Neglected Money. How to Grasp the Organizational Problem of Money Supply?

This paper starts off from an empirical as well as a theoretical observation. Empirically it can be observed that organizations have a fundamental need for money whether we look at business firms, Non-Profit-Organizations, political parties, hospitals or any other organization. Organizational access to crucial resources usually depends on the capability to pay—e.g. salaries for professional personnel (the precondition for continuity) or rents for office rooms (the precondition for addressability).

Theoretically it can be observed that most organizational theories reflect on the general need for resources but usually without reflecting on the specific quality of organizations’ ubiquitous need for money. For instance, whereas Resource-Dependency-Theory (RDT) explicitly addresses organizational resource dependency from a power relations perspective, the Sociological Neo-Institutionalism (NI) refers to resource issues indirectly by not conceptualizing legitimacy as an end in itself but a means of securing access to different kind of resources. However, even if the organizational need for external inputs is widely unquestioned, the specific quality of the need for money is concealed by the overgeneralized concept of resources.

By shedding light on this theoretically neglected need for money, the paper aims at theorizing this common pressing organizational issue and thus keeping it visible. Therefore, it will first illustrate the way RDT and NI neglect the organizations’ need for money. Then, a typology of four modes of organizational refinancing will be suggested: compulsory levy, alimentation by the external environment, alimentation by the internal environment, and sale of self-created outputs. By briefly comparing business firms and NGOs, the benefit of explicitly and systematically addressing questions concerning the organizational need for money will become obvious. Finally, an extension to the NI approach will be suggested.