the influence of board members and community and economic effectiveness are significant, as their confidence intervals do not contain 0 (β = .072, lower limit B = .011, upper limit B = .301; β = .071, lower limit B = .015, upper limit B = .331). Supporting Hypotheses 4, influence of rank-and-file stakeholders is related to both forms of effectiveness through the mediating effect of mission-based strategic planning (β = .094, lower limit B = .009; upper limit B = .176; β = .093, lower limit B = .010; upper limit B = .187). Based on the unexpected relationship between the influence of paid workers and mission-based strategic planning, the latter had a mediating effect between paid workers and community and economic effectiveness (β = .083, lower limit B = .036, upper limit B = .149; β = .083, lower limit B = .010, upper limit B = .153).

Table 3.

Bootstrap Analysis of Indirect Effects.

IV	Mediators	VD	β direct effect	β indirect effect	SE	95% B confidence interval
IV	Mediators	VD	β direct effect	β indirect effect	SE	Lower	Upper
Board
I. Board		MBSP	.146		.181	.010	.655
MBSP		Community Eff.	.493		.078	.284	.594
I. Board	→ MBSP →	Community Eff.	(.146 × .493)	.072	.113	.011	.301
I. Board		MBSP	.146		.181	.010	.655
MBSM		Economic Eff.	.488		.091	.276	.631
I. Board	→ MBSP →	Economic Eff.	(.146 × .493)	.071	.099	.015	.331
Rank-and-file members
I. Rank & F.		MBSP	.190		.092	.011	.373
MBSM		Community Eff.	.493		.078	.284	.594
I. Rank & F.	→ MBSP →	Community Eff.	(.190 × .493)	.094	.044	.009	.176
I. Rank & F.		MBSP	.190		.092	.011	.373
MBSM		Economic Eff.	.488		.091	.276	.631
I. Rank & F.	→ MBSP →	Economic Eff.	(.190 × .488)	.093	.044	.010	.187
Paid workers
I. Paid W.		MBSP	.169		.075	.010	.303
MBSM		Community Eff.	.493		.078	.284	.594
I. Paid W.	→ MBSP →	Community Eff.	(.169 × .493)	.083	.036	.009	.149
I. Paid W.		MBSP	.169		.075	.010	.303
MBSM		Economic Eff.	.488		.091	.276	.631
I. Paid W.	→ MBSP →	Economic Eff.	(.169 × .488)	.083	.035	.010	.153

Note. All mediations have been tested with the final model, controlling for direct effects. IV = independent variable; DV = dependent variable; I. = influence; MBSP = mission-based strategic planning; Community Eff. = community effectiveness; Economic Eff. = economic effectiveness; Board = members of the board; Rank & F. = rank-and-file stakeholders; Paid W. = paid workers.

Discussion

Findings

The aim of this study was to empirically examine whether NPOs where rank-and-file stakeholders remain influential have a strategic planning that is more focused on the mission, leading them to develop a higher level of community effectiveness and possibly achieve better economic results. Our results show that rank-and-file stakeholders are the only stakeholders who have the capacity to directly develop community effectiveness and that, through mission-based strategic planning, they also contribute to economic effectiveness. However, our results also reveal that board members and paid workers, through the same mediating effect of mission-based strategic planning, can ultimately contribute to community effectiveness too. These results make several contributions to previous literature.

Our results first show that rank-and-file stakeholders are the only stakeholders with the capacity to directly contribute to community effectiveness. This result extends previous stakeholder approaches to NPO effectiveness (Enjolras, 2009; Herman & Renz, 1997, 2004, 2008) by reintroducing rank-and-file stakeholders as a forgotten group providing their NPO with a specific type of input. Rank-and-file stakeholders are nonprofessional internal stakeholders whose participation can help to preserve the original community nature of NPOs’ action. According to Valeau (2015), this is what makes them different from other service providers. This direct relationship between the influence of rank-and-file stakeholders and community effectiveness suggests that NPOs where rank-and-file stakeholders are more influential have a better capacity to build community in and around the organization. Such embeddedness may contribute to communities’ capacity to take charge of their own problems, or at least participate in its resolution (Haugh, 2007; Laville et al., 2015).

