Performance measurement in the Third Sector: the development of a stakeholder-focussed research agenda

This paper addresses a need for greater insight into the theory and practice of performance measurement (PM) in the Third Sector (TS). Effective PM is crucial to the long-term viability of Third Sector organisations (TSOs), since it provides funders with the requisite evidence to demonstrate value for money and to convince them to provide further funding. It also serves to ensure that vulnerable societal groups receive the social care they need and that the internal management processes of TSOs continuously improve their effectiveness and sustainability. PM research has been scant in this sector and our literature review suggests that no extant models or frameworks are particularly suitable in this context, due in part to the wide range of stakeholders and the distinctive characteristics of TSOs. Drawing on a comprehensive review of the literature, we develop the conceptual foundation of PM in the Third Sector and derive a research agenda that provides a platform for future work. This draws in part on the notions embedded in Stakeholder Theory.

[1]  L. Spence,et al.  Reinterpretation of a metaphor: from stakes to claims , 2003 .

[2]  M. Moore,et al.  Managing for Value: Organizational Strategy in for-Profit, Nonprofit, and Governmental Organizations , 2000 .

[3]  J. Liddle,et al.  Implementing the UK Central Government's policy agenda for improved third sector engagement: Reflecting on issues arising from third sector commissioning workshops , 2011 .

[4]  Sally Coleman Selden,et al.  No Longer Unmeasurable? A Multidimensional Integrated Model of Nonprofit Organizational Effectiveness , 2004 .

[5]  Jos van Iwaarden,et al.  Charities: how important is performance to donors? , 2009 .

[6]  Steve Mason,et al.  Towards a definition of a business performance measurement system , 2007 .

[7]  J. Glasby,et al.  SSCR Scoping Review: The role of the third sector in delivering social care , 2012 .

[8]  Jessica E. Sowa.  The Collaboration Decision in Nonprofit Organizations , 2009 .

[9]  Walid Cheffi,et al.  Green supply chain performance measurement using the analytic hierarchy process: a comparative analysis of manufacturing organisations , 2013 .

[10]  Kathy Babiak,et al.  Challenges in Multiple Cross-Sector Partnerships , 2009 .

[11]  D. Young.  The Prospective Role of Economic Stakeholders in the Governance of Nonprofit Organizations , 2011 .

[12]  J. Manzoni,et al.  Strategic Performance Measurement: Benefits, Limitations and Paradoxes , 2010 .

[13]  A. Neely,et al.  The performance prism in practice , 2001 .

[14]  Claire Moxham,et al.  The impact of performance measurement in the voluntary sector: Identification of contextual and processual factors , 2007 .

[15]  G. Manville,et al.  Changing Times for Charities: Performance management in a Third Sector Housing Association , 2013 .

[16]  D. Steinbruner,et al.  Voices from the Field , 2009 .

[17]  Mike Bourne,et al.  Researching performance measurement system implementation: the dynamics of success and failure , 2005 .

[18]  Douglas C. West,et al.  Perceptual determinants of nonprofit giving behavior , 2006 .

[19]  Marta Marsilio,et al.  An evaluation framework for measuring supply chain performance in the public healthcare sector: evidence from the Italian NHS , 2013 .

[20]  Ali B. Somers,et al.  Shaping the balanced scorecard for use in UK social enterprises , 2005 .

[21]  R. R. P. Jackson,et al.  Production Planning and Control , 1965 .

[22]  Ronald K. Mitchell,et al.  Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of who and What Really Counts , 1997 .

[23]  P. Garengo,et al.  Performance Measurement Systems in SMEs: A Review for a Research Agenda , 2005 .

[24]  John Roberts,et al.  Trust and Control in Anglo-American Systems of Corporate Governance: The Individualizing and Socializing Effects of Processes of Accountability , 2001 .

[25]  Graham Manville,et al.  Implementing a balanced scorecard framework in a not-for-profit SME , 2007 .

[26]  Kelly L. Patterson,et al.  The effects of perceived funding trends on non‐profit advocacy: A national survey of non‐profit advocacy organizations in the United States , 2011 .

[27]  T. Packard.  Staff Perceptions of Variables Affecting Performance in Human Service Organizations , 2010 .

[28]  J. Manthorpe,et al.  Old issues and new directions , 2006, Journal of intellectual disabilities : JOID.

[29]  C. Grönroos.  An Applied Service Marketing Theory , 1982 .

[30]  Andy Neely,et al.  Performance measurement frameworks: A review , 2007 .

[31]  Umit Bititci,et al.  Performance Measurement: Challenges for Tomorrow , 2012 .

