Business nonprofit partnerships as a driver of internal marketing in nonprofit organizations consequences for nonprofit performance and moderators

Business nonprofit partnerships as a driver of internal marketing in nonprofit organizations Consequences for nonprofit performance and moderators ARTICLE IN PRESS+Model BRQ 63; No of Pages 12 BRQ Bus[.]

www.elsevier.es/brq BRQ

Quarterly

ARTICLE

Luis Ignacio Álvarez-Gonzáleza , ∗, Nuria García-Rodrígueza, Marta Rey-Garcíab,

María José Sanzo-Pereza

aUniversity of Oviedo, Avenida del Cristo, s/n Facultad de Economía y Empresa, Oviedo 33071, Spain

bUniversity of Coru˜ na, Campus de Elvi˜ na s/n Facultad de Economía y Empresa, A Coru˜ na 15071, Spain

Received10January2017;accepted11January2017

JEL

CLASSIFICATION

M31;

L31;

L33

KEYWORDS

Business-nonprofit

partnerships;

Internalmarketing;

Nonprofit

organizations;

Nonprofit

performance;

Commercialrevenues

innonprofits

Abstract Nonprofitorganizations(NPOs)confrontcompetitivepressuresderivedfromcomplex economicandsocietalchallenges.Theircapacitytofulfiltheirmissionincreasinglydependson developingsuccessfulallianceswithkeyexternalandinternalstakeholders,including coopera-tiveinterorganizationalrelationships.Inthiscontext,theaimofthisresearchistoanalyze:(1)

towhichextentbusiness-nonprofitpartnerships(BNPPs)fosterthedevelopmentofaninternal marketingapproachbyNPOs;(2)theimpactofthisapproachtohumanresourcemanagement

onnonprofitperformance;and(3)thepossiblemoderatingeffectofthefundingstrategyof thenonprofit.Thisempiricalresearch,basedonasurveytoarepresentativesampleofSpanish NPOs,showsthatcooperativerelationshipsbetweennonprofitandbusinessorganizationsare closelyassociatedwithaprocessofknowledgetransfer,resultinginimprovednonprofit per-formance;althoughthesepositiveeffectsdependonthecapacityofNPOstogenerateincome fromcommercialsources

©2017ACEDE.PublishedbyElsevierEspa˜na,S.L.U.ThisisanopenaccessarticleundertheCC BY-NC-NDlicense(http://creativecommons.org/licenses/by-nc-nd/4.0/)

∗Correspondingauthor.

E-mail addresses: alvarezg@uniovi.es (L.I Álvarez-González),

nuriagr@uniovi.es (N García-Rodríguez), martarey@udc.es

(M Rey-García), mjsanzo@uniovi.es (M.J Sanzo-Perez).

Introduction

The development of cooperative relationships with inter-nalandexternalstakeholders,includingallianceswithother organizations,iscriticalfornonprofits(NPOs)toensure mis-sionaccomplishment and long-term survival (Wellens and

http://dx.doi.org/10.1016/j.brq.2017.01.001

2340-9436/© 2017 ACEDE Published by Elsevier Espa˜ na, S.L.U This is an open access article under the CC BY-NC-ND license ( http:// creativecommons.org/licenses/by-nc-nd/4.0/ ).

cor-porateandinstitutionaldonorsarekeytogenerateprivate

charitablecontributions,bothbusinesspartnersandthe

per-sonnelofnonprofitorganizationsbecomestrategicalliesif

thecapacityofNPOstogenerateincomefromcommercial

activitiesneedstobeenhanced

First,cooperativeinterorganizationalrelationships,and

especially cross-sector partnerships - i.e collaborative

alliances among businesses, governments, and NPOs that

addresssocialcauses,havebecomeasignificanttrend

dur-ingrecentyears(SelskyandParker,2005).Thedevelopment

of successful business-nonprofit partnerships (BNPPs), in

particular,isvitalfromboththenonprofitandthebusiness

perspective.TheproliferationofNPOs,combinedwith

eco-nomichardship,isforcingnonprofitsnotonlytocompetefor

shrinkingtraditionalsources -e.g.governmentgrants,but

alsotodevelop newresourcesfromthe markettoensure

long-termsurvivalandtoscale theiroperationsinfaceof

rising societal demands (Never, 2011) From the business

side,interestinthesepartnershipshasincreasedinthe

con-textoftheevolutionofcorporatesocialresponsibility(CSR)

towards the so-called ‘‘CR Innovation’’ paradigm (Halme

Secondly, most NPOs are service organizations that

dependontheirpersonnel’sprofessionalskills,service

atti-tude, and motivation in order to provide a satisfactory

service totheirbeneficiaries.As NPOs relyupon a mixof

paidandunpaidpersonnel,bothemployeesandvolunteers

representkeystakeholders.Theirrelevancehastranslated

into substantial research on the ‘‘internal marketing’’

