Research Infrastructure of China Foundations. Working Paper Series #1. October 6, 2015

Transcription

1 Research Infrastructure of China Foundations Working Paper Series #1 October 6, 2015 Resource Dependence Theory: A Testable Approach to Study Government and NGO Relationship in China Qun Wang Qun Wang ( 王群 ) is Ph.D. student at Indiana University Bloomington Phone Number: E John Hinkle Pl Apt I Bloomington, IN United States qunwang@indiana.edu Yanran Yao Yanran Yao ( 姚嫣然 ) is Ph.D. student at the University of Hong Kong Phone Number: Room 825, Jockey Club Tower Central Campus, the University of Hong Kong, Hong Kong u @hku.hk 1

2 资源依赖理论 : 研究中国政府和非营利组织关系的实证方法 摘要 : 在公民社会和社团主义对中国政府和非营利组织关系解释力受到质疑的情况下, 涌现出一些新的理论 这些理论在一定程度上与资源依赖有关或部分重合 虽然资源依赖理论越来越被广泛应用于研究这个关系问题, 但目前少有研究将已有成果作为相关变量来讨论资源依赖理论的适用性 本文结合中国国情对资源依赖理论进行综述, 探讨部分重要变量及其在此理论框架下对中国政府和非营利组织关系可能造成的影响和影响机制 关键词 : 资源依赖 政府和非营利组织关系 组织环境 非营利组织 理事会 Abstract: As the civil society and corporatism theories have been frequently challenged recently, alternative theories emerged to investigate the government-ngo relationship in China. Some new theories are largely related to resource dependence or share core ideas with it. This paper conducts a comprehensive review of the resource dependence theory. It identifies four groups of variables (organizational characteristics, board of directors, attitude and value, and external environment), finds support for their relevance from both Western and China scholarship, and applies them to the Chinese context. The resource dependence theory has the potential of empirically examining the relationship without over-focusing on the state or society. It is capable of explaining the dynamic and diverse relationships between the government and various NGOs in China. Key words: resource dependence, government-ngo relationship, environment, non-government organizations, board of directors 2

3 1. Introduction A global associational revolution of the nonprofit sector swept not only the developed countries but also the developing societies in the late 20 th century. 1 China is no exception. The number of non-governmental organizations (NGOs) in China has grown dramatically in the past three decades, from about 400 registered NGOs in to about 606,000 in 2014 reported by the Ministry of Civil Affairs. Their assets and employment also increased rapidly. Researchers estimate that there are between 2 million and 8 million additional unregistered organizations, depending on the classification criteria. 3 The aftermath of the 1989 Tiananmen incident features a great deal of scholarly attention to Chinese NGOs, marking the beginning of systematic research on state-society relationship in China. Civil society and corporatism have been the most prominent approaches until recently, as their theoretical usefulness of explaining Chinese NGOs being frequently challenged by those organizations increasing diversity and constant dynamics. Alternative approaches from the sociological, political, institutional, and organizational perspectives emerged and many seemed to rely on the core idea of resource dependence. This paper proposes resource dependence theory as a testable approach to study NGOs and their relationship with the government in China. This approach overcomes many theoretical insufficiencies of the civil society and corporatism by changing abstract concepts into measureable variables and expanding the scope of research to a less political focus. This section proceeds with comparison of the three theories abovementioned. The second section identifies the major resource dependence variables often seen in empirical research. Chinese cases are discussed whenever possible. The last section summarizes the paper with evaluation of the theory s merits and shortcomings Civil Society Theory Civil society refers to a sphere of association separate from the state, the market and the family that brings citizens together for diverse forms of social action and interaction. 4 Given the assumption that civic associations may help to create a robust civil society to counter the authoritarian Chinese Communist Party and lead China to democracy, 5 the emergence of such organizations in the post-mao era attracted increasing interest from Chinese and Western scholars. However, such optimism was compromised before long because the Chinese NGOs didn t demonstrate an expected confrontational behavior toward the government. Rather, they range widely in their relationship with the state, 6 often making the evaluation of organizational autonomy conditional and inconclusive. Lu summarized the rejection of civil society on three grounds. 7 First, it has generally been observed that Chinese NGOs enjoy only limited autonomy 1 Lester M. Salamon, The Rise of the Nonprofit Sector, Foreign Affairs, 73.4 (1994): Jessica C. Teets, Let Many Civil Societies Bloom: The Rise of Consultative Authoritarianism in China, The China Quarterly, 213 (2013): Carolyn L. Hsu and Yuzhou Jiang, An Institutional Approach to Chinese NGOs: State Alliance versus State Avoidance Resource Strategies, The China Quarterly, 221 (2015): Andrew Watson, Civil Society in a Transitional State: The Rise of Associations in China, in Jonathan Unger, ed., Associations and the Chinese State: Contested Spaces (Armonk, New York: M.E. Sharpe, 2008): Ibid, Carolyn L. Hsu and Yuzhou Jiang (2015). 6 Carolyn L. Hsu, Beyond Civil Society: An Organizational Perspective on State NGO Relations in the People's Republic of China, Journal of Civil Society, 6.3 (2010): Yiyi Lu, Non-Governmental Organizations in China (New York: Routledge, 2009). 3

