The importance of theory



There are many reasons why theory is useful and why getting it right is vital.

“First, like all institutions, philanthropy and the nonprofit sector rely explicitly and implicitly on conceptualizations to guide their choices and actions.” – this is true for all organizations. 

“Second, theory enables us to recognize and make sense of complex patterns. It allows nonprofit organizations to get a bird’s-eye view of the operating landscape rather than stumbling along at street level. It also helps justify things that leaders know intuitively but may be hesitant to implement because they run counter to market logic. An example is investing in professional development for employees. While economistic theories rationalize cost/benefit approaches to decision making and dispute the value of investing in employees, employee engagement theories provide empirical support for the wisdom of employee development, because it sets off a cascade of increasing returns to the employee and the organization.”

Finally, theory impacts how our world gets structured. … For example, economistic management theories make assumptions that people are self-serving and opportunistic and therefore must be monitored closely. However, substantial evidence shows that such attempts to reduce the autonomy of workers through control and surveillance actually make workers less, not more, trustworthy. ”

The article goes on to discuss how non-profits can use different theories – to help shift our understanding of organizations to help encourage collective governance.


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