Understanding international location decisions of poverty alleviation non-profit organizations

Despite the growing numbers of internationally active nonprofit organizations (NPOs), research on various facets of NPOs’ internationalization has been limited. The purpose of this paper is to investigate the impact of target-country related factors on international market selection of NPOs.

Analysis is based on a logistic regression procedure using a self-compiled data set of 2,440 observations of de-facto entry or non-entry occurrences made by 19 large development-focused NPOs.

The study reveals that NPOs select target markets that are less developed, characterized by greater risk profiles, where other NPOs tend to cluster, and those that are preferred by their home-country governments. Moreover, findings suggest that with respect to institutional strength, NPOs balance mission to help strengthen institutions where needed, and avoidance of environments with extremely dysfunctional institutions, hence opting to operate in environments with medium levels of institutional strength.

The study only looked at external environmental factors, it must be acknowledged that a more complete understanding of NPO market selection decisions must also include variables internal to the organization. Further the study is based on a sample of NPOs dealing with poverty alleviation, which limits the generalization. Finally, the use of data from secondary sources creates its own limitations.

This study represents one of the few cross country studies done on the area, thus contributing for the development of the field.