Internationalisation of British fundraising charities: a two-phase empirical study

International Journal of Nonprofit and Voluntary Sector MarketingInt. J. Nonprofit Volunt. Sect. Mark. 15: 28–51 (2010)Published online 30 March 2009 in Wiley InterScience
(www.interscience.wiley.com) DOI: 10.1002/nvsm.370
Internationalisation of Britishfundraising charities: a two-phaseempirical studyRoger Bennett*,y and Rehnuma Ali-Choudhuryz

London Metropolitan University, UK

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*Corin MMooWebE-mayProzLec

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two-phase mixed methods (qualitative and quantitative) study was undertaken to

identify and then to confirm the main dimensions and the principal antecedents of the

internationalisation behaviour of a sample of British charities known to engage in

foreign operations. Specifically the investigation examined the factors that explained

charities’ decisions to enter foreign countries, the motivations and practical methods

involved and the time periods elapsing between first and subsequent entry. Outcomes

were compared against theories of internationalisation developed by previous studies

completed in the commercial domain. The approaches to internationalisation adopted by

15 organisations were established, and the generalisability of these approaches tested via

a mail survey that elicited 238 responses. Least squares, Cox time and logistic regression

analyses were completed to determine the factors that significantly influenced the extents

and timings of the samplemembers’ international activities. It emerged that some but not

all of the considerations that have been found to affect the internationalisation of

commercial firms also impacted on the patterns of internationalisation pursued by

many of the sample organisations, especially managerial inclinations and participation

in networks. However, psychic distance was seemingly irrelevant to charities’ interna-

tionalisation decisions. Rather, a construct termed for present purposes as ‘philanthropic

imperative’ constituted a crucial determinant of behaviour. The results imply that

charities’ levels of involvement in networks should be encouraged and that charity

support organisations need to develop their institutional networking facilities. Also,

charity managers should question whether the most favoured mode of entry to foreign

countries (i.e. the ad hoc project partnership (PP)) is necessarily the most effective.

Copyright # 2009 John Wiley & Sons, Ltd.

respondence to: Roger Bennett, Centre for Researcharketing, London Metropolitan Business School, 84rgate, London EC2M 6SQ, U.K.site: http://www.londonmet.ac.uk/cermarkil: [email protected].

yright # 2009 John Wiley & Sons, Ltd. Int

Introduction

The research presented in the present paperwas motivated in part by two observations: (i)that an increasing number of UK fundraisingcharities now offer to online donors the optionof making contributions in several different

. J. Nonprofit Volunt. Sect. Mark., February 2010

DOI: 10.1002/nvsm

Charity internationalisation 29

currencies (e.g. Euros, US dollars, Australian,New Zealand or Canadian dollars, Scandina-vian Kroner) and (ii) that many large UK-basedcharitable organisations have internationalisedsignificant parts of their organisation struc-tures (see below for examples) to facilitatetheir operating abroad. Yet despite the appar-ent extension of the international activities ofUK charities, little research has been com-pleted into the motives underlying charityinternationalisation and the methods typicallyapplied by charities when internationalisingtheir operations. This contrasts sharply withthe plethora of published research studiesconcerning the internationalisation of com-mercial businesses. Early studies in the for-profit domain centred on the mannerswhereby firms entered foreignmarkets, usuallyconcluding that slow and gradual approachesto market entry were the most common andeffective (the so-called Uppsala model; seeJohanson and Vahlne, 1977). However, thisproposition was never (to the best of theauthors’ knowledge) tested within anythingother than purely commercial contexts. Chal-lenges to the Uppsala model soon emerged as itbecame clear that the model failed to explainreality in many situations. The Uppsala modelassumed that companies reacted progressivelyand systematically to foreign market opportu-nities, and that behaviour was based on a firm’sprior international experience. Clearly, theactual international activities of numerousenterprises did not correspond with thisprescription. Some long established compa-nies were observed to internationalise in a ‘bigbang’, entering multiple foreign countriessimultaneously, while some others were ‘bornglobal’ and operated internationally from themoment of their inception. A great deal ofacademic research effort was devoted toidentifying the antecedents, problems, advan-tages and consequences of these (and other)modes of entering foreign markets, as it wasobvious that new theories more in tune withcontemporary realties (e.g. technologies, glo-balisation, the fact that junior managementrecruits increasingly possessed internationalperspectives) were urgently needed. Again,

Copyright # 2009 John Wiley & Sons, Ltd. Int

these later investigations only covered for-profit organisations, thus creating significantgaps in both the internationalisation and thenonprofit research literatures.Accordingly the present study sought (i) to

establish the main factors that determinedpatterns of charity internationalisation and (ii)to compare these with influences (e.g. psychicdistance, managerial inclinations, networking)known to affect for-profit organisations. Thepractical devices that charities employ to enterforeign countries (e.g. joint ventures (JVs),direct foreign investment (DFI)) and toexpedite their overseas activities wereexplored, as were the barriers to effectiveinternationalisation that charity managers per-ceive to exist.Arguably, charities have internationalised in

recent decades in consequence of a generalrise in international philanthropy resultingfrom a heightened awareness among giversof international ‘good causes’ (Anheier andDaly, 2005). Hewa and Stapleton (2005) notedhow the last quarter century has witnessed ‘agrowing sense of interconnectedness ofhumankind around the globe’ (p. 4), accom-panied by a greater concern for transborderphilanthropic issues. Possibly this has beendriven by an increasing level of culturalhomogeneity across countries, by commoninterpretations of the need to address certainsocial and healthcare issues (Desforges, 2004),by the (dramatic) rise in the importance of thevoluntary sector throughout the westernworld (Anheier and Daly, 2005) and by theextensive publicity afforded to recent huma-nitarian catastrophes (e.g. the Asian tsunami,the South Asian floods and the disaster inDarfur). Developments of this kind havegreatly stimulated cross-border giving (seeBibby, 2005; Frumkin, 2005), especially amongthe rising numbers of migrants who work inforeign countries (Thompson, 2005) and olderpeople who on retirement choose to liveabroad (Axinn and Matthyssens, 2001; Frum-kin, 2005; Raymond, 2005). Philanthropicfoundations and commercial businesses alsodonate internationally, particularly NorthAmerican foundations. By the year 2000