4 from the state, and many NGOs are in fact hybrid organizations; second, apart from some underground organizations, Chinese NGOs tend not to engage in political pursuit; and third, it neglects the cooperative dimensions of the government-ngo relationship. Spires pointed out that civil society organizations need not necessarily foster democracy and may, under certain conditions, support the survival of authoritarian regimes; 8 this can be the case in China. 9 As a result, China scholars nowadays frequently reduce the civil society concept into an ideal or a measure of NGOs civilness, less of an analytical tool Corporatism Theory As the potential of a viable Chinese civil society faded, some scholars turned to the corporatism theory to explain the nature of associational life in China. The 1989 and later revised 1998 Regulations on Social Organization Registration and Administration states (1) there could be only one organization for any particular area of work in the same administrative area and (2) all social organizations must identify an official sponsoring agency. Such regulations signal a corporatist system of interest representation exclusively by state-recognized organizations within their respective categories. It simultaneously acknowledges the pluralizing socioeconomic changes induced by the market reform and the continued dominance of the Leninist part-state. 10 Not surprisingly, the majority of analysis in the 1990s concluded that the NGOs were not fully autonomous from the state, 11 and operated as a corporatist extension of the state apparatus. 12 Although corporatism worked well during that period, 13 more recent research found the government-ngo relationships are various, fluid and multidirectional; for example, some government-organized NGOs (GONGOs) are more autonomous and voluntary than others. 14 Saich believes corporatist interpretation overestimates the capacity of the state to enforce its will on NGOs in China. The NGOs are able to negotiate their own niches with the state and to pursue their members interest and organizational goals. 15 Deng argues the corporatist approach has only limited applicability. The hidden rules of the government on grassroots NGOs imply that the government s control mechanism is only selective and partial, and often ineffective Anthony J. Spires, Contingent Symbiosis and Civil Society in an Authoritarian State: Understanding the Survival of China s Grassroots NGOs, American Journal of Sociology, (2011): Ibid. Christopher Earle Nevitt, Private Business Associations in China: Evidence of Civil Society or Local State Power? The China Journal, 36 (1996): Ibid, Jessica C. Teets (2013). 10 Richard Baum and Alexej Shevchenko, The State of the State, in Merle Goldman and Roderick MacFarquhar, ed., The Paradox of China s Post-Mao Reforms (Cambridge, MA: Harvard University Press, 1999), E.g. Anita Chan, Revolution or Corporatism? Workers and Trade Union in Post-Mao China, The Australian Journal of Chinese Affairs, 29 (1993): Margaret Pearson, The Janus Face of Business Association in China: Socialist Corporatism in Foreign Enterprises, The Australian Journal of Chinese Affairs, 31 (1994): Jonathan Unger and Anita Chan, China, Corporatism and the East Asian Model, The Australian Journal of Chinese Affairs, 33 (1995): Ibid, Jessica C. Teets (2013). 13 Ibid, Anthony J. Spires (2011). 14 Ibid, Yiyi Lu (2009). Ibid, Jessica C. Teets (2013). Ibid, Carolyn L. Hsu and Yuzhou Jiang (2015). 15 Tony Saich, Negotiating the State: The Development of Social organizations in China, The China Quarterly, 161 (2000): Guosheng Deng, The Hidden Rules Governing China s Unregistered NGOs: Management and Consequences, China Review, 10.1 (2010):

5 Both the civil society and corporatist approaches are what Perry termed state-society paradigm 17 that represents a continuum rather than two poles. By adapting Jia s model that differentiates between bottom-up NGOs and top-down NGOs 18, we can divide China s associational sphere into two domains civil society and corporatism. Civil society features grassroots NGOs without legal status. They re usually small, located far from political centers, and have a limited range of activity. The corporatist domain mainly contains registered NGOs most of which are government-organized. The two domains are not mutually exclusive. In their overlapping area we find either grassroots NGOs that have sought registration as well as GONGOs that enjoy tremendous autonomy. It is this overlap that exhibits the most dynamic, diversity and fluidity that make both theories suffer from inadequate generalization Resource Dependence Theory Instead of stretching the definition of civil society and corporatism to remedy their theoretical insufficiencies, the last decade saw alternative approaches to investigate government- NGO relationship in China. Among many the following stand out. Spires claims that the government and grassroots NGOs can co-exist on contingent symbiosis. The government ignores the NGOs illegality as long as (1) the government can take credit for the NGOs work and (2) the NGOs remain small and make no calls for democratic reform. 19 Lu holds a similar opinion and calls the relationship dependent autonomy. She suggests that the Chinese NGOs have gained substantial autonomy from the state, but have to depend on and exchange with the state for various support. 20 Teets consultative authoritarianism combines social pluralism and differentiated control. Decentralization and tax reform in favor of the central government forced local governments to look for alternative public service provision, such as NGOs. The increased dependence on NGOs made the government reluctant to take violent and extra-legal actions. 21 Hsu and Jiang studied NGOs resource strategies from the institutional perspective. Their interpretation primarily draws from path dependency theory and consequently narrows the conclusion to that the leaders with government experience and those not behave differently toward government and government resources. 22 All the above approaches have borrowed from the resource dependence theory. Organization is an open, adaptive system that interacts with the external environment. The resource dependency theory posits that organizations are not able to internally generate either all the resources or functions required to maintain themselves. 23 As a result, they strive to acquire and sustain resources from the external environment. 24 It also posits that organizations play an active role to affect the environment. 25 The resource dependence theory rests on three 17 Elizabeth J. Perry, Trends in the Study of Chinese Politics: State-Society Relations, The China Quarterly, 139 (1994): Xijin Jia, Civil Organization-Government Relationships: Functional Cooperation and Power Dilemmas, in Ming Wang, ed., Emerging Civil Society in China, (Leiden, The Netherlands: Brill, 2010): Ibid, Anthony J. Spires (2011). 20 Ibid, Yiyi Lu (2009). 21 Ibid, Jessica C. Teets (2013). 22 Ibid, Carolyn L. Hsu (2010). Ibid, Carolyn L. Hsu and Yuzhou Jiang (2015). 23 Howard E. Aldrich and Jeffrey Pfeffer, Environments of Organizations, Annual Review of Sociology, 2 (1976): Jeffrey Pfeffer and Gerald R. Salancik, The External Control of Organizations: A Resource Dependence Perspective (New York: Harper and Row, 1978). 25 Ibid, Howard E. Aldrich and Jeffrey Pfeffer (1976). 5

