Management without a bottom line

by Charles Wolf, Jr.

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Enterprises and organizations can be categorized in a number of ways, one of which is market/nonmarket. Nonmarket enterprises are those whose principal revenues derive from taxes, donations, contributions, endowments, or sources other than the proceeds from charging prices for products or services sold to buyers who are able to buy or not, as they wish. Market enterprises are those whose principal revenues come from charging for products or services. A common and crucial characteristic of nonmarket enterprises is that they operate without the valuable information contained in the "bottom line"--the profit-and-loss statement. To attempt to understand how nonmarket enterprises conduct their operations without the bottom line information available to market organizations, the paper briefly examines three grant-making enterprises, one government and two nongovernment. Four general findings are discussed relating to decisionmaking in such organizations: (1) the role of process vs. product; (2) the outside "marketplace" of ideas; (3) the influence of size, and governmental or nongovernmental status; and (4) the inherent difficulties in managing nonmarket enterprises.

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