Firms, nonprofits, and cooperatives: A theory of organizational choice

Patrick Herbst, Jens PrÜfer

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)


We formalize the difference between profit-maximizing firms, nonprofits, and cooperatives and identify optimal organizational choice in a model of quality provision. Firms provide lowest and nonprofits highest levels of quality. Efficiency, however, depends on the competitive environment, the decision making process among owners and technology. Firms are optimal when decision making costs are high. Else, firms are increasingly dominated by either nonprofits or cooperatives. Increased competition improves relative efficiency of firms and decreases relative efficiency of nonprofits.

Original languageEnglish
Pages (from-to)315-343
Number of pages29
JournalAnnals of Public and Cooperative Economics
Issue number3
Publication statusPublished - 1 Sep 2016


  • cooperatives
  • D23
  • L21
  • L31
  • nonprofits
  • organizational change
  • organizational choice
  • theory of the firm

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