Comparing The Affects Of Management Practices On Organizational Performance Between For-Profit And Not-For-Profit Corporations In Southeast Wisconsin

Abstract

The need to demonstrate the effectiveness of any business or organization worthy of attracting resources and transforming them into valued products/services is an entity’s primary mission. A variety of methods have evolved over time to measure a for-profit enterprise’s performance. Economists have typically studied how well a firm manages the factors of production under its control while accountants and financial analysts scrutinize a variety of analytical tests to determine current and future performance. Not-for-profit organizations have adopted many of the commercial sector’s economic and accounting/financial techniques to gauge their performance. However, an issue that plagues the analysis of for-profit and not-for-profit businesses is the effect that management has on an enterprise’s performance. While economists and accountants can account for nearly all of the factors of production, the discipline cannot calculate the effect of management on agency performance. Considering the roles and economic impact that both for-profit and increasingly not-for-profit organizations/non-governmental organizations (NPO or NGO) it is vital to assess how these organizations are managed and what if any effect management practices have on their organizational performance. The purpose of this quantitative research investigation was to study the affect of 18 management practices defined as “operations (three practices), monitoring (five practices), targets (five practices), and incentives (five practices)” (Bloom & Van Reenen, 2007, pp. 1393 - 1397) had on the performance of for-profit firms and NPOs in southeast, Wisconsin. The basis of this research project was derived from two studies. One study (Keller, 2009) was conducted on for-profit corporations in late 2008 and the second that Keller conducted on NPOs in 2010. The examination revealed that management practices did not have a statistically significant impact on the economic performance of for-profit firms (with the exception of one ownership type) and a strongly significant influence on not-for-profit organizations.