DOI: 10.1002/nvsm

30 Roger Bennett and Rehnuma Ali-Choudhury

foreign giving represented 11 per cent of alldonations made by US foundations (Frumkin,2005) and, of these foreign gifts, around halfwent directly to foreign charities (as opposedto US charities with foreign operations).The internationalisation of charities’ activi-

ties has given rise to new forms of organis-ational arrangement for executing foreignoperations (Zimet, 2006). Large charitiessometimes establish international divisionsthat manage a variety of types of internationalintervention. For example, the internationaldivision of the Royal Society for the Preventionfor Cruelty to Animals (RSPCA) completed in2006 projects in 26 countries either throughJVs with local organisations, through the directsupply (DS) of RSPCA staff and veterinaryequipment to foreign locations or through DFIin shelters, vehicles and educational materialsabroad. The Society networks internationallythrough an association scheme that links itwith 160 animal welfare organisations in 65countries. Likewise, the family planningcharity ‘Marie Stopes’ has an internationaldivision (financed from surpluses on UKoperations) that undertakes activities usingall forms of legal structure (directly ownedclinics, JVs, partnerships with foreign govern-ments and so on) throughout the world.Further charities with international divisionsinclude the deaf-blindness charity ‘Sense’, andthe YMCA (Desforges, 2004). Certain charitiesfounded in Britain subsequently set up quasi-independent bodies that now operateautonomously or semi-autonomously in othernations. ActionAid, for instance, was estab-lished in 1972 by a British businessman and in2003 created a foundation entitled ActionaidInternational, registered in the Netherlands butwith its head office in Johannesburg in SouthAfrica. Actionaid International has licensed theActionaid name to (‘affiliate’) organisations inthe USA, Italy, Greece, Ireland and Brazil. It alsooperates joint programmes with ‘associates’that are allowed to carry the Actionaid name(subject to annual audit and review) in manyother countries, and itself directly employs1590 staff around the world (Shifrin, 2006).‘Save the Children’ was founded in Britain in


1919. In 2004, it established a quasi-indepen-dent international body: the International Savethe Children Alliance (ISCA) comprising 28foreign national organisations entitled (underlicence) to use the name ‘Save the Children’and undertaking projects in 120 countries.‘Oxfam’ was set up in Britain in 1942 and wassubsequently replicated as Oxfam America,Oxfam Australia, Oxfam Belgium and nineother versions. ‘Oxfam International’ is astrategic alliance (SA) of 13 national organis-ations, each using the name ‘Oxfam’. Othercharities that have employed this ‘federation’approach include the British charity ‘VoluntaryService Overseas’ and the US-based Inter-national Youth Foundation, which has estab-lished a number of ‘country partners’embedded in a network entitled YouthNetInternational (Roberts et al., 2005).

At the operational level, partnership agree-ments between charities in different countriesappear to be common (see Roberts et al.,2005). This approach involves a foreignpartner hiring and controlling local staff towork on an approved project, supplementedperhaps by employees and funding from acharity in another nation. Dozens of UKcharities (notably animal welfare organis-ations) operate in this way, and many haveinvested directly in ad hoc foreign operations(see www.Guidestar.org.uk). Charities such asthe Donkey Sanctuary, Brooke Animal Hospi-tal, Birdrescue, the Dogs Trust and numerousothers own animal sanctuaries, mobile andpermanently established clinics, premises,vehicles and equipment in other countries(see for example www.thedonkeysanctuary.org.uk).

The remainder of the paper is structured asfollows. Firstly, the academic literature on theinternationalisation of business enterprises isreviewed in order to identify variables thatmight also apply to the internationalisation ofcharities. Then the design of the research isexplained and the details of the initial phase ofthe study are presented. The outcomes to thefirst phase are stated and the second phase ofthe investigation is introduced. Descriptiveand analytical results of the study are then


DOI: 10.1002/nvsm


discussed. The paper concludes with com-ments on the implications of the results fortheory and practice.

Internationalisation theory

Academic literature on the internationalisationof commercial businesses is both voluminousand inconclusive (for recent reviews ofrelevant studies see, for example, Axinn andMatthyssens, 2001’; Malhotra et al., 2003;Ruzzier et al., 2006; Glaum and Oesterie,2007). Research to date has focused onorganisational motives for entering foreigncountries, modes of entry, the speed of andbarriers to internationalisation and possibleconnections with performance. Althoughbusinesses internationalise predominantly forfinancial and/or strategic gain whereascharities operate abroad for philanthropicpurposes, it is instructive to examine brieflythe outcomes to studies of internationalisationcompleted in the commercial domain in orderto establish their potential applicability to thenonprofit sector. Many of the prior studieshave queried firms’ motives for internationa-lisation. A business may be motivated tooperate beyond its national borders conse-quent to receiving orders from abroad, orthrough observing other firms starting tointernationalise (Cavusgil, 1984; Nadkarniand Perez, 2007). Analogously, a UK charitymight receive enquiries from foreign private orpublic sector organisations that have comeacross the charity’s work in Britain and wish toemulate its activities in other countries. Thereceipt of a handful of unsolicited foreigndonations might also arouse a charity’s interestin operating and/or fundraising internationally.Financial pressures in the domestic fundraisingmarket could impel a charity to seek contri-butions from foreign foundations or corpor-ations, especially if it is a small organisation in aspecialist field where the scope of the homedonor market is severely limited (Glaum andOesterie, 2007). Other motivations for under-taking foreign operations might include thewish to employ a charity’s resources (possibly


including its investments in research) across aswide an international area as possible (Javalgiet al., 2003), and the desire to develop cross-border contacts with experts in other nations.Another theme running through prior