6 principles. 26 First, an organization needs resources to survive and to pursue its goals; second, an organization can obtain resources from its environment, or, more simply, from other organizations; and third, power and its inverse, dependence, play key roles in understanding interorganizational relationships. The last principle implies that the balance of power usually favors the resource providers, 27 and consequently results in the adaptation of the needing organizations to the providers requirements. 28 Organizations are not autonomous entities pursuing desired ends at their own discretion. Rather, they re constrained by the environment to the degree of dependence. Three factors determine the degree of dependence: the importance or criticality of sources to the organization, the concentration of resources and the availability of alternative resources, and the resource holders discretion over resource allocation and use. 29 Some resources flow predominantly from one organization to another, and some are involved simultaneously in a two-way exchange. The latter interaction demonstrates the interdependence of organizations on resources. 30 Resource interdependence and exchange is common and frequent, within the scope of resource dependence theory. Malatesta and Smith even call the environment a system of interdependencies. 31 The theory has been widely used to study government-ngo relationship, ranging from collaboration to non-collaboration. 32 It has several advantages to study the government-ngo relationship in China and perhaps elsewhere too. First, it de-politicalizes such relationship and meanwhile place it in an institutional environment, treating politics as a strategy 33 rather than the most important variable. Second, the theory does not mean to challenge the theories and findings in the past literature on government-ngo relationship in China. In addition to its ability to explain such relationship, it also offers theoretical and empirical support to some existing theories. For example, it can examine the resource exchange patterns and their level of frequency and importance to understand when and how the contingent symbiosis will cease or change. Third, it allows comparative study of government-ngo relationship in different countries, because the resource dependence variables tend to be available, measurable and similar in meaning. Civil society and corporatism, however, subject to many interpretations and scholars often talk past one other. 2. Resource Dependence Variables for Government-NGO Relationship 26 Deanna Malatesta and Craig R. Smith, Lessons from Resource Dependence Theory for Contemporary Public and Nonprofit Management, Public Administration Review, (2014): Ibid. 28 Karen Froelich, Diversification of Revenue Strategies: Evolving Resource Dependence in Nonprofit Organizations, Nonprofit and Voluntary Sector Quarterly, 28.3 (1999): Sungsook Cho and David F. Gillespie, A Conceptual Model Exploring the Dynamics of Government-Nonprofit Service Delivery, Nonprofit and Voluntary Sector Quarterly, 35.3 (2006): Judith R. Saidel, Dimensions of Interdependence: The State and Voluntary-Sector Relationship, Nonprofit and Voluntary Sector Quarterly, 18.4 (1989): Ibid, Deanna Malatesta and Craig R. Smith (2014). 32 E.g. Beth Gazley and Jeffry L. Brudney, The Purpose (and Perils) of Government-Nonprofit Partnership, Nonprofit and Voluntary Sector Quarterly, 36.3 (2007): Beth Gazley, Why Not Partner With Local Government? Nonprofit Managerial Perceptions of Collaborative Disadvantage, Nonprofit and Voluntary Sector Quarterly, 39.1 (2010): E.g. Joseph Galaskiewicz and Wolfgang Bielefeld, Nonprofit Organizations in An Age of Uncertainty: A Study of Organizational Change (New York: Aldine De Gruyter, 1998). 6

