Academic journal article International Journal of Management

The Effect of Management Practices on Corporate Performance: An Empirical Study of Non-Governmental Organizations in the Middle East

Academic journal article International Journal of Management

The Effect of Management Practices on Corporate Performance: An Empirical Study of Non-Governmental Organizations in the Middle East

Article excerpt

The objective of this paper is to provide a framework that relates non-government organization (NGO) internal management practice to corporate performance and to study the effect of senior management initiatives taken inside the organization on the overall performance of the entity. The internal initiatives addressed in this paper are (1) the time span of corporate strategy, (2) the NGO's internal management techniques and practice, (3) industrial, government relations, and image, (4) ability to navigate through the external environment with a market-driven philosophy, (5) human resource development, and (6) spirit and culture of volunteerism among staff and managers. NGO corporate performance is represented by outcomes developed in the paper, related to sustainability of the NGO, its volume of operations, the deliverability of its services, and the quality of its project products. We then validated our suggested theoretical framework through an empirical analysis of NGOs based in Lebanon and operating in the Middle East. Data was collected by means of a questionnaire developed from preliminary interviews with managers from a subset of 12 NGOs, followed by data collected from 115 NGOs. Empirical results show that NGO corporate performance is significantly and positively correlated with the time span of the strategic plan, industry and government relations, and senior management ability to maneuver in the external environment with market-driven philosophy. However, the internal management model and the human resource development plan were not found to be significant. This could be due to the structure of the projects that are funded through international donors.

The NGO Business Context

Most developing countries are showing an increased activity in NGOs as part of their economic rehabilitation, yet the civil society sector is still challenged by the lack of clear performance measurement criteria. The increased activity of NGOs is partially due to the fact that local governments in such economies are often ill equipped, and private sector firms are hesitant to invest and offer public goods and services. These factors led international organizations to channel their sponsored developmental projects through NGOs.

NGOs are under increasing pressures to become accountable against corporate performance measurement criteria. Theoretically, such measures should involve the volume of the NGO's operations, its capacity to attract funds, the quality of its human resources and its ability to execute projects under consideration, its administrative structure and management models. However, it is challenging to measure outcomes related to typical NGO project deliverables such as alleviating poverty, building capacity, improving literacy levels, protecting biodiversity, or decreasing mortality.

NGOs as a Major Part of Civil Society

Civil society is defined as "...die sphere of institutions, organizations and individuals located between the family, the state and the market, in which people associate voluntarily to advance common interests..." Civil society mainly involves the role of the government and the marketplace towards the citizens and the society they represent (Carlson, 2002). Civil society comprises two types of organizations; the mutual benefit organizations, and public benefit organizations (Holloway, 2001). Mutual benefit organizations include (1) labor-related organizations such as unions, professional and trade organizations, (2) political parties, (3) student associations, (4) edinic organizations, and (5) recreational or cultural organizations. They are characterized by a two-way benefit system whereby members donate or contribute with the expectations of getting back collective benefits.

Organized labor, for example, aims at achieving bargaining power for its members. Such representation and interest protection concepts, along with their applications, go as far back as the late 1800s in that the bargaining power and advocacy for an individual's well-being is far smaller than that of employers with access to financial resources (Webb and Webb, 1987; Commons, 1934). …

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