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A very weird question I agree.

I am interested in understanding the motives behind firm behaviours of diversification. Why would some firms choose new target sectors/activities?

Is there any difference between for profit and non-profit organisations, particularly those grassroots NGOs. I have read newspaper, sociological articles about their altruism, needs of the community they serve and so on. But, perhaps they are money-driven, they choose some activities where the money/funding goes. For example, if there is a huge wave funding for HIV prevention (Gates Foundation), there is a substantial number of newly registered NGOs. This case, in my opinion, should be distinguished with those organisations working on disaster relief (such as after 2004 Tsunami, 9/11 ...). But well, I still feel that NGOs now are not purely altruistic, they might shield their true motive under their brand.

My questions are of economics and related literatures:

  1. Could you please point out some (economics) relevant readings, both theoretical and empirical at micro-level, on how a non-profit organisation may choose some certain activities? and how it may introduce some activities?

  2. Could you please point out some relevant readings at micro-level on how/why organisations may choose/introduce/switch to some activities?

I am aware of some papers of entrepreneurs, but I feel that the body of literature is still growing and most evidence is macro-based. Am I right?

Thank you very much.

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  • $\begingroup$ An excellent topic. However I think it is important to distinguish between the founders of the NGOs (e.g. Bill Gates) and their executives. The founders gain no monetary rewards but the executives do. Hence the founders' interest in collecting more donations might be about efficiency while the executives' interest might involve a bonus in their contract. $\endgroup$ – Giskard Jul 5 '15 at 16:33
  • $\begingroup$ Thanks for your interests. I am actually interested in grassroots NGOs, those who actually apply and receive fundings execute programmes/campaigns. Why would they do that? E.g, NGOs in Africa do HIV activities because they want to help people (altruism) or because they go where funding goes? If purely altruistic, why before the wave of HIV funding, there was little interests from NGO? This might sound trivial that NGOs can be both altruistic and money-driven, but how can we prove that? (and has any academics done so?). $\endgroup$ – Thien Jul 5 '15 at 17:29
  • $\begingroup$ For your comment, I think economics has been dealing with economics of charity for a while (the joy of giving, or even purely to avoid taxations). I think body of literature in charity has been quite extensive (please correct me if I understand it wrong). What I want to understand is local NGOs (those who actually get their hand dirty) choose to respond the new money. Is that they engage in HIV activities because they feel that is their mission or they feel they need to grab the opportunity? My head can't get around with this, sorry. $\endgroup$ – Thien Jul 5 '15 at 17:35
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    $\begingroup$ Once again I think it is important that you do not personify the NGO. It makes no decisions. The founders and the executives do. They may also have different interests and hence different motivations for their decisions. $\endgroup$ – Giskard Jul 5 '15 at 18:50
  • $\begingroup$ Thanks very much, some of my friends working on non-profit sector suggest (without literature) that one can look at business plans/grant proposals/stated missions of NGOs and see if they follow such plans. For example, disaster relief missions suddenly turn to installing new computers to a village. That sounds intuitive but in an economics view, particularly causality inference, it doesn't really convince. Just update on how I get on. $\endgroup$ – Thien Jul 7 '15 at 9:34

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