Non-governmental organizations: strategic management for a competitive world

Abstract

Purpose

This paper aims to empirically investigate competition within the non-governmental organization (NGO) sector, and presents some strategic approaches to managing it. Porter’s five forces (1980) model was used as a theoretical framework to understand and quantify competition in the NGO sector, as well as to explore the differences between NGOs’ budget sizes. Traditional strategic management often fails to meet NGOs’ needs. While economization is prevalent within the NGO sector, little is known about how NGOs address competition.

Design/methodology/approach

An online global survey was conducted between November 2010 and May 2011. Data were collected from 1,211 NGOs that either function as consultants or work in association with the United Nations (UN). The key informants were leaders and executive managers of NGOs. The respondents’ fields of work varied from international advocacy and development (38 per cent), education and research (14 per cent), community and neighborhood (8 per cent), health (8 per cent), environment (8 per cent) and social services (7 per cent) to civil liberty (6 per cent), labor (6 per cent), culture (3 per cent), philanthropy (2 per cent) and religion (1 per cent).

Findings

The findings suggest that the NGO sector is becoming increasingly competitive. However, the data suggest that the lower and upper budget classes have different priorities and perceptions. Small NGOs (with budgets <USD250,000 and especially <USD10,000) compete more aggressively for funding, as they have less bargaining power over donors and large foundations, and face stronger competition from social entrepreneurship. This results in income reductions. Large NGOs (with budgets >USD250,000 USD and especially >USD1 million) experience increased pressure for accountability.

Research limitations/implications

This research is aimed at a wide range of NGOs. The findings are based on an empirical and open survey that was held among NGOs in association with the UN. Future research should survey NGOs that are not associated with the UN to generalize the results. This may lead to contradictory or more varied results.

Practical implications

The findings can help NGOs adapt their strategy to cope more effectively with increasing competition in the sector. Large NGOs seem to prioritize fundraising measures and their positioning (uniqueness) through specialized knowledge. Small NGOs, on the other hand, seem to consider sharing resources, co-operation with other NGOs and co-operation with the private sector slightly more important. To enhance their competitive position, small NGOs are advised to improve their potential by concentrating on developing specific skills that are hard to imitate and to improve their fundraising measures. Finally, large NGOs could benefit from pooling their resources and collaborating with other NGOs and private organizations.

Originality/value

NGOs have to pursue their missions under increasing competitive pressure. This paper comprehensively assesses competition, analyzes the various facets thereof and tests these aspects’ relevance to NGOs. It furthermore proposes strategies that are more appropriate for NGOs of different sizes to cope with this competition.

Citation

Schwenger, D., Straub, T. and Borzillo, S. (2014), "Non-governmental organizations: strategic management for a competitive world", Journal of Business Strategy, Vol. 35 No. 4, pp. 11-19. https://doi.org/10.1108/JBS-11-2013-0105