Our results also support a significant relationship between the influence of rank-and-file stakeholders and the degree to which strategic planning is rooted in the mission. This was a necessary for the mediating effect of mission-based strategic planning on the relationship between the influence of rank-and-files stakeholders and community and economic effectiveness (Hypothesis 4). This finding extends previous but scarce research showing that rank-and-file stakeholders can play a strategic role in their NPO (Chatelain-Ponroy et al., 2015; Coule, 2013; Haugh, 2007; Rothschild & Stephenson, 2009; Schachter, 2011; Yu, 2012). For example, Kreutzer (2009) and Chatelain-Ponroy et al. (2015) highlight their official participation in general assemblies where they may have the final say on the strategy adopted (Schachter, 2011). Morison and Salipante (2007) observed a mixture of deliberate strategy formally established by the board and emerging strategies informally develop by other stakeholders in the field. Our results show that when rank-and-file stakeholders are able to influence strategic planning, the latter is more firmly rooted in the mission.

Our results also indicate that, through mission-based strategic planning, rank-and-file stakeholders do not only reinforce their effect on community effectiveness, but also make an indirect contribution to their NPO’s economic effectiveness. This result constitutes an important step toward the reassessment of the role of rank-and-file stakeholders. A large body of literature from the past three decades addressing NPO development (Connors, 2001; Dees, 1998; Kanter & Summers, 1987; Mair et al., 2012; Santos, 2012) gives a great deal of importance to economic effectiveness. The indirect yet significant impact of rank-and-file stakeholders on the latter means that, beyond community effectiveness, these stakeholders play a part in matters of concern for this business approach to NPOs. Based on this result, rank-and-file stakeholders may be given more consideration. Thus, as pointed out by Cumming (2008), Ramus and Vaccaro (2017), and Yu (2012), economic effectiveness is not just a matter of professionalization, but may also benefit from the commitment and legitimacy of all stakeholders.

In addition, our results suggest that, again, through the mediating effect of mission-based strategic planning mediation, members of the board and paid workers can ultimately contribute to community effectiveness. The board’s contribution to this mission-based strategic planning confirms its role in defining and maintaining the mission (Axelrod, 1994; Carver, 1990; Houle, 1997; Ingram, 1989). Our results suggest that this transformation of mission into action and action into mission achievement helps the board to gain a legitimacy in terms of economic effectiveness and may also be necessary to counterbalance its unexpected negative direct effect on community effectiveness. Unexpected results in relation to the contribution of paid workers to mission-based strategic planning are also worth noting; they seem to indicate that the latter are not only professional executives, and that rank-and-file stakeholders and the board do not have a monopoly on mission commitment. Indeed, in their study of opera houses, Reid and Karambayya (2009), showed that nonmanagement paid workers were committed to the mission, eventually voicing mission drift concerns.

Taken together, our results support the central and mediating role played by mission-based strategic planning. While mission may evolve over time, Mintzberg (1983) insisted on the importance of NPOs keeping a sense of mission that will inspire action and keep stakeholders together. Our concept and measure of mission-based strategic planning extend both previous research on the “missionary” nature of NPOs and previous approaches to strategic planning and NPO effectiveness, by allowing us to measure the effect of transforming mission into action on both community and economic effectiveness. The finding of this study in relation to mission-based strategic planning add to recent literature on mission drift (Jones, 2007; Mair et al., 2012; Ramus & Vaccaro, 2017; Weisbrod, 2004) by reconnecting the latter to previous research on professionalization promoting the use of strategic management tools (Bryson, 1988; Hwang & Powell, 2009; Medley & Akan, 2008; Morison & Salipante, 2007). This translation of the mission into projects does not only contribute to community and economic effectiveness, but constitutes a link between them. Our results also show that mission-based strategic planning can benefit from the cumulative effect of the influence of rank-and-file stakeholders, members of the board and paid workers. Mission-based strategic planning also constitutes a common basis for action where different stakeholders can combine their efforts.

Finally, one of our key contributions is that all the relationships identified between the influence of rank-and-file stakeholders, mission-based strategic planning and community and economic effectiveness are invariant across size, tenure, and sector. Previous research has already established the benefits of the influence of rank-and-file stakeholders during the first stages of NPOs’ development. Our study extends this previous research by further assessing the effects of the influence of rank-and-file stakeholders’ influence in larger NPOs during subsequent stages of their development.