[32]  Julia Roloff,et al.  Learning from Multi-Stakeholder Networks: Issue-Focussed Stakeholder Management , 2008 .

[33]  W. Crittenden.  Spinning Straw into Gold: the Tenuous Strategy, Funding, and Financial Performance Linkage: , 2000 .

[34]  T. Bovaird,et al.  Commissioning Across Government: review of evidence , 2012 .

[35]  Andy Neely,et al.  The Performance Prism: The Scorecard for Measuring and Managing Business Success , 2002 .

[36]  Dorothea Greiling,et al.  Balanced scorecard implementation in German non‐profit organisations , 2010 .

[37]  Mik Wisniewski,et al.  Performance measurement for stakeholders: the case of Scottish local authorities , 2004 .

[38]  G. Martin.  The third sector, user involvement and public service reform: a case study in the co-governance of health service provision. , 2011, Public administration.

[39]  James S. Noble,et al.  The changing basis of performance measurement , 1996 .

[40]  William J. Ritchie,et al.  Nonprofit organization financial performance measurement: An evaluation of new and existing financial performance measures , 2003 .

[41]  Alan Fowler,et al.  A systems perspective of performance management in public sector organisations , 2000 .

[42]  David Walters,et al.  Performance planning and control in virtual business structures , 2005 .

[43]  Alnoor Ebrahim,et al.  How does accountability affect mission? The case of a nonprofit serving immigrants and refugees , 2006 .

[44]  Paul R. Niven.  Balanced Scorecard Step-by-Step for Government and Nonprofit Agencies , 2003 .

[45]  Natalie J. Webb,et al.  Relationships between Nonprofit and for-Profit Organizations: A Stakeholder Perspective , 1999 .

[46]  Ronald K. Mitchell,et al.  Who Matters to Ceos? An Investigation of Stakeholder Attributes and Salience, Corpate Performance, and Ceo Values , 1999 .

[47]  Joanne G. Carman.  The Accountability Movement , 2010 .

[48]  E. Tapinos *,et al.  The impact of the performance measurement systems in setting the ‘direction’ in the University of Warwick , 2005 .

[49]  Luis M. Camarinha-Matos,et al.  Performance indicators for collaborative networks based on collaboration benefits , 2007 .

[50]  Brad M. Barber,et al.  Challengers, Elites, and Owning Families: A Social Class Theory of Corporate Acquisitions in the 1960s , 2001 .

[51]  P. Alcock,et al.  Constituting the Third Sector: Processes of Decontestation and Contention Under the UK Labour Governments in England , 2011 .

[53]  R. Dacombe.  Can we argue against it? Performance management and state funding of voluntary organizations in the UK , 2011 .

[54]  R. Paton,et al.  Beyond Nonprofit Management Education: Leadership Development in a Time of Blurred Boundaries and Distributed Learning , 2007 .

[55]  Taco Brandsen,et al.  Co-management in public service networks , 2006 .

[56]  David Campbell,et al.  Outcomes Assessment and the Paradox of Nonprofit Accountability , 2002 .

[57]  William C. Little.  Charities ready to play with the big boys but say 'let's be fair'. , 2005, The Health service journal.

[58]  S.D.P. Flapper,et al.  Towards consistent performance management systems , 1996 .

[59]  George A. Boyne,et al.  Public and Private Management: What's the Difference? , 2002 .

[60]  Judith L. Miller-Millesen.  Understanding the Behavior of Nonprofit Boards of Directors: A Theory-Based Approach , 2003 .

[61]  Stephen P. Osborne,et al.  Managing and Measuring Social Enterprises , 2003 .

[62]  Mike Bourne,et al.  An examination of the literature relating to issues affecting how companies manage through measures , 2005 .

[63]  Adrian John Wilkinson,et al.  The long and winding road: The evolution of quality management , 2002 .

[64]  E. Parry,et al.  Comparing HRM in the voluntary and public sectors , 2005 .

[65]  John S. Oakland.  Oakland on quality management , 2012 .

[66]  L. Preston,et al.  The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications , 1995 .

[67]  Jeffrey L. Callen,et al.  The Contextual Impact of Nonprofit Board Composition and Structure on Organizational Performance: Agency and Resource Dependence Perspectives , 2010 .

[68]  Tommaso Ramus,et al.  Accountability as a Managerial Tool in Non-Profit Organizations: Evidence from Italian CSVs , 2011 .

[69]  R. Freeman.  Strategic Management: A Stakeholder Approach , 2010 .