7 This section examines organizational characteristics, board of directors, attitude and value, and external environment. All the four groups of variables can be measured by observation, survey and secondary data. This paper has no intention to dictate the variables to use. Rather, it attempts to inspire adaptation of the variables and additional variables to investigate causality. The empirical research examined in this paper does not necessarily agree on the result and the degree of significance, making the theory s application to Chinese NGOs more interesting and contributive to understanding the global nonprofit sector. 2.1 Organizational Characteristics Different research focuses on different organizational characteristics. Such characteristics can be structural, cultural, operational, historical, political, etc. This paper highlights a few as follows. They include the internal characteristics as well as what one can see from the outside of the organization Age and size Organization theorists have argued that organizations commonly form links with their external environments to reduce uncertainty arising from concerns regarding, for example, the availability of capital, government regulation, and customer demand. 34 Organization age and size, as a measure of the nonprofit organizations links to the community and their capacity to form such links and to provide service, frequently appear in the literature that studies the resource dependence between the government and nonprofits. They were treated as either the explaining variables or control variables. Provan s et al study of nonprofit service organizations revealed that organization age can be one of the proxies of organizational competence. The long period of existence of nonprofits demonstrate their ability to provide specialized service from which they strengthen their linkage with the environment. 35 They also measured the strength of links by organization size, including the nonprofits number of employees, number of volunteers and number of people served. The result was positive. Foster and Meinhard found that small organizations are significantly less likely than either medium or large organizations to collaborate. It s because they either have less to share or lack the ability to obtain sufficient resources. 36 Gazley observed that smaller and younger nonprofit organizations are more likely to perceive barriers to collaborate with government agencies. 37 In his study of the morality patterns of nonprofits in the United States, Bielefeld found organizations that ceased to operate tend to be younger and smaller. 38 Similar conclusions were found in China. For example, Hasmath and Hsu observed that in both Beijing and Shanghai it s oftentimes the older NGOs that have managed to carry out projects with the involvement of local authorities. Those NGOs are more likely to have 34 Lynn E. Miller, Evonne Kruger, Gauss Jonas and Marianne Salmon, Nonprofit Boards and Perceptions of Funding, Nonprofit Management and Leadership, 5.1 (1994): Keith G. Provan, Janice M. Beyer and Carlos Kruytbosch, Environmental Linkages and Power in Resource- Dependence Relations Between Organizations, Administrative Science Quarterly, 25.2 (1980): Mary K. Foster and Agnes G. Meinhard, A Regression Model Explaining Predisposition to Collaborate Nonprofit and Voluntary Sector Quarterly, 31.4 (2002a): Ibid, Beth Gazley (2010). 38 Wolfgang Bielefeld, What Affects Nonprofit Survival? Nonprofit Management and Leadership, 5.1 (1994):

8 developed a professional capacity and gained approval of the wider community. 39 However, Spires s et al statistical analysis of the societal support for China s grassroots NGOs in three provincial jurisdictions implied a rather modest effect of organization age on funding from all sources Leadership Nonprofit organizations are particularly vulnerable to external events and are highly dependent on the efforts of their chief executives to find resources for and to revitalize the mission of their organizations. 41 Social network scholars through studying interpersonal relationships noted that one of the outcomes of social networks is increased opportunity to collaborate. 42 One way in which these networks are formed is through mutual work experience. A greater familiarity with government functions or personnel through prior employment experience with the government can increase the willingness to collaborate. 43 Many scholars have noted the extraordinary amount of career interpenetration between the government and nonprofit sectors. 44 Organizational actors tend to replicate their own institutional experiences when they move to new firms and even to new fields. 45 From this perspective, many founders of the first generation of Chinese NGOs used to work in the government and usually built organizations around alliances with the government, 46 or combined cultural prestige with political capital. 47 For example, Yongguang Xu, a former Communist Youth League official, used the numerous Youth League offices in the country to promote the Project Hope. Another example is Congjie Liang. Well connected with the academia and politics, Liang was able to affiliate Friends of Nature with the International Academy of Chinese Culture as a secondary entity to avoid the registration requirement in the early 1990s. This institutional characteristic is also related to political freedom. For example, Zhang found that if the former government official position of the NGO s chair or secretary is higher than the NGOs registration level, the NGO has a slightly higher chance of effective advocacy. 48 In contrast, the founders that have no such experience tend to avoid the state and seek arenas away from government attention; 49 they re usually strong in professional expertise or technical skills Reza Hasmath and Jennifer Y.J. Hsu, Isomorphic Pressures, Epistemic Communities and State-NGO Collaboration in China, The China Quarterly, 220 (2014): Anthony J. Spires, Lin Tao and Kin-Man Chan, Societal Support for China s Grass-Roots NGOs: Evidence from Yunnan, Guangdong and Beijing, The China Journal, 71 (2014): Richard D. Heimovics, Robert D. Herman and Carole L. Jurkiewicz Coughlin, Executive Leadership and Resource Dependence in Nonprofit Organizations: A Frame Analysis, Public Administration Review, 53.5 (1993): Soonhee Kim and Hyangsoo Lee, The Impact of Organizational Context and Information Technology on Employee Knowledge-Sharing Capabilities, Public Administration Review, 663. (2006): Ibid, Beth Gazley (2010). 44 Ibid, Judith R. Saidel (1989). 45 Paul J. DiMaggio and Walter W. Powell, Introduction, in Walter W. Powell and Paul J. DiMaggio, ed., The New Institutionalism in Organizational Analysis (Chicago: University of Chicago Press, 1991): Ibid, Carolyn L. Hsu (2010). Ibid, Carolyn L. Hsu and Yuzhou Jiang (2015). 47 Guobin Yang, Environmental NGOs and Institutional Dynamics in China, The China Quarterly, 181 (2005): Changdong Zhang, Non-Governmental Organisations Policy Advocacy in China: Resources, Government Intention and Network, China: An International Journal, 13.1 (2015): Ibid, Carolyn L. Hsu (2010). Ibid, Carolyn L. Hsu and Yuzhou Jiang (2015). 50 Ibid, Guobin Yang (2005). 8

