Stakeholder orientation and financial performance of NPOs: development and testing of a mediating model

Yangcheng Hu

School of Business Administration, Nanchang Institute of Technology, Nanchang, China

Literature examining how stakeholder-oriented strategy helps non-profit organizations (NPOs) cope with environmental uncertainty is limited. Thus, this study builds and tests a mediating model to investigate the relationships among stakeholder orientation, social performance and financial performance of NPOs. Data from 32 NPOs were collected in east China. Multiple regression analysis was employed to examine the relationships among the variables. The results revealed that stakeholder orientation has a positive and significant relationship with both social performance and financial performance. Meanwhile, it was discovered that social performance is significantly related to financial performance. Further, the results provided empirical evidence that the relationship between stakeholder orientation and financial performance was fully mediated by social performance. The limitations and future research directions were also discussed. This paper not only contributes to the theory of stakeholder orientation but also provides practical implications for NPOs on how to improve organizational performance.