This paper adds to the scant literature on the internal structure of organizations by focusing on the organizational design of nongovernmental development organizations (NGDOs). Specifically, we evaluate prominent Spanish NGDOs during 2010 to determine the balance of two key organizational design choices at the NGDO’s project department: delegation of authority to lower-level employees and the provision of incentive compensation to ensure that these employees do not misuse their discretion. We develop a simultaneous model of these two choices that treats delegation and incentive compensation as endogenous variables. The results of our empirical analysis provide evidence that delegation of decision rights and incentive compensation systems are interdependent allowing scholars and practitioners a better understanding of the determinants of organizational design choices.
Published in | European Business & Management (Volume 3, Issue 3) |
DOI | 10.11648/j.ebm.20170303.12 |
Page(s) | 47-56 |
Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
Copyright |
Copyright © The Author(s), 2017. Published by Science Publishing Group |
Delegation, Incentive Compensation, Job Authority, NGDOs, Nonprofit Organizations
[1] | Brickley, J. A., Smith, C. W. & Zimmerman, J. L. (2004). Organizational architecture: A managerial economics approach, 3rd ed., Boston, MA: Irwin/McGraw-Hill. |
[2] | Jensen, M. C. & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305–360. |
[3] | Mirvis, P. H. & Hackett, E. J. (1983). Work and work force characteristics in the nonprofit sector. Monthly Labor Review, 106(4), 3–12. |
[4] | Lambert, R. A., Larcker, D. F. & Weigelt, K. (1993). The structure of organizational incentives. Administrative Science Quarterly, 38(3), 438–461. |
[5] | Jensen, M. C. & Meckling, W. H. (1992). Specific and general knowledge and organizational structure. In L. Werin & H. Wijkander (Eds), Contract Economics (pp. 251–274), Oxford: Blackwell. |
[6] | Milgrom, P. & Roberts, J. (1992). Economics, Organization, and Management. Englewood Cliffs, CO: Prentice-Hall. |
[7] | Nagar, V. (2002). Delegation and incentive compensation. The Accounting Review, 77(2), 379–395. |
[8] | O’Connor, N. G., Deng, J. & Luo, Y. (2006). Political constraints, organization design and performance measurement in China´s state-owned enterprises. Accounting, Organizations and Society, 31(2), 157–177. |
[9] | Widener, S. K., Shackell, M. B. & Demers, E. A. (2008). The juxtaposition of social surveillance controls with traditional organizational design components. Contemporary Accounting Research, 25(2), 605–638. |
[10] | Steinberg, R. (1990). Profits and incentive compensation in nonprofit firms. Nonprofit Management and Leadership, 1(2), 137–152. |
[11] | Caers, R., Du Bois, C., Jegers, M., De Gieter, S., Schepers, C. & Pepermans, R. (2006). Principal-agent relationship on the stewarship-agency axis. Nonprofit Management and Leadership, 17(1), 25–47. |
[12] | Slivinski, A. (2002). Team incentives and organizational form. Journal of Public Economic Theory, 4(2), 185–206. |
[13] | Olson, D. A. (2000). Agency theory in the not-for-profit sector: Its role at independence college. Nonprofit and Voluntary Sector Quarterly, 29(2), 280–296. |
[14] | Miller, J. L. (2002). The board as a monitor of organizational activity: The applicability of agency theory to nonprofit boards. Nonprofit Management and Leadership, 12(4), 429–450. |
[15] | Du Bois, C., Caers, R., Jegers, M., Schepers, C., De Gieter, S. & Pepermans, R. (2009). Agency conflicts between board and manager. A discrete choice experiment in Flemish nonprofit schools. Nonprofit Management and Leadership, 20(2), 165–183. |
[16] | Andrés, P., Martin, N. & Romero, E. (2006). The governance of nonprofit organizations: Empirical evidence from nongovernmental development organizations in Spain. Nonprofit and Voluntary Sector Quarterly, 35(4), 588–604. |
[17] | Andrés, P., Azofra, V. & Romero, E. (2010). Beyond the disciplinary role of governance: how boards add value to Spanish foundations. British Journal of Management, 21(4), 100–114. |
[18] | Callen, J. L. & Falk, H. (1993). Agency and efficiency in nonprofit organizations: The case of "specific health focus" charities. The Accounting Review, 68(1), 48–65. |
