Chapter 4 Nonprofit governance and external environments
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One of the key tenets of organization theory is that an organization’s design depends upon its environment. Based on this, we use open systems theory to examine various ways that the environment of a nonprofit influences its governance. We begin with a review of concepts essential for understanding organizational environments and specifically highlight the importance of environmental uncertainty and dependence. These are useful for understanding key nonprofit governance factors that have been discussed in the literature including board size, composition, roles and political action. We next seek to advance the governance discussion by considering two additional theories. We use population ecology and its emphasis on dynamics of organizational aggregates to examine the impacts on nonprofit governance of competition and founding conditions. Complexity science, which concerns extreme environmental uncertainty, has implications for the use of rules, planning, tension management, knowledge and interactions in nonprofit governance.

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