The theoretical foundations of nonprofit competition: a resource-advantage theory approach

Competition in the nonprofit sector has dramatically intensified in the past two decades because of (1) the increased number of nonprofit organizations (NPOs), (2) the decline and diffusion of governmental support, and (3) the entry of for-profit companies into markets that traditionally have been the domain of nonprofits. In an attempt to enhance the understanding of nonprofit competition, the authors apply resource-advantage (R-A) theory, a dynamic theory of competition adapted from the for-profit business literature, to commercial nonprofits and explain how commercial nonprofits can leverage their various resources to successfully compete and deliver social value. Contributing to the understanding of nonprofit competition and the challenge that NPOs face in balancing mission and money, this paper provides a foundation for a theory of nonprofit competition that can guide future research in the area and help NPO managers as they maneuver in today's increasingly competitive environment.