approachtohumanresourcesmanagement(HRM),showing

itspositiveeffectsonjobsatisfaction,commitmenttothe

organizationandloyaltyoftheNPOpersonnel(Bennettand

2015) Adoption of this marketing approach originating

from the for-profit sector has resulted in enhanced

pro-fessionalizationofHRMinnonprofits (RodriguezandSams,

PreviousstudiesaboutthetopicofBNPPsaremainly

con-ceptualinnatureorbasedoncasestudies(foranoverview

robust, quantitative studies that integrate the topics of

BNPPsandprofessionalizationofNPOsthroughthe

develop-mentofaninternalmarketingstrategy.Therefore,thefirst

objectiveofthisresearchistoevaluatetheextenttowhich

BNPPsfosteraprocessofknowledgetransferfromthefirm

tothenonprofitorganization,encouraging

professionaliza-tionofthe latter throughthedevelopmentof an internal

marketingstrategy,andultimatelyimprovingnonprofit

per-formance

However, these potential positive associations may

depend on different factors, most notably the funding

strategy of the nonprofit NPOs can resort to a variety

ofpotentialsources ofrevenue (Andreasen, 2012;Fischer

etal., 2011) These include public and private donations

andsubsidies;fees forservicesandgoods (incomeearned

fromcommercial activities); andreturns fromrealestate

orfinancialassets.Revenuediversificationisgenerallyseen

asanecessarystrategytoeffectivelysupportnonprofit

mis-sions in an increasingly challenging resource environment

sce-narios where NPOs undertake commercial activities, the

improvement of their internal capabilities will be par-ticularly important to enhance performance, and parallel

to this, also the role to be played by external partners

in resource development As anticipated by Dees (1998),

‘‘nonprofitsexploringcommercializationcanformalliances withfor-profit companiestoprovidecomplementaryskills and training in business methods’’ Consequently, a sec-ondgoal ofthisresearchistodetermine howthefunding strategyof theNPOmoderatesthelinkbetween coopera-tive relationships withbusinesses, internal marketing and performance

Tosummarize,bycombiningthesethreecloselyrelated topics -i.e.BNPPs,professionalization,andrevenue diver-sification, the research attempts to offer a threefold contribution to the literature on cooperative interorgani-zationalrelationships,withpotentialimplicationsforboth nonprofitandbusinesspartners.First,previousstudieshave noted that‘‘nonprofits have embraced collaborationwith businessasanimportantmodeforthegenerationofvalue required for successfully meeting their missions’’ (Austin

how this process occurs, by means of a positive associa-tionbetweenpartnering witha firmandthedevelopment

ofinternalHRMcapabilities.Secondly,theimpactof inter-nalmarketingprogrammesonNPOperformanceisanalyzed Thispotentialeffectisespeciallyinteresting,sinceagreater degree of professionalization is increasingly demanded in supportfunctionsinNPOs(Hurrelletal.,2011).Andthirdly,

wetestwhethertheserelationshipsgainrelevanceina con-textwhererevenuediversificationthroughthedevelopment

of commercialactivities isbecoming anessential strategy forthistypeoforganization

Westructurethisworkasfollows.First,weexplainthe theoreticalbackgroundoftheresearch.Secondly,wedetail themethodologyusedtoconducttheanalysis,basedona surveytoarepresentative sampleof SpanishNPOs.Third,

we interpretthe empiricalresults Fourth,we discussthe mainconclusionsandimplicationsforacademicsand prac-titioners

Conceptual framework Business-nonprofit partnerships as an antecedent

of internal marketing in NPOs

‘‘Cross-sector partnering, and in particular collaboration betweenNPOsandbusiness,hasincreasedsignificantlyand

isviewedbyacademicsandpractitionersasaninescapable and powerful vehicle for implementing corporate social responsibility (CSR)andfor achievingsocialandeconomic missions’’ (Austin and Seitanidi, 2012a,728) Along those lines, thelatest developments of the CSR concept - ‘‘CR Innovation’’(HalmeandLaurila,2009)and‘‘sharedvalue’’

value through enhanced competitiveness, while simulta-neously addressing social problems in the communities wherefirmsoperate.Thisdualgoalisachievedthroughthe developmentofnewbusinessmodelsandcooperative orga-nizationalrelationshipsforsolvingsocialandenvironmental problems,includingbusiness-nonprofitpartnerships(BNPPs)

A cooperative relationship between a company and a

nonprofitcanexperiencedifferentdegreesofdevelopment,

dependingontheextenttowhichrelationalnormsguidethe

interactions between the partners Accordingly, different

types of business-nonprofit alliancescan be distinguished

in terms of commitment and value creation (Austin and

monetary or in-kind resources froma corporatedonor to

a recipient NPO), transactional (partners exchange more

valuableresourcesthroughspecificactivities,e.g

sponsor-ships,cause-relatedmarketing,orpersonnelengagements),

integrative(partners’ missions,strategies,values,

person-nel, and activities experience organizational integration,

resultinginco-creationofvalue),andtransformational

part-nerships(partnersinvolveinjointproblemsolving,decision

making,management,learning,andconjoinedbenefits

cre-ation)

Relationship marketingisthe frameworkthathas

stud-iedtoagreaterextentfactorsexplainingthedevelopment

ofsuccessfulcooperativeinterorganizationalrelationships,

withafocusontransformationalpartnerships.Thisapproach

hasbeenrecentlyextendedtothesubfieldofstakeholder

consid-ers that the organization’s behaviour towards multiple

stakeholderscanbebetterunderstoodinthecontextof

rela-tionshipmarketing(GrinsteinandGoldman,2011).Alliances

betweenfirmsandNPOshavereceivedparticularattention

amongthevariousapproachestodescribingandclassifying

stakeholdersintherelationshipmarketingliterature(Frow

beimproved by adoptinga deeperRelationship Marketing

approach’’ (Barroso et al., 2014; 199) The demand ‘‘to

adoptprinciple-basedstakeholdermarketing’’hasbeen

fur-therarguedforthepublicsector(MishandScammon,2010,

12),giventheneedforadouble(Fairfax,2004)andtriple

con-textof the trendtooutsource socialservices frompublic

institutionstoNPOs

Relationship marketingpointstotrustandcommitment

asthekeydimensions thatexplainthesuccess of

cooper-ative interorganizational relationships (Morgan and Hunt,

1994).The crucialroleof trustin partnershipsuccess has

beenhighlightedbyBNPPresearch,notingthat‘‘[t]rusting

relationshipsareoften depicted astheessence of

collab-oration.Paradoxically,theyareboththelubricantandthe

glue thatis,theyfacilitatetheworkofcollaborationand

theyholdthecollaborationtogether’’(Brysonetal.,2006:

47 -48) Inits turn, commitmentimpliesthat one partner

believestherelationshipis‘‘soimportantastowarrant

max-imumeffortsat maintaining it’’ (Morganand Hunt,1994:

23) Mostresearchersagree thataffective commitment

-i.e a type of commitmentbased on an affective

predis-position to maintain the relationship because people in

the organization develop emotional bonds with the

part-ner, often as a result of identification with the partner’s

values - is the most influential factor towards

maintain-ing mutually beneficial relationships Research on BNPPs

hasfurtheremphasizedtheimportanceof affectivebonds

for partnership’ssuccess (Berger etal., 2006) Moreover,

relationshipmarketingliteraturewidelyacknowledgesthat

trust is the major determinant of affective commitment

Hypothesis 1. Nonprofittrustinthefirm’sbehaviouris pos-itivelyassociatedwithnonprofit affectivecommitment to thepartnership

Close cooperative interorganizational relationships can giverisetoa bilateral processof knowledge transferand capability building (Austin and Seitanidi, 2012a; Bennett

etal.,2008).ThispossibilityisespeciallyrelevantforNPOs Accordingtopreviousnonprofitliterature,inorderforNPOs

tosuccessfully address currentmanagement challenges,a greaterdegreeofprofessionalizationisneededinfunctions suchasadministration,finance,ICT,publicrelations/media, marketing, and human resources (Hurrell et al., 2011) Specifically, our research focuses on professionalization resultingfromtheimplementationofan‘‘internal

NPOs.HRMrepresentsacriticalfunctioninnonprofit orga-nizationsbecause,asserviceproviders,theymustmaintain personalcontactswiththeircoreexternalstakeholders Per-sonnelplayadecisiveroleinthisprocess,encouragingNPOs

toconsidertheiremployeesandvolunteersasreal‘‘internal customers’’.Nonprofitsshoulddevelop policiesattempted

toobtaininformationabouttheexpectationsandneedsof theirpersonnel,inordertoimprovetheirsatisfaction,skills and service attitude ‘‘Internal marketing’’ has precisely emergedasaneffective approachfor HRMinNPOsinthis context(BennettandBarkensjo,2005).Generally,an inter-nal marketing strategy comprises three main dimensions

(e.g.,collectinginformationaboutspecificsegmentsof per-sonnel),internalintelligencedissemination(communication betweensupervisorsandpersonnel),andresponsesto inter-nalintelligence(e.g.,designingjobsortrainingprogrammes thatmeetpersonnelneeds)

Asalreadymentioned,oneofthedistinctive character-isticsofHRMinnonprofitsisthat,differentfromfor-profit organizations,theyofteninvolvebothpaidstaffandunpaid volunteers.Intensecompetitionwithinandacrosssectorsis forcingNPOstoboosttheirprofessionalizationbyincreasing thenumber ofpaid employeesand improving the compe-tences and skills of all their personnel, paid or unpaid

It is important to note that professionalization does not mean that volunteers become less important, but rather thattheytendtobemanagedinamoreformalizedway.In fact,competitivepressuresareforcingemployeesand vol-unteerstocoexistin many NPOs,generating tensionsand conflictsbetween bothgroups (KreutzerandJäger,2011) Elementssuchascommunication,training,clearobjectives andtrust,arekeyin ordertoaddress thesepossible ten-sions (Kreutzer and Jäger, 2011) As a consequence, the developmentof an internal marketing approach becomes evenmorenecessary(HumeandHume,2015).Furthermore, thisHRMapproachplaysacrucialroleinvolunteer motiva-tion.The associationaladvantagesfromfeelingconnected

toothers,theperceivedimportanceofvolunteerwork,the perceivedsupportprovidedby thenonprofit organization, andthe satisfactionand identification with itsvalues are criticalsourcesof motivationand commitmentfor volun-teers(Borzaga and Tortia, 2006; Boezeman and Ellemers,

Giventhatinternalmarketingisacentralcapabilityfor NPOs,identifyingitspotentialdriversrepresentsarelevant

issue Successful cooperative interorganizational

relation-shipsmight constituteone ofthesefacilitators.According

institutionali-zation produces affective engagement between partners,

as members develop close personal bonds Austin (2000)

also points to personal connections and relationships as

driversofknowledgetransfer,as‘‘theextenttowhich

col-laborators’respectiveresourcesandcorecompetenciescan

beaccessed and deployed for strategic value depends on

the quality and closeness of the partners’ relationship’’

