Economics at your fingertips  

Global Non-Profit Chains and the Challenges of Development Aid Contracting

Burger Ronelle (), Owens Trudy () and Prakash Aseem ()
Additional contact information
Burger Ronelle: Department of Economics, Stellenbosch University, Stellenbosch, South Africa
Owens Trudy: Nottingham University, Nottingham, UK
Prakash Aseem: Political Science, University of Washington Seattle, Seattle, USA

Nonprofit Policy Forum, 2018, vol. 9, issue 4, 12

Abstract: This paper employs Oliver Williamson’s transaction cost approach to assess contracting. We find that donor contracting with global non-profit chains is conducive to NPO opportunism due to the asset specificity of the contracts, infrequent contracting, and the uncertainty of outcomes. These risks are further exacerbated by the weak enforcement mechanisms available in many developing countries. Williamson’s framework predicts that these risks would tempt donors to resort to the muscular approach, where they would exercise maximum control over the non-profit chain. Although competition would be a safeguard against the muscular approach, the donor landscape suffers from collusion and is monopsonistic. Our analysis suggests that while the current contracting and oversight arrangements might serve the donor procedural objective to exercise control in a sector marked by information asymmetries, these arrangements can undermine the primary objective of donors, namely responsiveness to beneficiaries, and ultimately, improved beneficiary welfare. We illustrate our conceptual analysis with short case studies of three Ugandan NPOs.

Keywords: foreign aid; transaction costs; non-profits; aid chains; development (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) ... -0026.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Nonprofit Policy Forum is currently edited by Dennis Young

More articles in Nonprofit Policy Forum from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

Page updated 2019-03-30
Handle: RePEc:bpj:nonpfo:v:9:y:2018:i:4:p:12:n:4