Does Organization Ownership Matter? Structure and Performance in For-profit, Nonprofit and Local Government Nursing Homes

We compare the structure and performance of for-profit (FP), nonprofit (NP) and local government (LG) organizations. These organizations differ in their ownership structure, objectives and agency relations. We conjecture that, compared to NP and LG, FP firms (a) delegate less decision-making power to employees, (b) provide more incentives and fewer fringe benefits, (c) monitor less, and (d) rely less on social networks to recruit employees. We also hypothesize that, relative to NP and LG, FP firms (i) are more efficient, (ii) provide similar levels of service elements that observable to their customers, (iii) provide lower levels of less-well observable elements, and (iv) provide less of the relational elements. Differences in structure and performance are likely to be tempered by market competition and institutional pressures for similarity. Our empirical investigation of Minnesota nursing homes (utilizing state, federal and survey data) supports these hypotheses. This study was supported by the Aspen Institute Grant NSRF 2005-1, “A Comparative Study of Organizational Structure, Behavior and Performance.” Email: [email protected], [email protected]. 2 Does Organization Ownership Matter? Structure and Performance in For-profit, Nonprofit and Local Government Nursing Homes