impede effective knowledge transfer between

organiza-tions; among them credibility of the source (the extent

to which it is perceived as expert, reputable and

trust-worthy).Therefore, ifa nonprofit organizationtrusts and

emotionally engages with a firm, it will be more

predis-posed to adopt business tools from the for-profit world

such as internal marketing strategies Thus, we expect

that,

Hypothesis 2. Nonprofit commitmenttothe partnership

ispositivelyassociatedwithitsdevelopmentofaninternal

marketingapproach

The effect of internal marketing on nonprofit

performance

Theresource-basedview(RBV) ofthefirm positsthatthe

developmentofsuperiorinternalcapabilitieshelps

organi-zationsimprove their performance (Barney, 1991) Under

this theoretical framework, and given that internal

mar-keting is a criticalcompetence for NPOs,we expectthat

theenhancementofHRMcapabilitiespositivelyaffects

non-profitperformance

Measuring nonprofit performance is a complex task

nonprofit organization is the extent to which its mission

isaccomplished(McDonald,2007).However,thisfinalgoal

depends on multiple factors, including intermediate

per-formance measures Scholars have proposed internal and

externalcriteria(Sowaetal.,2004),efficiencyand

effec-tivenessmeasures(LeRouxandWright,2010),andobjective

andperceptualindicators(Sowaetal.,2004).Wehavetaken

intoconsiderationtheaforementionedchallengesfacedby

NPOsintermsofcompetitivepressures,scarcerresources,

and the need to increase the scale of their operations

Accordingly,wehaveincludedinourmodeltworelated

out-putindicators,thevolumeoffunding(funding)andthescale

ofoperations(numberofactivitiesdevelopedand/or

num-berof beneficiariesreached by its programmes) We also

measuretheextenttowhichthenonprofitestimatesithas

accomplisheditsmission andsatisfiedthe expectationsof

beneficiariesanddonors,asaproxyofitsultimate

perfor-manceindicator,i.e.missionaccomplishment(Sanzoetal.,

Internal marketing increases personnel satisfaction,

reduces turnover, and improves service orientation and

alignment with organizational objectives (Bennett and

employ-ees and volunteers will be more willing and prepared to

undertake a greater numberof fundraisingactivities, and

toexpandthenumberofactivitiesandprogrammesofthe nonprofitand/orprovideitsservicestomorebeneficiaries Moreover, an internal marketing is a socially responsible approach toHRM The organizationmeets its responsibil-ityforitsimpactsonitspersonnelthroughastrategythat

isimplementedinclosecollaborationwithaffected stake-holders.Thus,weexpectinternalmarketingtodirectlyand positivelyaffectthedegreetowhichtheNPOaccomplishes itssociallyvaluedgoals (missionaccomplishment) Conse-quently,

Hypothesis 3. Development of an internal marketing approach by a nonprofit is positively associated with its (a) volumeoffunding, (b) scale ofoperations(number of activitiesdevelopedand/orbeneficiariesreached),and(c) missionaccomplishment

Previousnonprofitmanagementresearch(ChenandHsu,

etal.,2002)showsthatgreaterfinancialresourceshelpthe NPOenlargethescaleofitsoperations,andthisfactor, in itsturn,contributestotheimprovementoftheperceptions about mission accomplishment So,we propose two addi-tionalhypotheses thatshow theconnectionsbetween the proposedperformanceindicators:

Hypothesis 4a. Nonprofitfundingispositivelyassociated withthescaleofitsoperations

Hypothesis 4b. The scale of nonprofit operations is positively associated withperceptions that organizational missionisaccomplished

NPO development of revenues from commercial sources as a moderator

The potential transfer of know-how from the firm to the NPO might depend on other factors than can boost or alternatively hinder the process (Rathi et al., 2014) For instance, Sanzo etal (2015b)show how that this knowl-edgetransferdependsonthetypeofcontributionthatthe firmbringstothepartnership:it is stronger when the

haslong been a consensusthatthe typeof funding strat-egyoftheNPOcanplayarelevantroleinitswillingnessto adoptmanagementandmarketingtoolsfromthefor-profit world.Traditionally,‘‘thedifferencebetweenpredominant public sector funding and majority private sector funding emerges asthe most important distinction tounderstand howorganizationsdiffer’’(Anheieretal.,1997:212) How-ever, the key distinction is nowadays between NPOs that depend basically on private donations and public grants (contributedincome), and thosethat obtain theirincome (or at least most of it) from commercial sourcessuch as the sale of goods or charging fees for services (earned income)

At thetime when NPOsdeveloped their activities in a context of prosperity,it seemed moreimportant tofocus

on securing and managing contributions from public and

privatedonors;ratherthan implementinga proactiveand

systematic strategy to generate earned income (Macedo

produced a drastic reduction of traditional governmental

support, coupledwitha simultaneousincrease in demand

for the servicesprovidedby NPOs(Never, 2011)

Further-more,itislikelythattheaftermathofthecrisis(forexample

intheSouthofEurope)willsignificantlyimpactcorporate

donations Consequently, the development of commercial

activities asacore or supplementary source of fundingis

becomingcriticaltoensureNPOsurvivalandmission

accom-plishment (GrasandMendoza-Abarca,2014) Accordingto

fewerdonationsandgrants,andincreasedrivalryfrom

for-profitcompaniesentering thesocial sector,nonprofits are

turningtothefor-profitworldtoleverageorreplacetheir

traditionalsourcesoffunding (they)looktocommercial

fundinginthebeliefthatmarket-basedrevenuescanbe

eas-iertogrowandmoreresilientthanphilanthropicfunding’’

(5 -6)

Therefore, implementing this type of funding strategy

reflectsaproactivenon-profitmarketingorientation

circumstance to reinforce the predisposition of NPOs to

adopt businesstools and strategies, including an internal

marketing approach, also seen asone of the key

dimen-sionsofarealmarketorientation(Akingbola,2013;Borzaga

serviceresearchstressesthefactthatpersonnelmotivation,

commitment,andcoordinationareessentialforthesuccess

of any commercial activity Thus, it is probable that the

intensityoftheeffectofinternalmarketingonthenonprofit

performanceindicatorswillbegreaterwhenthe

organiza-tionisinvolvedingeneratingearnedincome.Consequently,

wepositthat:

Hypothesis 5. Thepositiveassociationsbetween(a)

affec-tivecommitmenttothepartnershipandinternalmarketing,

and(2)internalmarketingandnonprofitperformance,will

bestrongeriftheNPOobtainsfundsfromcommercial

activ-ities(feesforgoodsand/orservices)

TheconceptualmodelisdepictedinFig.1

NPO perception about

the business-NPO

partnership

NPO human resource

management

NPO

results

+ Trust

Affective commitment

Funding +

Scale of operation

Miss ion

accompli shment

+

+ +

+ +

Commercial activities

+

+ +

+ Internal

marketing

Figure 1 Conceptualmodel

Methodology Data collection and sample description

To test theconceptual model we focusonfoundations as

a distinct (Hopt et al., 2006) and fast-growing type of NPOinEurope(European FoundationCentre,2013) Foun-dations arenon-member nonprofits, and this key feature clearlydifferentiatesthemfrommemberorganizationssuch

asassociations,cooperativesandotherorganizationsofthe socialeconomy or the third sector (Hoptet al.,2006) It

is estimated that there are about 110,000 foundations in Europe, spending a total of between 83 and 150 billion eurosannuallyontheirprojectsandprogrammes,and pro-vidingemploymenttouptoonemillionEuropeans(European

Wesurveyed a sample of525 NPOs,randomlyselected fromthe global census of 9050 Spanish foundations iden-tified by the Spanish Institute for Strategic Analysis of Foundations (INAEF) In Spain, where a ‘‘foundation’’ is oneofthetwolegalformulasavailablefororganizationsto incorporateasnon-profit froma tax perspectivetogether with associations, non-member nonprofits are estimated

to account for approximately half of the nonprofit

thiscountryhasahighlyinstitutionalizedfoundationsector, andalsoone of the largestnumbers ofregistered public-benefitfoundationsintheEuropeanUnion,furtherexplains why analyzing these NPOs represents an interesting case study

Ane-mailedquestionnairewascompletedbytheperson

inchargeofdailydecision-makingintheorganization.We askedeachrespondenttoindicatewhetheritsNPOhad col-laborated at any timeduring the past threeyears witha businessinordertoachieveitssocialbenefitmission.Ifthey answeredintheaffirmative,weaskedthemtoindicatetheir levelof agreement withaseries ofstatements about the characteristicsoftherelationship,theirinternalmarketing policiesandtheperformanceoftheNPO.Weobtained325 validquestionnaires(sampleerror=±5.34%;95%confidence level).Ofthe325NPOs,185indicatedthattheymaintained

orhadmaintainedapartnershipwithafirm(Table1) Because we used data gathered from a survey, we employedseveral techniques to assess thepossible exist-enceofunitnonresponsebias(ArmstrongandOverton,1977;

geographicscope,type ofnonprofit, founders, modeland areasofactivity,beneficiaries,andsize) ofoursample of

325NPOswiththedescriptorsofthe sectorasa wholeas providedby theINAEF,asthis isconsideredthe most reli-ableexternalsourcetocharacterizetheSpanishfoundation sector(Table1).Therearenostatisticallysignificant differ-encesbetweenboththedescriptorsofthesampleandthose

ofthepopulation Second,we comparedearly versuslate respondents.Theestimationofatwosample(independent) t-testrevealsthattherearenostatisticallysignificant dif-ferencesbetweenbothgroupsinanyofthekeyconstructs

ofthemodel.Third,wecomparedthemeanvaluesofthe mainconstructsofthemodelobtainedfromthesampleof

325NPOs, withthe valuesderived from anew sample of

50additionalorganizationsnotincludedinthefinalsample

Table 1 Sampledescription.

sector(N=9050)

Sample

(N=325)

Partnerships

(N=185) Yearoflegalconstitutiona

Founders

Geographicscopeof

activities

Areaofactivityafter

ICNPO(International

ClassificationofNonprofit

Organizations)

Businessandprofessionalassociations, 1.6 3.4 5.4

Modelofactivity

Operatingtheirownprogrammesorprojects 74.6 78.6 84.8

Large/mega(revenue>2,400,000D) 11.6 16.9 21.0

a These thresholds correspond to two Spanish laws: the first Spanish Foundation Law of 1994 and the current Spanish Foundation Law

of 2002.

Again,the estimationof a t-testshows that thereare no

statisticallysignificantdifferencesbetweenbothgroups

Measuring the model variables

Weusedmulti-itemscalestomeasurethemodelconstructs

andallitemsusedseven-pointLikert-typescales,where1

indicated ‘‘completely disagree’’ and 7 was‘‘completely

agree.’’ The trust and commitment scales are grounded

inrelationshipmarketingliteratureandresearchonBNPPs

(e.g.,MorganandHunt,1994;Wetzelsetal.,1998;Wymer

marketingapproachcomefromGounaris(2006)

With regard to the NPO performance scales, we

employedperceptual measures and asked respondents to

evaluatetheextent towhichtheybelievedtheobjectives

established for a set of performance indicators (Vázquez

duringthepastyear Inthiscase,avalueof 1meantthat performance on a particular indicator was significantly belowtheestablishedobjective,whereas7indicated that

it hadsignificantly exceededit We collectedinformation abouttheorganization’ssourcesofrevenuefromfoundation registries

Inordertoevaluatethepossiblemagnitudeofthe com-monmethodvariance,weperformedHarman’ssingle-factor test This test shows that: (1) an underlying structure of fivefactorsemergesfromthefactorialanalysis,and(2)the mainfactorcomprises29.83%oftotalvariance,sothistype

ofbiasisnotaprobleminthisresearch.The factthatthe moderatingvariableusedinthisstudywascollectedfrom secondarysourcesalsocontributestoreducethispotential bias

Table 2 Reliabilityandvalidityofthemodel’sscales.