9 However, a more careful examination should extend to those executives behavior that s not entirely attached to the institutional constraint. By comparing effective chief executives to those less effective, Heimovics et al found that nonprofit chief executives, when responding to conflict or tension over the allocation of scarce resources or the resolution of differences, tend to adopt the political measures to bargain or negotiate to acquire or allocate resources. 51 Those that only take structural, human resource or symbolic managerial activities are less effective in securing resources. This behavioral approach overcomes the institutional approach in that it explains the outcome of differentiated and multiple behavior patterns and reduces the possibility of overlooking certain key characteristics that undermine the generalization. Heimovics et al suggests the importance of looking inside the organization to understand the dynamics of the leadership, and we should regard the leadership as a learner of the field and environment. 52 We may otherwise fall into the trap that mutually exclusive institutional characteristics of the leadership lead to results that are not Policy Area Policy area refers to the functionality of the public service delivered. It has been used in many researches as the control variable to explore the variation and details in resource dependence, issue importance and government-nonprofit collaboration output. 54 For example, government funding tends to go to education and research and social service areas more than other areas, regardless of the level of formality of the collaboration and organizational and board characteristics. Guo and Acar reasoned that government priorities may result in different levels of support to nonprofit organizations. 55 Spires et al reported that doing anything other than HIV/AIDS significantly lowers an unregistered NGO chances of getting government funding in China. 56 The degree of issue sensitivity can cause different attitudes of the government and NGOs toward important issues. The definition of sensitive activity is elusive and frequently locale specific in China. 57 For example, in Guangdong s NGO community, labor is the most sensitive issue because (1) the high density of labor may develop into demands of the government, and (2) the government rely on them for economic development. This can also be understood as the political environment to be discussed later Legitimacy Legitimacy refers to an organization having its actions endorsed by powerful external collective actors and results from a congruence between societal values and organizational 51 Ibid, Richard D. Heimovics, Robert D. Herman and Carole L. Jurkiewicz Coughlin (1993). 52 Ibid. 53 Ibid, Carolyn L. Hsu and Yuzhou Jiang (2015). 54 Arthur C. Brooks, Is There a Dark Side to Government Support for Nonprofits? Public Administration Review, 60.3 (2000): Chao Guo and Muhittin Acar, Understanding Collaboration Among Nonprofit Organizations: Combining Resource Dependency, Institutional, and Network Perspectives, Nonprofit and Voluntary Sector Quarterly, 34.3 (2005): Chao Guo, When Government Becomes the Principal Philanthropist: The Effects of Public Funding on Patterns of Nonprofit Governance, Public Administration Review, 67.3 (2007): Ibid, Chao Guo and Muhittin Acar (2005). 56 Ibid, Anthony J. Spires, Lin Tao and Kin-Man Chan (2014). 57 Ibid, Anthony J. Spires (2011). 9

10 actions. For example, in a study of voluntary social service agencies in the Toronto metropolitan area, Singh et al measured the legitimacy of those organizations by three external indicators. 58 The institutional environment motivates organizations to increase their legitimacy in order to appear in agreement with the prevailing norms, rules, beliefs or expectations of external constituents. 59 The organizational moral as the organization s resource also has to be framed prudently to gain government and public acceptance. 60 In the Chinese context, the three common sources of legitimacy are registration with the civil affairs departments, awards through good service, and the severe resource dependence of the government on NOGs. Without a registration with the civil affairs department, the Chinese NGOs are in effect illegal and subject to a series of control at the discretion of the government. 61 Registration can be the single most important source of legitimacy in many cases. For example, the government purchases service only from registered NGOs, causing a lower likelihood for unregistered NOGs to receive government funding. Awards for good service, especially by the government, can enhance an NGO s legitimacy to the public. An NGO registered with Pudong s Bureau of Civil Affairs was recognized by the local government as a recipient of the Top Ten Organizations and Top Ten Projects. Such status enabled the organization to conduct fundraising and attract substantial support from the business community in Shanghai. 62 The high resource dependence of government can accord legitimacy to NGOs. In reviewing current community religion and welfare in China, Laliberte et al claimed that village temples have frequently emerged as alternative centers of resource collection and allocation. In many cases the temple board spent the money on direct public service and local infrastructure upon the request of local cadres. Those philanthropic activities help the temple to gain legitimacy in its negotiations with the local state, and also reinforce the accountability of the cadres. 63 The combined result of issue urgency and the government s lack of expertise can also lend NGOs legitimacy, albeit it s likely to be temporary and particular Revenue Diversification Revenue structure is particularly relevant to nonprofits survival, 64 because they inherently experience high levels of revenue uncertainty. 65 Nonprofit organizations that rely mainly on 58 Jitendra V. Singh, David J. Tucker and Robert J. House, Organizational Legitimacy and the Liability of Newness, Administrative Science Quarterly, 31.2 (1986): Christine Oliver, Determinants of Interorganizational Relationships: Integration and Future Directions, The Academy of Management Review, 15.2 (1990): Ying Xu and Ngan-Pun Ngai, Moral Resources and Political Capital: Theorizing the Relationship between Voluntary Service Organizations and the Development of Civil Society in China, Nonprofit and Voluntary Sector Quarterly, 40.2 (2009): Ibid, Guosheng Deng (2010). Xiaoguang Kang, and Han Heng, Graduated Controls: The State-Society Relationship in Contemporary China, Modern China, 34.1 (2008): Jennifer J.Y. Hsu and Reza Hasmath, The Local Corporatist State and NGO Relations in China, Journal of Contemporary China, (2014): Andre Laliberte, Dvaid A. Palmer and Keping Wu, Religious Philanthropy and Chinese Civil Society, in David A. Palmer, Glenn Shive and Philip Wickeri, ed., Chinese Religious Life (Oxford University Press, New York, 2011): Ibid, Wolfgang Bielefeld (1994). 65 Kirsten A. Gronbjerg, Understanding Nonprofit Funding: Managing Revenues in Social Services and Community Development Organizations (San Francisco, CA: Jossey-Bass Publishers, 1993). 10