research into internationalisation has con-cerned its pace and mode, notably whetherorganisations tend to internationalise graduallyand in stages rather than internationalising inone or more concentrated efforts. Earlyresearch in the area (e.g. Bilkey and Tesar,1977; Johanson and Vahlne, 1977) mainlyconcluded that firms favour internationalisingvia a series of progressive stages, starting withindirect exporting and then moving to JVs andDFI. Each stage built on the knowledge offoreign operations acquired previously andrequired a greater degree of resource commit-ment. Increasing knowledge and experience offoreign activities was posited to reduceperceived risk and to create a platform forfurther international expansion. Allegedly,moreover, organisations would initially entercountries that were ‘psychically close’ to theirown national cultures, i.e. which had ‘manysocial, political, economic and cultural sim-ilarities with the home country’, and wouldthen gradually explore markets with fewersimilarities (Kim, 2003 p. 23). Periods betweenstages allowed for deliberation and analysis andthe integration of recently gained knowledgeinto an organisation’s infrastructure (see Mait-land et al. 2005). Alternative views havecoalesced around the proposition that in factmany organisations choose to internationalisein a single major effort (simultaneously enter-ing many countries and engaging in multipleforms of foreign operation), or are simply ‘bornglobal’ and undertake international operationsfrom the moment of their inception. Windowsof opportunity may be so short that experi-ential learning is simply not possible (seeAxinn and Matthyssens, 2001), and relevantknowledge of foreign countries might not bereadily available (Forsgren, 2002). Also econ-omies of scale and scope (e.g. using the samemanagement team) may be available from nearsimultaneous entry to several countries (fordetails see Maitland et al., 2005).


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It has been argued furthermore that thespeed with which an organisation internatio-nalises frequently depends on factors such assize, the degree of strategic planning and analysiscompleted in respect of foreign operations,and managerial traits and proclivities (includ-ing willingness to learn and pre-existing know-how). Larger organisations might have thefinancial resources and staff with the skillsnecessary to engage in international operationsand be better able to absorb the associatedrisks (Javalgi et al., 2003). Hence smallerorganisations may be anticipated to interna-tionalise gradually and in a stepwise fashion(Karadeniz and Gocer, 2007). An organis-ation’s age has been posited to represent asignificant determinant of the pace at which itis likely to internationalise, on the grounds thatthe older an organisation the more time itsmanagement will have had to obtain knowl-edge about possible opportunities in foreigncountries, implying a gradualistic approach tointernationalisation. It should be noted, how-ever, that because organisations consist ofpeople, motives and capacities to internatio-nalise will depend substantially on the degreesof knowledge and experience of internationaloperations possessed by the particular set ofindividuals running an organisation (Wickra-masekera and Oczkowski, 2007). Thereforethe speed and extent of internationalisationcould be determined more by the compositionof the management team in a certain periodthan by the number of years for which anorganisation has existed (Reuber and Fischer,1997).

Barriers to internationalisation

Cross-border activities may be risky andexpensive, require a great deal of effort, andmight drain an organisation’s resources. Oper-ating in foreign legal jurisdictions coulddemand expert (and expensive) professionalassistance (Maitland et al., 2005). Internalmanagement control systems might not beappropriate for foreign projects, and theorganisation’s employees might not be capable


of running international operations (Cuervo-Cazurra et al., 2007). A charity’s services mightbe needed in countries where the nonprofitsector is underdeveloped, where attitudestowards philanthropy are substantially differ-ent to those prevailing at home, whereforeigners are distrusted, and where benefici-aries’ requirements differ from those of peoplein the UK (Frumkin, 2005). Stages theories ofinternationalisation sought to explain thephenomenon in terms of gradual expansionfrom psychically close to psychically distantcountries. Psychic distance can involve dis-similarities in language, culture, religion,political and social systems and geographicallocation. Sometimes a distinction is drawnbetween psychic distance and ‘cultural dis-tance’. The two are said to overlap, however,and the latter has been successfully used as aproxy for the former (see Kim, 2003 for detailsof the academic literature relating to thismatter). Arguably, psychic distance is lessrelevant today than in the past consequent toimprovements in communication systems andthe greatly increased incidence of foreigntravel (Chetty and Campbell-Hunt, 2004).Younger professional charity managers mayhave international work experience and mighthave travelled extensively, hence reducingpsychic distance and perceptions of uncer-tainty connected with foreign operations. Inthe present context it is relevant to note thatthe medical, social and other issues dealt withby charities do not occur only in ‘similar’countries. Indeed, problems may be the mostacute in nations that are culturally the furthestapart.

Role of networks

Managers sometimes develop work and socialrelationships within a network and, accordingto some researchers, these relationships influ-ence (i) the timing, extent and nature offoreign operations (see Malhotra et al., 2003),(ii) the choice of countries to be entered and(iii) modes of entry (Ruzzier et al., 2006).Personal contacts can identify opportunities in


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other countries, enhance an individual’s know-ledge of foreign conditions, expedite learningand improve self-confidence vis-a-vis cross-border activities (Zhou et al., 2007). Hence,networking could help overcome manyinternal knowledge and resource deficiencies(see Hutchinson et al., 2007 p. 101 for detailsof the academic literature relating to thesepropositions). Roberts et al. (2005) allegedthat networks play a critical role in theinternationalisation of nonprofit organisations,noting how ‘most substantially sized domesticcharities’ belong to networks that also containinternational nonprofits. These networks haveconnections that ‘reach beyond the nationstate to the global domain’ (p. 1846) and givedomestic nonprofits access to internationaldonors including governments, multinationalcompanies and the ‘growing cadre’ of inter-mediaries that connect grass root charities tointernational funding agencies (p. 1846). Aspecific network could consist of othercharities, local or central government bodies,foreign representatives of network members,corporate supporters and their contacts,national charity support organisations andinternational foundations. Network theoryhas critics however, as it cannot explain theinternationalisation behaviour of organisationsthat do not have any network connections.Building network associations takes time andmoney (Chetty and Agndal, 2007) and theknowledge obtained from network partnersmay be inadequate and/or useless (Solberg andDurrieu, 2006). Also relationships with keynetwork partners may be managed by just acouple of individuals within an organisation,meaning that the social capital arising fromthese relationships is lost when the relevantpeople resign (Ruzzier et al., 2006).