Factor Item Factorloadings(t-value) Compositereliability

coefficient

AVE

TR2 0.778(9.274) TR3 0.894(12.356) TR4 0.777(10.055) Affective

commitment(AFC)

AFC2 0.864(10.407) AFC3 0.832(11.615) Internalmarketing

(IM)

IID 0.795(8.671) RESP 0.779(8.361)

FUND2 0.815(13.194) FUND3 0.902(18.667) Scaleofoperations(SCALE) SCALE1 0.899(14.182) 0.880 0.785

SCALE2 0.873(12.675) Missionaccomplishment(MA) MA1 0.769(9.016) 0.843 0.645

MA2 0.913(11.075) MA3 0.714(7.975) Goodness-of-fit-measures:S-B2(120)=152.9356(p=0.02276);BBNNFI=0.970;CFI=0.976;RMSEA=0.040

Table 3 Discriminantvalidityofthescales

Note:The values on the diagonal are the square roots of the AVE coefficients of each of the seven constructs considered The values off the diagonal are the correlations between each pair of constructs.

Results

Scale reliability and validity

Aconfirmatory factor analysis(Tables 2and3), usingEQS

6.2forWindows,supportsthereliabilityandvalidityofthe

modelscales(GerbingandAnderson,1988;Steenkampand

reliability coefficient, which exceeded the recommended

valueof.7.Toassessconvergentvalidity,weconfirmedthat

the standardized parameters weresignificant andgreater

than.5.Furthermore,wecalculatedtheaverage variance

extracted (AVE),always greaterthan 5.In orderto

eval-uate discriminant validity, we compared the AVE of each

constructandthesharedvariancebetweeneachpairof

con-structs;theformeralwayssurpassedthelatter.Theinternal

marketingscalewasmultidimensional.Becausethe

dimen-sionsofthisconstructexhibitconvergentvalidity,weadded

theindividualscores toobtaina global(mean) evaluation

of each dimension We then usedthe three-item internal

marketing factor to estimate the full structural equation

model

Model estimation

estima-tionusingSEMwithEQS6.2forWindows.Thegoodness-of-fit measuresareappropriate.Trustishighlyandpositively asso-ciatedwithaffectivecommitment(p<.01),supportingH1

We also find support for H2 (p<.01): nonprofit affective engagement withthe firm is positively linked to internal marketing,which inturn is positively associatedwiththe achievementofthethreeperformancemeasures,insupport

ofH3a(p<.01),H3b(p<.01),andH3c(p<.05).Finally,our results supportthe positive connections between funding andscaleof operations(H4a)andscale ofoperationsand missionaccomplishment(H4b)

Multi-sampleanalysisusingEQS6.2forWindowsenabled

us to investigate the possible moderating effect of commercial activities as a source of nonprofit funding

groups.Thefirstgroupiscomprisedof99NPOsthatobtain fundingfromthesaleofgoodsorfeesforservices.The sec-ondgrouprefersto70NPOsthatdonotdevelopcommercial activities;insteadtheyobtain theirrevenuesfromprivate

Table 4 Modelestimationresults.

Causalrelationships Hypotheses Standardized

coefficients H1:Trust→Affective

commitment

Positive 0.499***

H2:Affective

commitment→Internal

marketing

Positive 0.333***

H3a:Internal

marketing→Funding

Positive 0.241***

H3b:Internal

marketing→Scaleof

operations

Positive 0.239***

H3c:Internal

marketing→Mission

accomplishment

Positive 0.210**

H4a:Funding→Scaleof

operations

Positive 0.623***

H4b:Scaleof

operations→Mission

accomplishment

Positive 0.434***

Goodness-of-fit-measures

S-B2(128)=175.4046

(p=0.00346);BBNNFI=0.959;

CFI=0.966;RMSEA=0.047

**p< 0.05.

*** p< 0.01.

donations (from firms, individuals or other NPOs), public

grants, or returns from real estate and/or from financial

assets According to Table 6, the strength of the links

between(1)affectivecommitmentandinternalmarketing

(p<.05),(2)internalmarketingandfunding(p<.05),and(3)

internalmarketingandscaleofoperations(p<.10),depends

onthetypeoffundingstrategyoftheNPO,supportingH5

These threepositive effects are not significant when the NPOdoesnotdevelopcommercialactivities(Table5)

Discussion

Thisworkhasadoptedaninternalmarketingperspectiveto HRM in nonprofit organizations In orderto address three

of themost criticalchallenges andtheoretical debates in current nonprofitmanagementresearch:cooperative rela-tionshipswithbusinesses,nonprofitprofessionalization,and diversification of revenue sources The lack of previous empiricalworks linkingcross-sector partnerships,internal capabilitybuilding,andperformanceinNPOsreinforcesthe interest of its results Thus, this research provides some useful contributionsfor both academics andpractitioners interestedinunderstandingtheimpactofcross-sector part-nershipsuponinternalresourcesandcapabilitiesatworkin

anonprofitorganizationalsetting;andontheperformance

oftheNPOitself

Thefirst contributionreferstothe positive connection between partnership success andthe developmentof key internalcapabilities bytheNPO.Strongerdegreesof rela-tionaldevelopmentfosterlearningandknowledgetransfer;

it is not simply a matter of resources contributed This transfer dependson thedegree of affective engagement Althoughmonetarysupportisusuallythepredominanttype

ofcorporatecontribution,firmsandNPOsshouldrealizethat

iftheirstrategicgoalofthepartnershipconsistsof generat-ingaddedvalueforsociety,theallianceshouldtranscendthe meredonationofmoneytoimplyanddevelopmorespecific resourcesandaffectivelinks

