Expanding the Third Sector in Education? A Critical View
The fiscal stress and the growing legitimization problems of state institutions that many countries are facing have led to an increased interest in alternative ways of providing public services. As a result, the nonprofit sector (third sector, voluntary or independent sector) has received special attention as an alternative to both state and market provision. This development is also reflected in a growing research interest. Different disciplines have contributed to the theoretical foundation of the nonprofit sector. Microeconomic theories, which were introduced more than a decade ago by Henry Hansmann and Burton Weisbrod, are of particular relevance.
In explaining the existence of nonprofit organizations in the school sector the heterogeneity thesis and entrepreneurship theories developed and empirically tested by Estelle James (1993) deserve special attention. The central underlying assumption is that in developed countries the size of the third sector in education is directly related to differentiated demand and nonprofit supply, stemming mainly from cultural heterogeneity, especially religious heterogeneity. “On the demand side, differentiated tastes about ideology lead people voluntarily to opt out of the public system even when space is available, to secure the kind of education they prefer. On the supply side, private schools are a convenient institution for diverse non-profit-maximizing religious organizations to use in their competition for a larger market share of 'souls'” (James, 1993, p. 574).
Empirical tests of the heterogeneity and entrepreneurship theory provide mixed results. Whereas James (1993) found some evidence for the explanatory power of conceptual models based on that theory in cross-national analyses, a recent comparative study by Anheier (1997) did not find a relationship between multicultural heterogeneity (degree of ethno-