[70]  N. I. Fisher,et al.  OPM ® : A SYSTEM FOR ORGANISATIONAL PERFORMANCE MEASUREMENT , 2000 .

[71]  Kennard T. Wing.  Assessing the Effectiveness of Capacity-Building Initiatives: Seven Issues for the Field , 2004 .

[72]  D. Kane.  The UK civil society almanac , 2009 .

[73]  G. Mitchell.  The Construct of Organizational Effectiveness , 2013 .

[74]  Pietro Micheli,et al.  Performance measurement frameworks in public and non-profit sectors , 2005 .

[75]  Kelly LeRoux,et al.  Author Query Form , 2022 .

[76]  Gerhard Speckbacher,et al.  The economics of performance management in nonprofit organizations , 2003 .

[77]  Louis Raymond,et al.  Researching performance measurement systems , 2008 .

[78]  Claire Moxham,et al.  Performance measurement: Examining the applicability of the existing body of knowledge to nonprofit organisations , 2009 .

[79]  Theodore H. Poister,et al.  Measuring Performance in Public and Nonprofit Organizations , 2003 .

[80]  Peter Johansson,et al.  Implementing stakeholder management: a case study at a micro‐enterprise , 2008 .

[81]  Ben. Cairns,et al.  Improving performance? The adoption and implementation of quality systems in U.K. nonprofits , 2005 .

[82]  Listening to Those Who Matter Most, the Beneficiaries , 2013 .

[83]  S. Morris.  Defining the Nonprofit Sector: Some Lessons from History , 2000 .

[84]  Alnoor Ebrahim.  Accountability Myopia: Losing Sight of Organizational Learning , 2005 .

[85]  Eric Kong,et al.  The Development of Strategic Management in the Non-Profit Context: Intellectual Capital in Social Service Non-Profit Organizations , 2008 .

[86]  A. Dawson,et al.  A case study of impact measurement in a third sector umbrella organisation , 2010 .

[87]  Christine Cooper,et al.  Making the trains run on time: The tyranny of performance indicators , 2005 .

[88]  Kimberly A. Fredericks,et al.  Nonprofits and evaluation: Empirical evidence from the field , 2008 .

[89]  P. Alcock.  The Big Society: a new policy environment for the third sector? , 2012 .

[90]  J. Bisbe,et al.  The Role of Performance Measurement Systems in Strategy Formulation Processes , 2010 .

[91]  R. Herman,et al.  Multiple Constituencies and the Social Construction of Nonprofit Organization Effectiveness , 1997 .

[92]  P. Dunn.  Strategic Responses by a Nonprofit When a Donor Becomes Tainted , 2010 .

[93]  Eric Kong.  Analyzing BSC and IC's usefulness in nonprofit organizations , 2010 .

[94]  An interdisciplinary conversation on research method best practices for nonprofit studies , 2006 .

[95]  G. Manville,et al.  The use and efficacy of anecdotal performance reporting in the third sector , 2010 .

[96]  Patrizia Garengo,et al.  Performance measurement system contingency factors: a cross analysis of Italian and Indian SMEs , 2014 .

[97]  A. Parasuraman,et al.  A Conceptual Model of Service Quality and Its Implications for Future Research , 1985 .

[98]  H. Glennerster,et al.  Human Services and the Voluntary Sector: Towards a Theory of Comparative Advantage , 1998, Journal of Social Policy.

[99]  John Hasnas.  Whither Stakeholder Theory? A Guide for the Perplexed Revisited , 2013 .

[100]  Kimberly A. Fredericks,et al.  Program evaluation in a challenging authorizing environment: Intergovernmental and interorganizational factors , 2002 .

[101]  Marc Jegers,et al.  The Governance of Nonprofit Organizations , 2012 .

[102]  R. Kaplan.  Strategic Performance Measurement and Management in Nonprofit Organizations , 2001 .

[103]  M. Stone,et al.  Acting in the Public Interest? Another Look at Research on Nonprofit Governance , 2007 .

[104]  R. Kaplan,et al.  Strategy Maps: Converting Intangible Assets into Tangible Outcomes , 2003 .

[105]  D. Preece,et al.  Board member development in the public, voluntary and social housing sectors , 2012 .

[106]  Emily R. Hoole,et al.  Voices from the field: Evaluation as part of a learning culture , 2008 .

[107]  J. E. Swan,et al.  SERVQUAL revisited: a critical review of service quality , 1996 .

[108]  V. Murray,et al.  Collaboration between non‐profit organizations in the provision of social services in Canada , 2000 .

[109]  David N. Figlio,et al.  Public sector performance measurement and stakeholder support , 2009 .