Research design

In order to explore the internationalisationbehaviour of British charities, a two stagemixedmethods research studywas undertakenamong a sampling frame of 931 organisations.Firstly, an exploratory qualitative investigation


was completed involving interviews withmanagers in 15 charities. Outcomes to thisinitial phase offered clues regarding howBritish charities might internationalise theiroperations. A questionnaire was constructedto incorporate these outcomes and additionallyto include variables and constructs commonlydiscussed in prior academic literature on theinternationalisation of commercial enterprises.The questionnaire was distributed to the mainsampling frame to test the generalisability ofthe findings from the 15 interviews, to obtain amore precise picture of the typical pattern ofcharity internationalisation and to ascertainwhether behaviour observed in the for-profitsector also applied to charities. Results fromthis second phase of the investigation weresubjected to least squares, logistic and Coxtime regression analyses. The investigationexamined the internationalisation behaviour ofa sample of British charities that operate in theUK and which additionally work overseas.Hence, the study excluded international devel-opment and disaster relief organisations thatoperate exclusively abroad and which, there-fore, cannot be described as having ‘inter-nationalised’ their operations. Nearly 190 000charities are officially registered with theBritish government’s Charities Commission.A search of the database that contains details ofthese organisations (Guidestar.org.uk) usingthe search term ‘charities working overseas’generated 763 results. Four hundred and sixty-one further contacts were obtained via aGoogle search using the same heading andfrom the charity appeals website of the BBC(www.bbc.co.uk/charity appeals). The listswere scrutinised and certain genres of charitydeleted, notably proselytising religious organ-isations and NHS Trusts. This left a samplingframe of 931 organisations.

Phase 1: the exploratoryqualitative study

Senior managers in 30 charities were selectedat random (using the random number gen-erator of a calculator) from the main sampling


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frame and asked for interviews, half agreeing toparticipate. Table 1 lists the main character-istics of the sample organisations. A straight-forward interview schedule was constructedthat queried when and why a respondent’sorganisation had begun engaging in foreignoperations, the pattern of internationalisationand the influences involved, how foreignoperations were organised and managed, themethods used and problems and barriersexperienced. Apart from factual queries allthe questions were open-ended. Followingeach interview the respondent was emailed asummary of the outcome to enable the personto check the accuracy of the interviewtranscript (a procedure recommended byFlick, 2006 for validating the results of open-ended interviews). Codes for the interviewees’comments were generated via the constantcomparison technique, i.e. provisional codeswere allocated during the analysis of the firsttranscript and the remarks of the second andsubsequent respondents were then allotted tothese codes whenever possible (see Flick,2006). New codes were created for emergingsub-categories and, where appropriate, exist-ing codes were adjusted or combined, hencesystematically reducing the number of maincategories. This procedure allegedly facilitatesthe identification of themes and concepts that‘summarise what is in the data’ (McGivern,2003 p. 269) and then enables the researcherto build propositions. Thus, according toPartington (2002), the constant comparisonof categories is a highly effective process forallocating properties and dimensions to qual-itative data. Reliable codes should emerge fromsuch an exercise (Strauss and Corbin, 1998).The interviews were completed in 2007 andwere analysed using the NVIVO 7 package.This enables ideas, dimensions and character-istics within data to be coded at nodes, whichcan then be compared throughout an investi-gation to ensure compatibility with emergingcoding systems (Gibbs, 2002). Node groupswere created via the Coding Stripes procedureof NVIVO 7.It can be seen from Table 1 that the sample

organisations operated in a median of


16 countries. The median time elapsingbetween a charity’s establishment and itscommencement of foreign activities was 6years, a figure that matches closely the out-comes to several studies completed in thecommercial domain which found that theaverage time to internationalisation was 6–8years (see Barba and Esteve, 2006). All 15 of thecharities undertook foreign activities throughproject partnerships (PPs) set up on an ad hoc

basis for individual assignments and resourcedjointly by a UK charity and a foreign organis-ation (e.g. a charity, state agency, localbusiness, religious body). The next mostpopular mode of operation (13 charities)involved arrangements termed for presentpurposes as ‘SAs’, comprising independentoperations undertaken by specific charities, yetcompleted in parallel in a planned and co-ordinated manner. Activities within a SAincluded exchanging know-how (and possiblystaff), jointly dealing with government officialsin particular countries, collectively assistingbeneficiaries in these countries and generallyhelpingother alliancemembers. The term ‘jointventure’ (JV) is used here to describe thesituation frequently referred to by the partici-pants wherein a charity and a foreign organis-ation jointly invested financially and signifi-cantly in a long-termproject such as developingan animal neutering and rehoming service in anoverseas country, completing major researchprogrammes across national borders or build-ing an infirmary. Eleven charities belonged toJVs of this nature. ’DS’ in the present contextrelates to the direct provision (essentially theexport) from the UK of equipment, vehicles,personnel on short term visits or drugs toanother country. Eight of the sample membersengaged in DS. Four charities had made DFIs inother nations, i.e. they had purchased orconstructed (using their own resources andin their own names) premises, buildings,clinics, sanctuaries and so on.

When asked why PPs were the preferredmode of foreign operation, the respondentsreplied that these arrangements (i) constitutedan excellent means for overcoming foreignlanguage difficulties and lack of knowledge of


DOI: 10.1002/nvsm

Table

1.Organ

isational

characteristics

Case

Sector

UK

income

2005/2006

(millions)

No.of

FTUK

employees

Year

established

Year

first

international

activitybegan

%oftotal

annual

expenditure

spentonforeign

activities(%

)

No.of

foreign

countries

Form

sof

foreign

activity

Form

sof

foreign

fundraising

1Homelessness

£0.85

61985

1990

3–4

7PP,JV

None

2DownsSyndrome

£0.85

81975

1990

3–4

16

PP,JV,SA

FF,FG

3Forest

conservation

£1.04

24

1983

1999

15

21

PP,SA

,JV

FWS,

FF

4Anim

alwelfare(donkeys)

£2.44

43

1982

1985

30

15

PP,DFI,DS,

SAFWS,

LC

5Tuberculosis

£2.92

61993

2001

3–4

17

PP,DS,

SAFF,FG

6Nature

conservan

cy

£3.33

13

1992

1994

30

26

PP,SA

,JV,DS

FWS,

FC,LC

7Children’s

medical

condition

£3.50

26

1966

1971

8–9

7PP,JV,SA

FF

8Drugabuse

£4.80

11

1997

2003

2–3

4PP,SA

None

9Anim

alwelfare(farm

anim

als)

£9

28

1977

1987

10

12

PP,DFI,JV,DS

LC

10

Anim

alwelfare(w

ildlife)