11 contributions appear to experience greater levels of instability and greater financial risk than do commercial or mixed nonprofits. 66 A diversified revenue portfolio decreases the instability of individual revenue sources, 67 creating greater organizational sustainability when there s a decline in any one source. Revenue diversification not only reduces an organization s dependence on a particular supplier, but also increases its ability to attract resources from other suppliers. 68 A nonprofit organization could expect an average reduction in revenue volatility over time if it actively diversifies its revenue. 69 Diversified revenue structure encourages nonprofit organizations to engage in a wider range of responses to the uncertain environment. 70 Zhang and Baum studied the Sanchuan Development Association, a rural NGO in the poor region of northwest China. The organization was mainly funded by a number of international philanthropic groups and foreign embassies in Beijing, and carried out local poverty alleviation and community development projects. The relatively reliable funding not only allowed them to fulfill their mission, but also gained acquiescence from the local authorities even after registration. 71 While in another case, a Shanghai based NGO relied its work and funding on government contracts. Years later it almost had to end its operation when the authorities had few contracts to award. 72 It s worth pointing out that funding is not the only resource NGOs desire from the government and elsewhere. The government can also provide information, clients, political and administrative support and legitimacy. Take example of clientele. A local district education bureau in Shanghai put the school principals into contact with an NGO that requested so. The principles then identified migrant children to receive the NGO s support. 73 In return, NGOs provide service delivery, information and credibility to the government. 2.2 Board of Directors Board size and composition are not random or independent factors, but are rather rational organization responses to the environment. 74 Resource dependence theory proposes that organizations boards of directors are a flexible mechanism for organizations to access and influence elements of, and strengthen the linkage to, their environment. 75 They reduce the environmental uncertainty through helping to acquire capital, enhancing the organization s political power, and providing information about the environment. Callen et al concurred that the 66 Deborah A. Carroll and Keely Jones Stater, Revenue Diversification in Nonprofit Organizations: Does It Lead to Financial Stability? Journal of Public Administration Research and Theory, 19.4 (2009): Fred C. White, Trade-off in Growth and Stability in State Taxes, National Tax Journal, 36.1 (1983): Jeffrey Pfeffer and Anthony Leong, Resource Allocation in United Funds: Examination of Power and Dependence, Social Forces, 55 (1977): Ibid, Deborah A. Carroll and Keely Jones Stater (2009). 70 Mary K. Foster and Agnes G. Meinhard, A Contingency View of the Responses of Voluntary Social Service Organizations in Ontario to Government Cutbacks, Canadian Journal of Administrative Sciences, 19.1 (2002b): Xin Zhang and Richard Baum, Civil Society and the Anatomy of a Rural NGO, The China Quarterly, 52 (2004): Ibid, Jennifer J.Y. Hsu and Reza Hasmath (2014). 73 Ibid. 74 Jeffery Pfeffer, Mergers as a Response to Organizational Interdependence, Administrative Science Quarterly, 17.3 (1972): Ibid, Jeffrey Pfeffer and Gerald R. Salancik (1978). Ibid, Lynn E. Miller, Evonne Kruger, Gauss Jonas and Marianne Salmon (1994). Ibid, Keith G. Provan, Janice M. Beyer and Carlos Kruytbosch (1994). 11

12 board of directors is to facilitate exchanges that reduce organizational resource dependencies, to increase the flow of resources through personal and professional contacts, and to represent the organization to external constituencies. 76 Interlocks between nonprofits boards can provide even more resource and build influence over other organizations. 77 Board of directors research has seen the greatest application of resource dependence theory Size Large board size is expected to be associated with more boundary spanning efforts since there are more members to make links with outside organizations. 79 Olson studied the relationship between several board characteristics of 43 independent colleges gift and total revenue. 80 His findings are consistent with the view that larger boards with more outside contact function more effectively in helping the organization to obtain resources. Callen et al noted a positive association between board size and the growth in direct contribution, after controlling the external instability Composition The board is naturally related to the linking or representation function of nonprofits in the sense that it includes representatives from important constituencies for the purposes of resource acquisition, legitimacy, and image. 82 Miller et al factored the board members by expertise: (1) business expertise such as fundraising, marketing, personnel, (2) service expertise such as formal training in the organization s specific service area, legal expertise, (3) media contacts or client representation, and (4) employment with the current organization. Board expertise and activities have little impact on the organization in the case of adequate funding. They explained that boards serve a homeostatic function, acting in crisis situation to return their organizations to stable equilibria; board can help nonprofit organizations to reduce uncertainty, if not to improve their performance. 83 Harland and Saidel added to the board the director s affiliation with regional associations, and found such them less politically active. 84 Callen et al classified the board of directors into five types: employee, major donor, well-known person who enhances the organization s image, person with a useful professional skill, and other. They found the growth rate in direct contributions is related to the proportion of staff members on the board and the 76 Jeffrey L. Callen, April Klein and Daniel Tinkelman, The Contextual Impact of Nonprofit Board Composition and Structure on Organizational Performance: Agency and Resource Dependence Perspectives, Voluntas: International Journal of Voluntary and Nonprofit Organizations, 21.1 (2010): Ibid, Keith G. Provan, Janice M. Beyer and Carlos Kruytbosch (1994). 78 Amy J. Hillman, Michael Withers and Brian J. Collins, Resource Dependence Theory: A Review, Journal of Management, 35 (2009): Noel Hyndman and Paul McDonnell, Governance and Charities: An Exploration of Key Themes and the Development of a Research Agenda, Financial Accountability and Management, 25.1 (2009): David E. Olson, Agency Theory in the Not-for-Profit Sector: Its Role at Independent Colleges, Nonprofit and Voluntary Sector Quarterly, 29.2 (2000): Ibid, Jeffrey L. Callen, April Klein and Daniel Tinkelman (2010). 82 Ibid, Chao Guo (2007). 83 Ibid, Lynn E. Miller, Evonne Kruger, Gauss Jonas and Marianne Salmon (1994). 84 Sharon L. Harlan and Judith R. Saidel, Board Members Influence on the Government-Nonprofit Relationship, Nonprofit Management and Leadership, 5.2 (1994):