Secondly, our findings suggest that internal marketing policies constitute an outstanding capability for NPOs,as theyimproveNPOperformance.Theanalysisofthe conse-quences of partnershipsfrom the perspective of the NPO

is a significant academic contribution, because previous empiricalresearchhasmostlyfocusedontheeffectsupon businessperformance.Furthermore,thereisstillsubstantial

Table 5 Multisampleanalysis(Step1)

Causalrelationships GROUP1(foundationsthat

developcommercialactivities)

GROUP2(foundationsthatdonot developcommercialactivities) Standardized

parameter

(t-value) Result Standardized

parameter

(t-value) Result

H1:Trust -Affectivecommitment 0.631 (4.415) *** 0.404 (3.773) ***

H2:Affectivecommitment -Internalmarketing 0.533 (4.810) *** 0.150 (1.436) n.s

H3a:Internalmarketing -Funding 0.426 (3.615) *** 0.071 (0.627) n.s

H3b:Internalmarketing -Scale 0.408 (3.869) *** 0.142 (1.304) n.s

H3c:Internalmarketing -Mission 0.176 (1.162) n.s 0.224 (1.506) *

Goodness-of-fitmeasures

S-B2(256)=333.8787;p=0.00075;

BBNFI=0.937;CFI=0.947;RMSEA=0.043

* p< 0.10.

**p< 0.05.

*** p< 0.01.

n.s = non significant.

Table 6 Multisampleanalysis(Step2).

H1:Trust -Affectivecommitment 0.756 0.384 H3c:Internal

marketing - Mission

0.085 0.770 H2:Affectivecommitment -Internal

marketing

5.314 0.021 H4a:Funding -Scale 0.513 0.474 H3a:Internalmarketing -Funding 5.019 0.025 H4b:Scale -Mission 0.339 0.561

-controversyinthenonprofitsectoraboutthedesirabilityof

maintainingrelationshipswithfirms,adoptingprofessional

management styles and/or relying oncertain commercial

sourcesoffunding(KreutzerandJäger,2011;ReedandReed,

2009).OurfindingsconfirmsomeoftheadvantagesofNPO

professionalization for mission advancement and for the

improvement of certain intermediate performance

meas-ures.Theyalsoclearlyidentifypartnershipswithbusinesses

asameanstoencouragethisprofessionalizationprocess

Third, theaccess tonon-traditionalsources of funding

(specificallyearnedincomefromcommercialactivities)

pos-itivelymoderatestheinfluenceofNPOcommitmenttothe

partnershiponinternalmarketingandorganizational

perfor-mance.TheintensityoftheimpactisgreaterinthoseNPOs

thatchargefeesforservicesorsellgoods.Thedevelopment

ofsuchmarket-orientedactivitiesis becomingakey

com-plementarysource of revenue for NPOsin an increasingly

demandingandcompetitiveenvironment.Consequently,the

rolesplayed bypartnershipswithfirmsandby aninternal

marketingapproachtoHRMareaccordinglygainingin

rele-vance in NPOs, particularly when it comes to addressing

complex societal problems under tighter resource

con-straints

Managerial implications

Underthelightoftheabove-mentionedcontributions,the

mainpracticalimplicationsconcerningthemanagementof

cross-sector partnerships and the relevance of adopting

toolsfromthebusinessworldareprovided,withaparticular

focusontheperspectiveofnonprofitpractitioners

First,NPOmanagersshouldbereceptivetothe

develop-mentofBNPPswiththeappropriatecompanies.Specifically,

NPOandbusinessmanagersshouldpayparticularattention

totheclimate oftrustand commitmentintheir

coopera-tiveinterorganizationalrelationships.Inordertoencourage

them,theyshouldestablishan interorganizationalteamin

which members work togethertoimplement the

partner-ship,encourage their physical proximity,ensurethe team

members’stability, useformalprogrammes (e.g.,training

andseminarsessions)todevelopunderstanding,and

encour-age temporary personnel mobility toenhance integration

ofdifferentperspectives.Theimplementationofallthese

activitieswillprobablyfostercommunicationflows,reduce

conflictandrisk,andimprovetheperceivedbenefitsofthe

collaboration

Secondly, the development of an internal marketing

strategy to manage human resources in NPOs involves a

systematicefforttoobtaininformationabouttheindividual

needs of employees and volunteers, and to assess their degree of satisfaction Furthermore, both formal and informal ways of vertical and horizontal communication between employees, volunteers, and their supervisors shouldbefostered.Allthis informationshouldbeusedto design training programmes, positions, and careers that are adjusted to the professional capabilities of the per-sonnel,take intoaccounttheir professionaldevelopment, and actively seek to develop better working conditions These activities can improve personnel’s satisfaction and identification with the values and principles endorsed by theNPOandembodiedinitssociallyvaluedmission Thirdand last,theeconomic crisis of thebeginning of the90softheXXcenturyencouragedaccesstonewprivate donors, as NPOs struggled to face the significant reduc-tioninpublicfunding.Furthermore,recenthardshipreveals theneedfor movingforwardand fosteringthegeneration

ofearnedincome.Intheaftermathof financialcrisis,not only public institutions and governments, but also busi-nessesexperience difficultiesin accesstofunding Inthis context,ourresearchshows thatthoseNPOsthatadopta proactivemarketingorientationandbuildastrategyto gen-eraterevenuefromcommercialactivities,arepreciselythe organizations in which partnering with firms and internal marketingapproachesbecomemoresignificantcapabilities towardsenhancedcompetitiveadvantage

