Academic journal article Journal of Management and Organization

A Qualitative Analysis of Intellectual Capital in Social Service Non-Profit Organisations: A Theory-Practice Divide

Academic journal article Journal of Management and Organization

A Qualitative Analysis of Intellectual Capital in Social Service Non-Profit Organisations: A Theory-Practice Divide

Article excerpt


The paper contributes to debates on non-profit strategy, first by arguing that intellectual capital (IC) can be utilised as a non-profit strategic management conceptual framework and second by highlighting nuances in the meaning and significance of IC. In responding to the public management agendas of government, non-profit organisations (NPOs) have had to commercialise their strategies. On the basis of data from in-depth interviews with 35 senior non-profit managers across 22 large Australian social service non-profit organisations (SSNPOs), the analysis confirms that IC assists SSNPOs in managing the social-commercial divide, but that managers' understandings of the IC concept are often different to those contained in the IC literature. IC scholars suggest that IC is synergetic with its components being inter-dependent. The managers perceived that very few inter-relationships existed between IC components. Implications of the theory-practice divide for non-profit strategy are discussed. Research limitations and future research direction are presented in the paper.

Keywords: intellectual capital, social service non-profit organisations, non-profit strategy


Historically non-profit activities were conducted mainly in the context of bureaucratic models of public administration. Since the 1980s the non-profit sector in developed countries has been continuously subject to pressures to commercialise, principally through techniques associated with the 'new public management' (NPM) agendas of governments (Bevir, Rhodes, & Weller, 2003; Hood, 1991). For-profit strategic management techniques that are brought to the non-profit sector under NPM have called into question non-profit organisations' (NPOs') capacity to pursue social missions (Alexander, 2000; Chetkovich & Frumkin, 2003). Among all organisations in the non-profit field, social service NPOs (SSNPOs) are particularly vulnerable. These include those which deliver social and community services, such as: child welfare, child services and day care, youth services and youth welfare, employment services, family services, services for people with disabilities, and services for the elderly (Australian Bureau of Statistics [ABS], 2002).

Commercialisation and competition have become common characteristics in the sector, attracting many for-profit organisations to enter the social service non-profit market. Whereas SSNPOs were once rarely contested for the right to provide social services under traditional bureaucratic arrangements, they now compete for contracts with both state and for-profit organisations in order to be able to perform their activities (Brown, 2005; Ramia & Carney, 2003).

Managing the social service non-profit sector has become more complex as SSNPOs in many countries are presented with a challenge to formulate and implement strategic management techniques which allow them to keep their independence and continue to invest in social concerns while also enhancing organisational effi- ciency. Commercial and social objectives can be harmonised, but they can also clash.

The central objective of this paper is to analyse the utility of intellectual capital (IC) in addressing conflicts between the commercial and social objectives of SSNPOs. IC is used to refer to the many and varied organisational resources that contribute to wealth creation through investment in knowledge, information, intellectual property, and skills and experience (Edvinsson & Malone, 1997; Stewart, 1997). IC is generally taken to encompass three primary, inter-related components: human capital (HC), structural capital (SC) and relational capital (RC) (Bontis, 1998; Dzinkowski, 2000; Saint-Onge, 1996).

This paper focuses on the social service nonprofit sub-sector in Australia. As the latest available data from the Johns Hopkins Comparative Non-profit Sector Project indicate, the sub-sector in Australia had the highest of all Anglo countries of full time paid and volunteer equivalent as a percentage of the entire non-profit field, constituting 23. …

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