13 proportion of major donors on the board s fundraising committee. 85 Board composition indicates the breadth and depth of community representation. The empirical research, however, shows that there s wide variability in the extent to which nonprofit boards are broadly representative of the community. For example, board membership in many nonprofits tend to be limited to upperincome, professional employers and managers, whereas the community has little or no representation. 86 Guo defined community representation in nonprofit governance as the extent to which clients, volunteers, rank-and-file staff members and neighborhood residents are included on nonprofit boards. By this standard, a board can be non-community. 87 It s worth emphasizing that the board of directors as a mediator between the government and nonprofits can also be shaped by the government and other external environmental influences. Hillman et al studied a sample of US airlines firms undergoing deregulation, and reported that as environments change, the board composition will change to reflect the shift in resource needs confronting the firm. Specifically, during regulation board replacements were more likely from the insider and support specialist category, while during deregulation board replacements were more likely to come from the business experts and community influential categories. 88 Guo noted that reliance on government funding decreases the likelihood that nonprofit organizations will develop strong, representative boards Activity The board s activity can be related to several organizational characteristics. The findings are in large variety. Middleton argued that in larger organizations, boards are more involved in policymaking and less involved in operational activities. 90 Smith and Lipsky observed that as a nonprofit organization grows, often because of new increasing government funding, meaningful board participation diminishes. 91 Harlan and Saidel found the nonprofit board of directors are not bystanders in the contracting relationship with the government; rather, they play multiple roles. As facilitators and political advocates, they help the organization to prepare proposals for government grants, contact legislators on behalf of the organization; by doing so they enhance interdependence between sectors. As buffers and values guardians, they discuss the negative impact of government funds, set priorities for community service, etc.; by doing so they contribute to preserving nonprofit autonomy. 92 The boards relationship with chief executives also varies across nonprofit organizations. The dynamics between the chief executive and the board can affect the board s influence. Harlan and Saidel argued the extent to which the nonprofit executive educates the board about the government contracting relationship and the length of time that they have been in office are in 85 Ibid, Jeffrey L. Callen, April Klein and Daniel Tinkelman (2010). 86 Robert D. Herman and F. Peter Tulipana, Board-Staff Relations and Perceived Effectiveness in Nonprofit Organizations, Nonprofit and Voluntary Sector Quarterly, 14.4 (1985): Ibid, Chao Guo (2007). 88 Amy J.Hillman, Albert A. Cannella, Jr. and Ramona Paetzold, (2000). The Resource Dependence Role of Corporate Directors: Strategic Adaptation of Board Composition in Response to Environmental Change, Journal of Management Studies, 37.2 (2000): Ibid, Chao Guo (2007). 90 Melissa Middleton, Nonprofit Bards of Directors: Beyond the Governance Function, in Walter W. Powell, ed., The Nonprofit Sector: A Research Handbook (New Haven: Yale University Press, 1987): Steven Rathgeb Smith and Michael Lipsky, Nonprofits for Hire: The Welfare State in the Age of Contracting (Cambridge, MA: Harvard University Press, 1993). 92 Ibid, Sharon L. Harlan and Judith R. Saidel (1994). 13