Limitations and Future Research

The first limit of this study concerns the fact that we were measuring “perceived” effectiveness based on information reported by self-recruited respondents. We thus had to evaluate the importance of common method biases and make sure that the status of the respondents (paid workers or board members) did not affect the results. Future research may find it difficult to access objective data (Herman & Renz, 1997, 2004). More realistically, it would be useful to conduct multilevel analyses of the responses of more than one the respondent of each organization studied. This would allow us to take into account the degree of consensus on the nature of the mission (Valeau, Willems, & Parak, 2016) and mission-based strategic planning, in particular, when the mission is changing. Second, our sample was exclusively composed of associations where members of the board were legally required to be volunteers. It would be interesting to extend our findings by examining other NPOs, such as cooperatives and mutual organizations, with paid board members. This may lead to different results.

Practical Implications and Future Research

Given the results of our research, practical recommendations for the management of NPOs might include the promotion of true democratic governance empowering rank-and-file stakeholders, despite the professionalization process. Yet, this may be easier said than done. Looking at the literature on NPOs, this pathway is not the most natural one: while rank-and-file stakeholders may be influential initially (Rothschild & Stephenson, 2009; Valeau, 2015), the development of most NPOs involves the board hiring professional paid workers as a response to institutional pressure (Pache & Santos, 2010; Verbruggen et al., 2011), with collateral damage being the loss of community (Kelley et al., 2005; Kreutzer & Jager, 2011; Valeau, 2015). In line with Michels’ (1915) “Iron Law,” which states that all communities end up being ruled by a small number of stakeholders, most NPOs tend to be controlled by a limited number of board members and top executive paid workers. While our study provides some statistical evidence on the benefits of reassessing the role of rank-and-file stakeholders in NPOs of different sizes, including larger NPOs, more research is still needed to better understand how this influence can be managed and to provide NPOs with more specific recommendations. Drawing on our results, we have identified three avenues for future research that seem worth exploring further: the first is how rank-and-file stakeholders can maintain direct contact with beneficiaries and other stakeholders in and around the NPO; second, how they can participate in strategic decision making; and third, how their influence in the field and on strategic decision-making can be communicated and utilized to generate more resources. Common to these three directions is the need for deliberate policies to reinforce the influence of rank-and-file stakeholders.

First, our study showed that rank-and-file stakeholders are the only ones whose influence has a direct impact on community effectiveness. Our theoretical framework drew on “mechanical solidarity” (Durkheim, 1903) and egalitarian-based socialization processes (Rothschild & Stephenson, 2009) to explain this effect. The above result suggests that NPOs should provide their rank-and-file stakeholders with direct access to beneficiaries and populations within and around them, to remain organizations for the population, by the population (Laville, 2017; Laville et al., 2015; Valeau, 2015). To our knowledge, Meyer, Pascucci and Murphy (2013) study on Brazilian nonprofit hospitals is the only one to illustrate this situation in a large professionalized NPO. These nonprofit hospitals started out with paid professional medical staff and managers, but to provide additional care and entertainment services, began to recruit volunteers. At first, the role of volunteers was unclear, resulting in a loss of direction and motivation until they were given a specific time, space, and mission. This case supports the recommendation that NPOs develop specific domains and tasks for rank-and-file stakeholders. Paradoxically, this recommendation involves managing times and spaces that are usually informal. More research is needed to understand how such informal moments can be reinvented and integrated in the process of professional service production.

