Fitting in as an outsider: a resource dependence theory approach to outside boards
Journal of Health Organization and Management
ISSN: 1477-7266
Article publication date: 24 August 2021
Issue publication date: 4 March 2022
Abstract
Purpose
This study draws on resource dependence theory (RDT) to explain a board's governance function in the United States (US) nonprofit healthcare industry. Specifically, while various nonprofit research studies have appealed to agency theory (AT) to explain the monitoring role of an outside board, RDT offers an alternative explanation that emphasizes an outside board's resource gathering role.
Design/methodology/approach
In drawing on the nonprofit GuideStar database, a fixed effect (FE) panel estimation was conducted on a sample of 230 US Non Profit Healthcare Organizations (NPHCOs). This panel estimation examines the relationship between the composition of an outside board and an NPHCO’s revenue and public support performance.
Findings
A key finding of this study is that the composition of an outside board involving its' number, compensation and gender impacts an NPHCO’s revenue and public support.
Research limitations/implications
This study shows that the composition of an outside board impacts an NPHCO’s ability to gain access to external resources. As NPHCOs face increasing pressure to seek external forms of revenue support, this study suggests that boards should favor a larger number, compensation and female representation of outside members.
Practical implications
The composition of an outsider board can offer external sources of revenue support that lower the poor's requirements for financial assistance and thus affirm an NPHCO’s identity as a charitable organization.
Originality/value
As an NPHCO’s identity as a charitable organization is dependent on serving the medical needs of the poor, an outside board not only introduces a resource gathering function that is absent in the monitoring explanations of AT, but that this resource gathering function is important to affirming this identity.
Keywords
Citation
Ng, D. and Khodakarami, N. (2022), "Fitting in as an outsider: a resource dependence theory approach to outside boards", Journal of Health Organization and Management, Vol. 36 No. 2, pp. 178-196. https://doi.org/10.1108/JHOM-04-2021-0137
Publisher
:Emerald Publishing Limited
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