£9.1

41

1970

1981

8–9

19

PP,JV,SA

,DFI

FC,FF

11

HIV/AID

S£13

280

1983

1985

8–9

26

PP,JV,SA

,DS

FF,FG,FC,LC

12

Disability(personal

mobility)

£26

354

1995

1999

511

PP,JV,SA

,DS

FG

13

Children’s

medical

care

£46

92

1927

1938

10

25

PP,JV,DS,

SAFG,FF

14

Muscularmedical

condition

£51

109

1955

1961

59

PP,SA

FF,FC

15

Blindness

£89

202

1969

1977

40

46

PP,SA

,JV,DFI,DS

FF,FC,LC

Copyright # 2009 John Wiley & Sons, Ltd. Int. J. Nonprofit Volunt. Sect. Mark., February 2010

DOI: 10.1002/nvsm



local conditions (12mentions), (ii) could be setup and disbanded quickly (seven mentions)and (iii) meant that the foreign partner couldassume most of the burden of local fundraising(five mentions). Also, contacts with a foreignpartner provided an entree to wide-rangingcharity and charity-related networks in theoverseas country concerned (five mentions).JVs allegedly offered similar advantages,although JVs required longer term financialcommitment and thus carried greater invest-ment risk (six mentions). Specific issues withJVs included disappointing levels of input bythe local party (three mentions), the partner’slack of experience and knowledge of theparticular good cause (two mentions), thepartner’s lack of management skills (threementions) and low ‘professional standards’(two mentions). Often the sample memberslinked upwith potential overseas collaboratorsthrough international networks of charitiesoperating in the same sector (e.g. the Inter-national Federation of Hard of Hearing Peopleor Vision International).All but two of the 15 charities engaged in

some form of foreign fundraising, mainlythrough soliciting donations from foreigngrant-making trusts and foundations (FF) (ninecases—see Table 1). Otherwise the charitiessought funding from foreign companies (FCs)(five cases), from foreign government bodies(FGs) (five cases) or directly from individualsvia local foreign fundraising campaigns (LCs)(five cases). Just three of the charities hadwebsites that could be said to make directappeals to non-UK people to donate to theorganisation. Reasons given for fundraisingabroad included the greater willingness offoreign trusts to give to overseas charities (ninementions) consequent, in the words of therespondent in charity number four, to ‘much

more interest by foreign funders in things

that need dealing with right across the

world’. The three charities that used theinternet as a major tool for foreign fundraisingjustified their behaviour in terms of theinternet enabling a charity ‘to showcase its

work to a global audience’ (charity four), andof the technical ease with which foreign


donations could be made online (charitiesthree, four and six). Also, according to theinterviewees in charities four and six, moreBritish people now lived abroad than everbefore and many of them wanted to donate toUK charities.

Reasons and methods for undertaking

foreign operations

The primary reason for operating abroad mightbe termed as ‘philanthropic imperative’, i.e.the desire to ‘do good’ in other regions byemploying a charity’s resources internation-ally. ‘We wanted to export our good work

overseas’, the respondent in charity ninecommented. Another interviewee said thather organisation offered ‘services that are

vastly superior to those available locally’;while a third alleged that it would ‘be criminal

not to furnish services in countries where

there is such terrible need’. Eleven of the 15organisations mentioned (without prompt)some dimension of philanthropic imperativewhen discussing their motives for internatio-nalisation. Four of the charities cited as theirreason for ‘going international’ the receipt ofapproaches from foreign governments, agenciesor charitable organisations. For instance, one ofthe sample organisations began its internationaloperations consequent to a request (via theBritish Foreign andCommonwealthOffice) fromthe government of a third world country toprovide services in that particular nation. Noneof the respondents mentioned spare capacityand/or having run out of things to do in Britain asa reason for having initiated foreign operations.There was no mention of international oper-ations having been instituted in order to imitatethe behaviour of other charities.

Approaches to internationalisation

The most common pattern of internationalisa-tion adopted by the sample charities entailedan initial ‘toe in the water’ approach in a singlecountry, followed within 1 or 2 years byentry to several other nations. Eleven of the


DOI: 10.1002/nvsm


15 respondents (of all size categories) reportedthat their organisations had internationalisedin this manner. The other four charities(i.e. charities three, six, 10 and 11) had openedoperations in four or five countries simul-taneously (i.e. all within a period of a fewmonths). The justifications offered for the toein the water approach centred on lack ofknowledge of foreign operating environments(nine mentions), of foreign beneficiaries andtheir needs and behaviour (nine mentions), offoreign countries’ nonprofit organisationalinfrastructures (seven mentions). Matters per-taining to social/cultural psychic distance (seebelow) were not discussed. There was nowidespread evidence within this particularsample of members having made progressivelyincreasing levels of investment and commit-ment to overseas activities, beginning with DS(the equivalent to exporting) and concludingwith DFI. Rather, the sample organisation hadtended to start their foreign activities via anyone of several modes of operation and had thenadopted, at around the same time, multiplemeans of working abroad. In three cases(charities four, nine and 15), DFI was reportedto have taken place immediately before the orga-nisation had begun exporting its services via theDS of materials from Britain. In charities six,nine, 12 and 13, JVs were formed prior to DS.Networking was regarded as a critical

element of successful international operations.Ten of the 15 interviewees reported that theircharities proactively sought network partners.The types of network contact specificallymentioned included other UK charities in anorganisation’s particular sector, nationalcharity support bodies such as CAF and theNational Council for Voluntary Organisations(NCVO), contacts in grant awarding trusts andfoundations, international alliances of charitiesdealing with specific issues (e.g. certain medicalconditions, drug abuse, sight problems), peoplein British and foreign government agencies andUnited Nations andWorld Bank representatives.Networking among these contacts was saidto improve know-how (12 mentions), self-confidence via-a-vis foreign activities (sevenmentions), skills and capabilities in relation to


foreign operations (10 mentions) and theprobability of success (five mentions). Asone interviewee commented

‘Interacting with these people (i.e. network

contacts) teaches us how to behave in

foreign places, how to avoid the pitfalls, the

charity ‘tourist traps’, in the places we

want to go to.’!