Second, our study extends previous scarce research on the influence of rank-and-file stakeholders may have on the overall orientation of their NPO, our results indicating a significant relationship between their influence and mission-based strategic planning. In small NPOs, previous research has identified a mix of deliberate strategy formally established by the board and emerging strategies informally developed by other stakeholders in the field (Enjolras, 2009; Kelley et al., 2005; Morison & Salipante, 2007; Valeau, 2015). More research is needed to understand how this positive contribution of rank-and-file stakeholders on strategic management can be deliberately reinforced in bigger NPOs. The institutionalization of formal times and spaces for debates and votes might be necessary to guaranty the influence of rank-and-file stakeholders. In France, where our study was conducted, the law obliges NPOs to hold a general assembly at least once a year. The aim of these formal meeting is to validate the results achieved over the year and approve the program and direction proposed by the board for the next one. Although this practice suggests a much more nuanced and multidimensional governance system than is other countries, the influence rank-and-file stakeholders have over strategic management varies tremendously from one NPO to another. In their examination of the relationship between board and general assembly, Chatelain-Ponroy et al. (2015) identified four clusters: two clusters where the influence of the general assembly and its effect on strategic management were undermined for various reasons such as limited information and vote by the show of hands, one cluster where in line with the spirit of the law the general assembly had more influence than the board, and one last cluster where the board deliberately welcomed the general assembly’s participation in strategic management. These findings suggest that it might be useful not only to officialize but also to proactively welcome the participation of rank-and-file stakeholders in strategic decision making. This reevaluation of their role has to be accepted and supported by other stakeholders, in particular, by board members and paid workers. The latter have to provide rank-and-file stakeholders with intelligible information on the different strategic decisions on which they must vote. More research is needed to examine how and to what extent NPOs claiming increased rank-and-file stakeholder participation in decision making actually put this into practice. Future research would need to examine how often stakeholders are consulted or are allowed to vote on strategic matters. A means of increasing the influence of rank-and-file members, especially in larger NPOs, could be through the use of information technologies and social media. Web forums might constitute a public space where all stakeholders could voice specific concern or discuss issues affecting their NPOs. Online surveys would allow them to vote or give their opinions on various matters.

Finally, our study shows an indirect effect of the influence of rank-and-file stakeholders on economic effectiveness. More research is needed to understand how this effect occurs and how it can be managed and amplified. One possible explanation for such an effect was identified by Cumming (2008). He found that small French NGOs displaying independent rank-and-file driven action gained more financial support from private donors than most professionalized NGOs. Donors might have more confidence in their desire and ability to take into account the beneficiaries’ needs. This could have implications in terms of the marketing strategy adopted by NPOs. It suggests that the promotion of a brand image based on rank-and-file stakeholders and a grassroots spirit may be an effective way of attracting donor support. In practice, more and more NPOs promote their rank-and-file volunteers. For instance, for the past few years, the French Red Cross has been broadcasting TV adverts spotlighting the work of grassroots volunteers, portraying them as everyday heroes. Further research is needed to measure not only the financial outcomes of such fundraising campaigns, but also their impact on the public’s perception of NPOs.

Conclusion

As stated by Mitchell et al. (1997), legitimacy is not always enough for a given group of stakeholders to get its demands taken into account. The voice of rank-and-file stakeholders warning against mission drift may not always be heard, unless they gain enough power. Power comes from being able to provide a resource that others depend on and cannot obtain otherwise. Our results show the unique contribution of rank-and-file stakeholders in terms of community effectiveness and their additional contribution to economic effectiveness through mission-based strategic planning. The acknowledgement of the value of rank-and-file stakeholders may contribute to the reinforcement of their influence.

Footnotes

Acknowledgements

We would like to thank Jill Bennoson for the linguistic revision of this paper and for her helpful comments and suggestions.

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) received no financial support for the research, authorship, and/or publication of this article.

Notes

Author Biographies

Patrick Valéau is a professor and the research director at University of Reunion Island Business School (IAE). He studies the governance, HRM, and development of nonprofit organizations.

Philippe Eynaud is a professor at IAE Paris, Sorbonne Business School and is the co-director of the master’s in Nonprofit Profit Management in Reunion. He studies how information technology contributes to the not-for-profit sector and the new forms of governance that spring from it.

Stéphanie Chatelain-Ponroy is a professor at the CNAM (Conservatoire des Arts et Métiers). She is the director of the Doctoral School Abbé-Grégoire. Her research interests include nonprofit professional bureaucracies and management control of public and nonprofit organizations.

Samuel Sponem is a chair holder of the CPA International Research Chair in Management Control and associate professor at HEC Montreal. His research interests focus primarily on the use, dissemination, and impacts of management control tools in community, creative and academic settings, as well as the place and role of management controllers.

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