Paid and Unpaid Labour in Non‐Profit Organizations: Does the Substitution Effect Exist?
| Published date | 01 December 2015 |
| DOI | http://doi.org/10.1111/bjir.12071 |
| Date | 01 December 2015 |
Paid and Unpaid Labour in Non-Profit
Organizations: Does the Substitution
Effect Exist?
Benjamin Bittschi, Astrid Pennerstorfer and
Ulrike Schneider
Abstract
In non-profit organizations (NPOs), volunteers often work alongside paid
workers. Such a co-production setting can lead to tension between the two
worker groups. This article examines for the first time if and how volunteers
influence the separation of paid employees, and thus it contributes to the debate
over whether volunteers can substitute paid workers. Using Austrian data at the
organizational level, we find a significant impact of volunteers on the separa-
tions of paid workers in NPOs facing increased competition. These findings
support the assumption that a partial substitution effect exists between paid
workers and volunteers.
1. Introduction
In comparison to public and for-profit enterprises, non-profit organizations
(NPOs) can rely more intensely on unpaid labour in the form of volunteer
work. Given the growing importance of service delivery by NPOs in many
countries1and the fact that these services are labour-intensive, it is astonish-
ing how little is known about the relationship between paid and unpaid
labour. In some organizations, such as self-help groups, volunteers are vital
for the very existence of the organizations, whereas in other organizations
they merely constitute an additional input factor, whereas other NPOs do not
have volunteers at all.
This phenomenon of collaboration between paid employees (‘profession-
als’) and unpaid employees has been labelled ‘co-production’ in the literature
Benjamin Bittschi is at the Centre for European Economic Research (ZEW) and Karlsruhe
Institute of Technology (KIT). Astrid Pennerstorfer and Ulrike Schneider are at the WU Vienna
University of Economics and Business.
British Journal of Industrial Relations doi: 10.1111/bjir.12071
© 2014 John Wiley & Sons Ltd/London School of Economics. Published by John Wiley & Sons Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
53:4 D ecemb er 2015 0007–1080 pp. 789 –815
British Journal of Industrial Relations
(see Brudney and England 1983). While co-production is commonly viewed
as collaboration between paid service agents and citizens to deliver services,
it can be easily generalized into a non-profit context (Handy et al. 2008). For
NPOs, co-production then implies that they have to decide whether volun-
teers should be involved in the production process, and if so, which tasks
should be performed by paid professionals and which by volunteer workers.
The co-production setting in NPOs can lead to tension between paid and
unpaid labour. While Brudney and Gazley (2002) find no evidence for an
adversarial relationship or a replacement of paid personnel by volunteers,
Handy et al. (2008) as well as Simmons and Emanuele (2010) address this
topic by describing unionized workplaces with provisions in collective agree-
ments that try to protect paid workers against their replacement by unpaid
workers, or workplaces preclude volunteer involvement entirely. So the ques-
tion of a substitution effect on paid employees by volunteers remains thus far
unresolved, especially as none of these studies are able to address directly the
influence of volunteers on the separations of paid employees.
In light of this, the following article aims to examine this potentially tense
relationship between paid and unpaid workers, and investigates whether the
presence of volunteers increases separations for paid employees in NPOs to
scrutinize the replacement fears expressed by the above-mentioned unions.
More specifically, we examine for the first time the direct influence of volun-
teer presence on separations of paid employees with non-profit sector-wide
data at an organizational — and thus demand — level. In our analyses, we
compare organizations that face increased competition and those that
operate under unchanged or even reduced competition. We make this dis-
tinction to account for various circumstances in the economic climates in
which the NPOs operate and which influence separations of paid staff.
Section 2 discusses existing literature concerning the relation between the
two worker groups before positing hypotheses in Section 3. Section 4
describes the econometric specification as well as the data used for the analy-
ses. We describe the robustness checks to our results in Section 5, present and
discuss our findings in Section 6, and provide a brief conclusion in Section 7.
2. Background and existing literature
Volunteers’ roles are diverse and not necessarily distinct from paid workers’
roles (Handy et al. 2008; Netting et al. 2005). Volunteers could either serve as
complements or substitutes to paid employees. In the first case, paid and
unpaid workers assume different tasks within the organization, whereas in
the second case paid employees and volunteers perform similar duties so that
volunteers can basically replace paid staff or vice versa.
In practice, volunteer workers are engaged in managerial or organizational
core tasks, as well as in auxiliary activities, which suggests that paid work and
volunteer work can in fact be interchangeable. However, not all NPOs make
use of volunteer labour, while others choose a mix of paid and unpaid labour
© 2014 John Wiley & Sons Ltd/London School of Economics.
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