When the respondents were asked howtheir organisations had entered networks themajority (12 cases) indicated that their firstport of call had been either a pre-existing UK-based network (nine cases) or a network thatcirculated around a large foundation (threecases). Problems arising from the financialcosts of networking, time requirements andstaffing issues were not raised by any of theparticipants.

Benefits and barriers to

internationalisation

Advantages of internationalisation werecharacterised by four respondents in termsof (i) wider knowledge of issues in a broaderrange of contexts, (ii) overall development ofmanagement skills (six mentions) including, inthe words of a respondent in charity 12,‘a sharpening of the way we organise things

here in the UK’, (iii) the acquisition of self-confidence in being able to operate in difficultenvironments (three mentions) and (iv) thegeneration of new ideas, fresh approaches andbroader perspectives among a charity’semployees (10 mentions). All the intervieweeswere asked whether their charities ‘would liketo undertake more operations overseas’? Res-ponses were mixed, with eight people sayingthat this was definitely the case and sevenvoicing severe reservations. The major barriersto increased foreign activities were specified aslack of financial resources (10 mentions),the absence of the experience and organis-ational skills needed for foreign ventures(eight mentions), threats arising from havingto work in foreign legal jurisdictions (four


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mentions) and the fact that the needs of foreignbeneficiaries were sometimes entirely differentto those of beneficiaries in the UK (fourmentions).

Psychic distance not an issue

There was little evidence within the presentsample that psychic distance influenced theselection of the countries in which a charitywould operate. Rather, objective need andpossibilities ‘for making a real impact’(charity 14) normally determined choices.Although it was widely recognised that benefi-ciaries and project (and JV) partners oftenexhibited different norms and values (sixmentions); motives (four mentions), econo-mic, social and educational backgrounds (ninementions); cultures (nine mentions) and needs(seven mentions); these disparities were seen asnatural ingredients of foreign work. ‘We can’t

choose where people have sight problems’, arespondent in charity 15 noted, and theorganisation necessarily had ‘to stand ready

to gowherever andwhenever help is required’.Certain nations and regions were alleged to bemore difficult to service than others (ninementions), but this was mainly due to technicalfactors connected with the physical provision ofassistance. It did not appear to be relevantwhether help was furnished in psychicallyclose or psychically distant countries. Theinterviewees were asked to name the foreigncountries or regions in which their organis-ations had first operated. Four charities hadinitially entered western European countries,two had entered east European countries(Albania and Romania, which at the time ofentry could be described as being culturallyand economically different to Britain), four hadcommenced their overseas operations in thirdworld countries, while the remaining fivehad entered European or other (mainly thirdworld) countries at around the same time.

Concealment of foreign operations

A recurrent theme emerging from the inter-views was the existence of a desire for the


respondent charities not to be seen by UKdonors as being too heavily involved in foreignactivities. Nine of the 15 respondents inti-mated (without prompt) that this was the case,and an examination of the websites of all the15 organisations in the sample revealed thatthey contained little detail of their foreignwork. This was true even of the charities withthe most extensive overseas operations.‘We need to be seen as a ‘British’ charity if

we are going to attract donations from people

here at home’, one interviewee commented.Another noted how ‘it is a liability in home

fundraising terms to be thought of as a

‘foreign’ charity; while a third person statedthat his charity ‘does not want to advertise our

overseas operations to the British public too

much because thismight reduce our domestic

donor relevance’. It appeared therefore thatthe managements of many of the sampleorganisations believed that domestic UKdonors wanted their gifts to be used primarily(if not exclusively) to assist beneficiaries inBritain.

Summary of the outcomes to study one

Taken in the round, the outcomes to study onesuggest that many of the issues previouslyresearched in the commercial domain arerelevant to the internationalisation of charities.Network contacts were perceived as cruciallyimportant for successful foreign operations,essentially because they generated largeamounts of know-how and greatly improvedmanagerial self-confidence. Partnerships andJVs were popular devices for entering othercountries although most of the samplecharities tended to wait for approaches fromforeign organisations, as opposed to proac-tively seeking overseas partners. Some of theinterviewees complained that their foreignpartners made little input to projects andlacked management skills. However, overseasactivities were reported to have createdfresh ideas and perspectives and to havesharpened managerial capacities to run chari-table organisations. The primary motivation for


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undertaking work abroad involved ‘philan-thropic imperative’. Psychic distance was not abarrier to foreign operations. Indeed, earlyentry to psychically distant countries wascommonplace. In the main, the charities didnot appear to have internationalised throughseveral stages. Typically a two-step entryprocedure had been followed whereby anorganisation gained its first internationalexperience by entering a single country via

any one of several modes of operation(including DFI) and had then simultaneouslycommenced activities in several other nations.

1The constructs involved were managerial inclination,resource availability, philanthropic imperative, gradual-ism in the internationalisation process (i.e. items C[ii]–[iv]), the benefits of networking, the advantages of inter-nationalisation, psychic closeness and proactivity.2These items failed to attain loadings of at least 0.5 on thefirst factor of the relevant construct, and the Cronbach’salpha value for the set of items increased if the item wasremoved.

Phase 2: test of thegeneralisability of the initialresults

A survey of the entire 931-strong samplingframe was completed to assess the generalisa-bility of the outcomes to Phase 1 of theinvestigation and hence to confirm or refutethe applicability of key elements of commer-cial internationalisation theory to the nonprofitsector. A questionnaire based on the results ofthe qualitative interviews and on the predic-tions of prior literature in the internationalisa-tion field was developed, followed by itsdistribution to the previously mentionedsampling frame of 931 British charities knownto undertake international operations. Thequestionnaire was pre-tested via (i) discus-sions with three senior managers in charitieswith substantial international operations and(ii) a trial distribution to 30 charities drawn atrandom from the sampling frame. The trialmailing generated nine replies, analysis ofwhich did not reveal any fundamental pro-blems with the document. Hence, the ques-tionnaire was mailed to the ‘Head of Inter-national Operations’ in each charity, on thegrounds that although few of the samplemembers would employ a person with this jobtitle, the envelope containing the documentwould most certainly be passed to theindividual most closely connected with theorganisation’s overseas activities. The ques-tionnaire is summarised in the Appendix to the