Limitations and further research

Thisworkrepresentsastartingpointfortheempiricalstudy

oftheenormouspotentialthatpartnershipswithbusinesses andmarketingcapabilitieshaveforimprovingnonprofit per-formance and, ultimately, for better addressing complex societalproblems through the efficient and effective use

of the resources and capabilities of theseservice organi-zations.However,thestudy focuses onSpain,a European countrythathasbeenespeciallyaffectedbytherecent eco-nomic crisis Generalization of results to other countries underdifferent institutionalsettingsandfinancial circum-stancesshouldbemadewithcaution

Furthermore,wehaveonlyanalyzedtheeffectsof coop-erativerelationships between nonprofit organizations and firms on the development of capabilities by NPOs Thus, moreresearchisneededtodeterminetheimpactofthese alliancesonthecompaniesinvolved,particularlyunderthe internal marketing framework Another possible line for future research consists of evaluating other moderating variablesthatcouldinfluence theintensityoftheeffects, for example the type of contributions provided by the

firm (monetary vs non-monetary contributions) Greater

researcheffortisalsoneededtoanalyzeotheroutstanding

competences,suchasthecapabilityofnonprofitstodeliver

socialinnovation

Finally, the contributions of this work suggest some

promising orientations for public policies concerning the

nonprofitsector.Theseincludethepromotionof

profession-alization and innovation (e.g., by means of the provision

ofincentivestopromotethoseBNPPsaimedat the

devel-opmentofsocialinnovations,suchasentrepreneurialjoint

ventures between businesses and NPOs), the support for

enhancedfinancialindependencethroughrevenue

diversi-fication utilizingsustainable commercial sources,and the

provisionofincentivesformoreaccountableand

transpar-entstakeholdermanagementbyNPOs

Acknowledgments

Theauthorsacknowledge fundingprovidedbytheSpanish

MinistryofEconomyandCompetitiveness,aspartofitsR&D

Plan(2009 -2011),fortheprojectentitled‘‘Foundationsas

akeyfactor ofSpanishfirms’corporatesocial

responsibil-itystrategy Bi-directionalanalysis of the foundation-firm

relationship followinga marketingapproach’’

(MICINN-09-ECO2009-11377)

TheauthorsalsoacknowledgetheSpanishAssociationof

Foundations(AEF)forendorsingthatresearchproject

Appendix Measurement scales

Mean(S.D.)

NPO affective commitment to the

firm

AFC1 Wehaveastrongsenseofloyalty

towardsthisfirm

5.31(1.72) AFC2 Wewanttoremainapartnerofthis

firm’sbecausewegenuinelyenjoyour

relationshipwiththem

5.96(1.48)

AFC3 Wearewillingtomakelongterm

investmentsinthisrelationship

becauseitisapleasureworkingwith

them

5.57(1.69)

NPO trust

TRI Wefeelthisfirmissincerelyconcerned

aboutourinterestsandobjectives

5.59(1.39)

TR2 Activities with this firm do not have to

be closely supervised

4.82 (1.89)

TR3 Thisfirmcanbereliedontokeeptheir

promises

5.68(1.30) TR4 Thisfirmistrustworthy 5.97(1.15)

TR5 Themanagementofthisfirmis

transparentandopen(regardingour

relationship)

6.21(1.06)

Internal marketing

IIG1 TheNPOemphasizesonunderstanding

personnel’s(employees’and

volunteers’)needsandexpectations

5.60(1.30)

IIG2 TheNPOregularlyassessespersonnel’s

jobsatisfaction

4.87(1.65)

Mean(S.D.)

IIG3 The NPO knows other NPO human

resource policies

3.85 (1.89) IIG4 The NPO knows the labour market

situation within its sector of activity

4.92 (1.72)

IID1 Personnelreportabouttheirproblems

whentheyaffecttheirperformance

5.52(1.43) IID2 Topmanagementregularlycollects

informationaboutpersonnel’s (employees’and/orvolunteers’) problemsinperformingtheirtasks

5.63(1.33)

RESP1 Thejobsareappropriatetothe

professionalcapabilitiesofemployees andvolunteers

5.75(1.18)

RESP2 TheNPOhumanresourcepolicytakes

intoaccountthepersonnel’s professionaldevelopment

5.46(1.31)

RESP3 TheNPOhumanresourcepolicy

activelyseekstoimproveworking conditions

5.39(1.41)

RESP4 The NPO has a Personnel Training

Programme

4.41 (2.08)

Mission accomplishment

MA1 AccomplishmentofNPOmissionand

goals

5.76(1.09) MA2 Satisfactionofbeneficiaries’demands,

needs,andexpectations

5.48(1.23) MA3 Satisfactionofdonors’expectations

abouttheNPOuseoffunding

5.72(1.14)

Funding

FUND1 Increaseofbudgetfordevelopingthe

NPOactivities

4.14(1.90) FUND2 Increaseinthenumberofdonors 3.71(1.80) FUND3 IncreaseofNPOrevenue 3.90(1.88)

Scale of operations

SCALE1 IncreaseinthenumberofNPO

activities

5.05(1.67) SCALE2 IncreaseinthenumberofNPO

beneficiaries

5.12(1.56)

Note:Items in italics were eliminated as a consequence of the scales’ validation process.

DONATSUBS Donationsand/orsubsidies 96.4 FEES Feesforservicesandgoodsprovided 58.6 RETURNS Returnsfromrealestateand/orfrom

financialassets

11.2

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