[19] | Fama, E. F. & Jensen, M. C. (1983a). Separation of ownership and control. Journal of Law and Economics, 26(2), 301–325. |
[20] | Fama, E. F. & Jensen, M. C. (1983b). Agency problems and residual claims. Journal of Law and Economics, 26(2), 327–349. |
[21] | Brickley, J. A. & Van Horn, L. R. (2002). Managerial incentives in nonprofit organizations: Evidence from hospitals. Journal of Law and Economics, 45(1), 227–249. |
[22] | Speckbacher, G. (2003). The economics of performance in nonprofit organizations. Nonprofit Management and Leadership, 13(3), 267–281. |
[23] | Kreps, D. M. (1990). A Course in Microeconomic Theory. Cambridge, MA: MIT Press. |
[24] | Christie, A. A., Joye, M. P. & Watts, R. L. (2003). Decentralization of the firm. Theory and evidence. Journal of Corporate Finance, 9(2), 3–36. |
[25] | Abernethy, M. A., Bouwens, J. & Van Lent, L. (2004). Determinants of control system design in divisionalized firms. The Accounting Review, 79(3), 545–570. |
[26] | Aghion, P. & Tirole, J. (1997). Formal and real authority in organizations, Journal of Political Economy, 105, 1–29. |
[27] | Kasarda, J. D. (1974). The structural implications of social system size: A three level analysis. American Sociological Review, 39(1), 19–28. |
[28] | Child, J. (1973). Predicting and understanding organizational structure. Administrative Science Quarterly, 18(2), 168–185. |
[29] | Montanari, J. R. (1979). Strategic choice: A theoretical analysis. Journal of Management Studies, 16(2), 202–221. |
[30] | Holmstrom, B. (1979). Moral hazard and observability. Bell Journal of Economics, 10(1), 74–91. |
[31] | Trice, H. M. & Beyer, J. M. (1993). The Cultures of Work Organization. Upper Saddle River, NJ: Prentice Hall. |
[32] | Milgrom, P. & Roberts, J. (1990). Bargaining and influence costs and the organization of economic activity. In J. E. Alt & K. A. Shepsle (Eds), Perspectives on Positive Political Economy (pp. 57–89), Cambridge: Cambridge University Press. |
[33] | Marcuello, C. & Salas, V. (2001). Nonprofit organizations, monopolistic competition, and private donations: Evidence from Spain. Public Finance Review, 29(3), 183–207. |
[34] | Gordon, L. A. & Narayanan, V. K. (1984). Management accounting systems, perceived environmental uncertainty and organization structure: An empirical investigation. Accounting, Organizations and Society, 9(1), 33–47. |
[35] | Delaney, J. T. & Huselid, M. A. (1996). The impact of human resource management practices on perceptions of organizational performance. Academy of Management Journal, 39(4), 949–969. |
[36] | De Gieter, S., De Cooman, R., Pepermans, R., Caers, R., Du Bois, C. & Jegers, M. (2006). ‘Identifying nurses´ rewards: A qualitative categorization study in Belgium. Human Resources for Health, 15(4), 1–8. |
[37] | Martín-Pérez, V., Martín-Cruz, N. & Estrada-Vaquero, C. (2012). The influence of organizational design on knowledge transfer. Journal of Knowledge Management, 16(3), 418-434. |
[38] | Gomez-Mejia, L. R., Balkin, D. B. & Cardy, R. L. (2004). Managing Human Resources. Upper Saddle River, NJ: Prentice-Hall. |
[39] | Martín-Pérez, V. & Martín-Cruz, N. (2012). The mediating role of affective commitment in the rewards-knowledge transfer relation. Journal of Knowledge Management, 19(6), 1167-1185. |
[40] | Collins, R. A. & Yeager, J. L. (1988). Staff evaluation and incentive practices utilized by behavioral science research organizations: A pilot study. Journal of the Society of Research Administrators, 20(1), 119–129. |
[41] | Gupta, A. K. & Govindarajan, V. (1986). Resource sharing among SBUs: Strategic antecedents and administrative implications. Academy of Management Journal, 29(4), 695–714. |
[42] | Widener, S. K. (2004). An empirical investigation of the relation between the use of strategic human capital and the design of the management control system. Accounting, Organizations and Society, 29(3-4), 377–399. |
[43] | Leete, L. (2000). Wage equity and employee motivation in nonprofit and for-profit organizations. Journal of Economic and Behavior Organization, 43(4), 423–446. |
[44] | Frey, B. S. (1993). Motivation as a limit to pricing. Journal of Economic Psychology, 14(4), 635–664. |