paper, which also specifies the literaturesources from which particular sets of itemswere adapted. Where items were modifiedfrom pre-existing inventories, the adaptationprocedure applied followed that recom-mended by Engelland et al. (2001). Thus,two independent academic adjudicatorsensured that candidate items fell within thedomain of the relevant construct, fullyexpressed its meaning and were worded usingappropriate vocabulary.The questionnaire began with items that

queried current and past modes and extents ofoperation in foreign countries, followed bysections that examined a charity’s motives foroperating abroad (including managerial incli-nation, resource availability and philanthropicimperative), approaches to internationalexpansion, attitudes towards networking,perceptions of the benefits of and barriers tointernationalisation, the role of psychic close-ness and whether the organisation wasproactive vis-a-vis its involvement in foreignoperations. The meanings of the terms ‘inter-national PP’, ‘JV’ and so on (items A[v] and [vi])were explained in the covering letter thanaccompanied the document. After follow-ups238 usable replies were received, representing25.6% of the sampling frame (a satisfactoryoutcome for an unsolicitedmail survey and onethat reflected the recipients’ interest in thetopic). Standard statistical tests were applied toassess whether late or early response bias hadoccurred, no evidence of this emerging.Sets of items relating to each of the

constructs covered by the questionnaire1 werefactor analysed and Cronbach’s a-values werecomputed. Two outliers (B2[i] and B3[iii])were identified2 and hence were treated asstand-alone variables. In all the remainingcollections of items, the first eigenvalue of a


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factor analysis explained more than two-thirdsof total variance and the a-value exceeded0.85. Hence factor scores were extractedfrom each of the constructs and used as com-posite variables in subsequent analyses. Thetwo items for the extent of formal planning(C[v] and [vi]) were substantially correlatedand thus were combined into a single scale.The data were analysed to ascertain the

patterns of internationalisation the sampleorganisations had adopted (time to entry,number of foreign countries entered), themethods they had applied and their motives forinternationalising. A series of regressions wasthen run to determine the variables thatsignificantly explained the average time tosingle country and to multiple country foreignentry, the number of countries in which acharity operated and the form of entry chosen.The statistical analysis was completed usingSPSS version 16.

Results

Characteristics of the sample

The sample charities had a median of 22 full-time UK employees (range four to 750) and onthe average (i) spent 12% of their revenues onforeign activities and (i) obtained less than fiveper cent of their revenues from foreign donors.One hundred and twenty-one of the samplecharities provided human services in somewayor other (e.g. medical care, disease control,rehabilitation), 48 were environmental protec-tion organisations, 31 were concerned withanimal welfare and 38 with other types ofwork. Themedian age of the organisation sincefoundation was 19 years (range 8–52 years),and the median period elapsing betweenfoundation and involvement in internationaloperations was 6 years (range 0.5–18 years).Themedian period for which a respondent hadbeen with his or her charity was 9 years (range4–26 years). Next, the data were examined toestablish the pattern of internationalisationtypical of the sample organisations, themethods employed and the motives stated tounderlie international expansion. As in Phase 1,


the most common pattern of internationalisa-tion was a ‘toe in the water’ approach withentry to a single country followed by nearsimultaneous entry to many countries a fewyears later. Eighty-five per cent of the samplehad begun their foreign activities in a singlecountry. Forty per cent of the charities hadinitially entered a single country but were thenoperating in 10 or more countries within thenext 5 years. Half of the sample was active in atleast five countries within 7 years of havingentered a single country. Only 37 organisations(15%) had initiated activities in severalcountries simultaneously at the very outsetof their foreign operations.

Initial entry to an overseas country hadinvolved international PPs in 68% of the cases,SAs in 40%, DS of materials or staff in 26%, joint(ownership) ventures in 18% and DFI in 12%.(The figures do not add up to 100 becauseentry was sometimes accompanied bymultipletypes of activity.) In terms of current ratherthan beginning operations, 72% engaged inPPs, 46% in SAs, 25% in JVs, 30% in DS and 14%in DFI. Just eight of the 238 organisationslicensed their name and/or identities to localoverseas charities. The sample charities tendednot to change their modes of operation overtime. Thus, 82% of the charities that werecurrently engaged in DFI were from the set oforganisations that had initiated their overseasoperations via this method. The correspond-ing figure for PPs was 96%, for SAs 96% and forJVs and DS 82% and 88%, respectively. Therewas no substantial evidence of charities havingstarted foreign operations using one methodand then having progressed to others.

Responses to the questionnaire items in thesections dealing with internationalisationmotives and approaches were relatively evenlydivided across the seven agree/disagreecategories, with certain notable exceptions.Only 12% of the sample agreed strongly or verystrongly that the initial decision to internatio-nalise had been driven by approaches receivedfrom foreigners (item B1[iii]). The samepercentage applied to item B1(iv) regardinghaving been motivated by the observation ofother charities operating abroad. It appears


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therefore that decisions to internationalisewere taken for deeper and more pragmaticreasons than these. Comparatively high meanvalues were recorded for the compositesformed to reflect managerial inclination toengage in foreign operations (mean [M]¼ 5.4),philanthropic imperative (M¼ 5.8), the extentof formal planning (M¼ 5.7) and the perceivedbenefits of networking (M¼ 5.4). Very few ofthe respondents believed that their charitieshad possessed slack resources or spare staff(B3[i] and [ii]) in relation to foreign operations(M¼ 2.8 and M¼ 2.7, respectively). Theaverage response concerning the importanceof the psychic closeness composite was alsolow (M¼ 2.9). Overall the benefits of inter-nationalisation were well-acknowledged(M¼ 5.3 for the composite reflecting thisconstruct). The main barrier to foreign oper-ations reported by the sample membersconcerned the lack of financial resourcesavailable for international activities (itemE[b][i]; M¼ 5.4).Networking (item D[v] had been used