14 part to explain board activities. 93 The chief executives of larger nonprofits tend to acquire more power relative to their boards because of their deep firsthand knowledge of the complexity of their organizations. 94 Miller et al also admitted the strength of the board is relative to the chief executive, and noted that the role of many nonprofit boards is reduced to a mere rubber-stamp function and insignificant participation in the process of contracting with government. 95 In China, board of directors is a legal requirement for registered NGOs. A quick review of their board composition gives the impression that they re usually composed of government officials, private entrepreneurs and NGO practitioners. The boards elitist feature is not unfamiliar to their foreign counterparts. Boards are less common among grassroots NGOs since their reputation and scale are less attractive. It would be reasonable to separate the Chinese NGOs into three types to compare their boards characteristics and functions: registered NGOs, unregistered NGOs, and charitable foundations. Most of the registered NGOs are GONGOs. Their board may function in a bureaucratic manner, and their advocacy function usually works toward membership. For unregistered NGOs the board is expected to increase the professionalization, image, and funding opportunities. The charitable foundations are in between, depending on their belonging jurisdiction and whether they re public or non-public. A systematic examination and comparison of their boards will contribute to our understanding of the Chinese NGOs interaction with the government and other environmental factors. Some research shed light on the board of directors in Chinese NGOs. In a survey of NGOs in 2002, Ding found that 86% of the organizations have a board, while only 52% are aware that it s a legal requirement. This shows many NGOs voluntarily set up a board and expect it to help. Thirty-eight percent of the respondents rate bring tangible resources (e.g. power, prestige and connections) as the board s major advantage. 96 Spires et al found that for Chinese grassroots NGOs having a board (as a dummy variable) increases the chance of individual donation. 97 Although the authors skipped discussion of the relationship between board and government funding, the impression is that when registration status is controlled, the existence of a board in unregistered NGOs does not channel government funding to their sampling NGOs. Foundations are the most financially independent. Their board of directors are also more salient elites in terms of rank, wealth and expertise. A preliminary research by Yan revealed that the demand, amount and distribution of resources affects the board size in Chinese foundations. 98 The board composition, however, is left untouched. The next steps should look into the board composition, activities, and interlocks. 2.3 Attitude and Value Resource dependence theory suggests that one way to mitigate dependence is to engage in collaborative strategies with other organizations, and such decision is the result of a combination 93 Ibid. 94 Ibid, Steven Rathgeb Smith and Michael Lipsky (1993). 95 Ibid, Lynn E. Miller, Evonne Kruger, Gauss Jonas and Marianne Salmon (1994). 96 Yuanzhu Ding, Third Sector Governance in China: Structure, Process and Relationships, in Samiul Hasan and Jenny Onyx, ed., Comparative Third Sector Governance in Asia: Structure, Process, and Political Economy (New York: Springer, 2008). 97 Ibid, Anthony J. Spires, Lin Tao and Kin-Man Chan (2014). 98 Kegao Yan, An Empirical Study on Relations Between Organizational Characteristics, Environment and Board Size: The Case of Chinese Foundations, Journal of Hunan University (Social Sciences), 28.2 (2014):

15 of organizational and attitudinal factors. 99 The more benefits an organization identifies as emanating from a collaboration, the more likely it s to engage in interorganizational activities. 100 Organizational characteristics are associated with the level of formality of the governmentnonprofit collaboration, 101 but such association can t be established without attitude and value preceding their behavior. The present research regards the attitude and value as two variables: trust and autonomy Trust There is an agreement among organization theory scholars that trust is an important cause to collaboration. The two most important conditions for trust to exist are risk and interdependence. 102 Lambright et al examined the conditions to build trust through surveying social workers in nonprofit human service agencies. They found that trust is a risk avoidance process that can be cultivated through successful past collaboration that leads to more frequent interaction, third parties who interact with both organizations, and the expected future collaboration. 103 An interesting experiment revealed that trust is higher when two parties work on complementary information rather than identical information. 104 This can well apply to the government-ngo relationship since they depend on each other s resource to deliver public service. For business organizations, Zand and Zaheer and Venkatraman both found a positive correlation between mutual trust and collaboration. 105 In their interview of Chinese NGOs about their relationship with the government, Hasmath and Hsu found more than half of their sample thought that there were low levels of trust and knowledge of NGOs, and many encountered difficulties in establishing collaborative opportunities. 106 Their finding is echoed by Ding s survey result that the majority of NGOs think the main reason for government supervision is to make sure that they re not involved in any political subversive activities. 107 The government s suspicious attitude makes the initial formation of collaboration an uneasy task. In order to achieve collaboration with the government, the NGOs have to burn their own resources to persuade the government officials that the government can gain from collaborating. 108 They noted trust is essentially a social capital building process that involves continuous formal and informal communication, commitment building and implementation. Only in the very end may the government procure NGO services in 99 Ibid, Mary K. Foster and Agnes G. Meinhard (2002a). 100 Sherrie Human and Keith G. Provan, An Emergent Theory of Structure and Outcomes in Small-Firm Strategic Manufacturing Networks, Academy of Management Journal, 40.2 (1997): Ibid, Chao Guo and Muhittin Acar (2005). 102 Denise M. Rousseau, Sim B. Sitkin, Ronald S. Burt and Colin Camerer, Not So Different After All: A Cross- Discipline View of Trust, Academy of Management Review, 23.3 (1998): Kristina T. Lambright, Pamela A. Mischen and Craig B. Laramee, Building Trust in Public and Nonprofit Networks: Personal, Dyadic, and Third-Party Influences, The American Review of Public Administration, 40.1 (2009): Celine Buchs and Fabrizio Butera, Is a Partner s Competence Threatening during Dyadic Cooperative Work? It Depends on Resource Dependence, European Journal of Psychology of Education, 24.2 (2009): Dale. E. Zand, Trust And Managerial Problem Solving, Administrative Science Quarterly, 17.2 (1972): Akbar Zaheer and N. Venkat Venkatraman, Relational Governance as an Interorganizational Strategy: An Empirical Test of the Role of Trust in Economic Exchange, Strategic Management Journal, 16.5 (1995): Ibid, Reza Hasmath and Jennifer Y.J. Hsu (2014). 107 Ibid, Yuanzhu Ding (2008). 108 Andreas Fulda, Yanyan Li and Qinghua Song, New Strategies of Civil Society in China: A Case Study of the Network Governance Approach, Journal of Contemporary China, (2012):