[45] | Gibson, J. L., Ivancevich, J. M. & Donnelly, J. H. (1994). Organizations. Behavior, structure, processes, 8th ed., Boston, MA: Irvin/McGraw-Hill. |
[46] | Leiter, J. (2005). Structural isomorphism in Australian nonprofit organizations. International Journal of Voluntary and Nonprofit Organizations, 16(1), 1–31. |
[47] | Mintzberg, H. (1992). Structure in Fives: Designing Effective Organizations. Upper Saddle River, NJ: Prentice Hall. |
[48] | Thompson, J. D. (1967). Organizations in Action, New York, NY: McGraw-Hill. |
[49] | Pfeffer, J. (1994). Competitive Advantage through People: Problems and Prospects for Change. Boston, MA: Harvard Business School Press. |
[50] | Greene, W. H. (1997). Econometric Analysis, 4th ed., Upper Saddle River, NJ: Prentice-Hall. |
APA Style
Victor Martín-Pérez, Natalia Martín-Cruz, Juan Hernangómez-Barahona. (2017). Determinants of Organizational Design Choices in Spanish Nongovernmental Development Organizations. European Business & Management, 3(3), 47-56. https://doi.org/10.11648/j.ebm.20170303.12
ACS Style
Victor Martín-Pérez; Natalia Martín-Cruz; Juan Hernangómez-Barahona. Determinants of Organizational Design Choices in Spanish Nongovernmental Development Organizations. Eur. Bus. Manag. 2017, 3(3), 47-56. doi: 10.11648/j.ebm.20170303.12
AMA Style
Victor Martín-Pérez, Natalia Martín-Cruz, Juan Hernangómez-Barahona. Determinants of Organizational Design Choices in Spanish Nongovernmental Development Organizations. Eur Bus Manag. 2017;3(3):47-56. doi: 10.11648/j.ebm.20170303.12
@article{10.11648/j.ebm.20170303.12, author = {Victor Martín-Pérez and Natalia Martín-Cruz and Juan Hernangómez-Barahona}, title = {Determinants of Organizational Design Choices in Spanish Nongovernmental Development Organizations}, journal = {European Business & Management}, volume = {3}, number = {3}, pages = {47-56}, doi = {10.11648/j.ebm.20170303.12}, url = {https://doi.org/10.11648/j.ebm.20170303.12}, eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ebm.20170303.12}, abstract = {This paper adds to the scant literature on the internal structure of organizations by focusing on the organizational design of nongovernmental development organizations (NGDOs). Specifically, we evaluate prominent Spanish NGDOs during 2010 to determine the balance of two key organizational design choices at the NGDO’s project department: delegation of authority to lower-level employees and the provision of incentive compensation to ensure that these employees do not misuse their discretion. We develop a simultaneous model of these two choices that treats delegation and incentive compensation as endogenous variables. The results of our empirical analysis provide evidence that delegation of decision rights and incentive compensation systems are interdependent allowing scholars and practitioners a better understanding of the determinants of organizational design choices.}, year = {2017} }
TY - JOUR T1 - Determinants of Organizational Design Choices in Spanish Nongovernmental Development Organizations AU - Victor Martín-Pérez AU - Natalia Martín-Cruz AU - Juan Hernangómez-Barahona Y1 - 2017/07/27 PY - 2017 N1 - https://doi.org/10.11648/j.ebm.20170303.12 DO - 10.11648/j.ebm.20170303.12 T2 - European Business & Management JF - European Business & Management JO - European Business & Management SP - 47 EP - 56 PB - Science Publishing Group SN - 2575-5811 UR - https://doi.org/10.11648/j.ebm.20170303.12 AB - This paper adds to the scant literature on the internal structure of organizations by focusing on the organizational design of nongovernmental development organizations (NGDOs). Specifically, we evaluate prominent Spanish NGDOs during 2010 to determine the balance of two key organizational design choices at the NGDO’s project department: delegation of authority to lower-level employees and the provision of incentive compensation to ensure that these employees do not misuse their discretion. We develop a simultaneous model of these two choices that treats delegation and incentive compensation as endogenous variables. The results of our empirical analysis provide evidence that delegation of decision rights and incentive compensation systems are interdependent allowing scholars and practitioners a better understanding of the determinants of organizational design choices. VL - 3 IS - 3 ER -