extensively (M¼ 6.1) and its advantages werehighly regarded (M¼ 5.8 for the compositeformed from items D[i] to [iv]). The import-ance of networking is underscored by theobservation that most (65%) of the responsesfell in the top three categories of the‘proactivity’ composite vis-a-vis seeking tieswith foreign organisations (G[i]–[iv]). Overallthe respondents believed that their charities’services were better than those availablelocally in the foreign countries (B1[i])(M¼ 6.1) and that they had ‘more to offer’(B1[ii]) than local charities (M¼ 6.2) in whichthey were active. Responses to the question(C[i]) regarding whether a charity would liketo expand its foreign operations were equallydivided, with a third agreeing (in one or otherof the three ‘agree’ divisions), a third disagree-ing and the remaining third of the repliesfalling in the neutral category. As reported bymany of the charities during Phase 1, most ofthe respondents in Phase 2 did not want theircharities to be seen as ‘foreign’ by their UKdonors (item E[b][v]), reflecting perhaps thefact that on average 95% of the sample


charities’ revenues arose in Britain. Fifty-eightper cent of the replies fell in the three ‘agree’categories for this item. It was not possiblewithin the confines of an already crowdedquestionnaire to explore in detail the degreesof ‘gradualism’ that had been pursued by thesample organisations when extending theirforeign operations. However, three items(C[ii]–[iv]) queried this matter in generalterms. Half the responses fell in the bottomthree divisions of the composite formed fromthe three items, 25% in the top three divisions.This suggests that, on the whole, the samplecharities had not internationalised in thesystemic and gradualistic manner noted bysome (but by no means all) of the commercialinternalisation literature.

Analysis

A least squares regression analysis was com-pleted to gain more detailed insights intopatterns of internationalisation by establishingwhich of the constructs and stand-alonevariables covered by the investigation signifi-cantly affected (i) the period elapsing betweena charity’s foundation and its first foreignoperations, (ii) the number of countries inwhich a charity currently operates and (iii) theproportion of the organisation’s total expen-diture devoted to foreign activities. Addition-ally a Cox time regression was undertaken toexamine the likelihood that a charity wouldengage in substantialmultinational expansionconsequent to its initial experience of foreignoperations and a logistic regression wasexecuted to explore the determinants ofdecisions to invest in long-term foreign DFIor JV projects. Independent variables wereincluded in the regressions on the basis of aninitial examination of pairwise and multiplecorrelations between the dependent and othervariables followed by an experimental pro-cedure wherein specific variables were incorp-orated and then dropped if they failed to attainsignificance at the 0.05 level and if theirexclusion did not significantly diminish theoverall power of the relevant regression.


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Table 2. Regression analysis

A ba B b C b D Expbb E Expb

Has networked extensively 0.31 (3.73) .21 (2.54) 1.91 (4.21) 1.18 (5.01)Managerial inclination 0.52 (4.97) 0.36 (4.09) .22 (2.55) 1.55 (4.07) 1.21 (5.59)Philanthropic imperative 0.46 (4.55) 0.29 (3.02) .33 (3.77) 2.18 (4.29) 1.66 (6.83)Belief that the charity offerssuperior services

0.31 (3.98) 0.25 (2.91)

Lacks experience/skills necessaryfor international operations

0.93 (6.03)

-2LL statistic 10.86 140.55Regression R

2 0.49 0.44 0.41Nagelkerke pseudo R

2 0.51

at-values in parentheses.bx2 values (1 df) in parentheses.Regression A: time between a charity’s foundation and its first foreign operation; B: number of countries in which acharity currently operates; C: proportion of a charity’s total expenditure devoted to foreign operations; D: timebetween first foreign operation and entry to multiple overseas countries within a 10 year period; E: does or does notcurrently engage in a long term joint venture or DFI.


Table 2 gives the results. All the regressioncoefficients listed in Table 2 are significant atthe 0.05 level or lower.Table 2 regression A indicates that early

internationalisation was most common amongcharities with a history of high managerialinclination to operate abroad, high levels ofphilanthropic imperative and with respon-dents who believed that their organisations’services were superior to those available inforeign countries. Regressions B and C presentthe significant determinants of two measuresof the extent of internationalisation. The samevariables attained significance (p< 0.05) inboth analyses: extensive networking, manage-rial inclination, philanthropic imperative andbelief in the superiority of a charity’s services.The ‘extensive networking’ variable (AppendixitemD[v]) was highly correlated (R¼ 0.78) withthe composite formed from items D[i] to [iv]reflecting the respondent’s view of the benefitsof networking. Therefore, it was not possible toemploy both these variables in the sameregression as this would have created technicalproblems associated with multicollinearity.However, the extensive networking variable

can be regarded as a proxy for the benefits ofnetworking variable can be regarded as a proxyfor the benefits of networking composite.


Networking was employed as an independentrather than dependent variable on the groundsthat networking activities are undertaken andnetwork arrangements developed in order toexpedite foreign operations (Malhotra et al.,2003) and are allegedly used to select countriesand entry modes (Ruzzier et al., 2006) and toidentify and learn about options and opportu-nities in advance of foreign activities (Robertset al., 2005; Zhou et al., 2007).

It is interesting to note from regressions Band C that a charity’s small size, sector (whichwas employed as a grouping variable: humanservices, animal welfare and other categories)and perceived lack of skills and experience vis-a-vis foreign operations failed to deter entry toa large number of countries and/or to dis-courage the organisation from spending inforeign nations. Equally, engagement in formalplanning was not significantly associated withentry to an extensive range of countries.Instead, the process appeared to have beendriven by managerial inclinations towardsinternationalism, a strong philanthropicimperative, a fundamental conviction that acharity was offering excellent services andwidespread networking.

Regression D of Table 2 gives outcomesto a Cox proportional hazards regression


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Figure 1. Time from single country entry to multinationalisation here.

3Linear, logarithmic and product transformations wereapplied, none resulting in a significant output.


completed to examine the factors that possiblyencouraged a charity to move from operatingin a single foreign country at the outset tooperating in ‘many’ countries (defined as fiveor more nations) within 7 years of the initialforeign operation. One hundred and nineteenorganisations had progressed from singlecountry to ‘multinational’ operations withina 7-year period and 83 had not. Thirty-seven ofthe latter 83 strong group had been inexistence for less than 7 years (leaving 46 ofthe 83 cases to be included in the analysis). The‘Expb’ figures in regression D show the changein the probability that a charity will havemultinationalised by the end of the 7-yearperiod considered, consequent to a one-unitchange in the value of the relevant indepen-dent variable. The significant (p< 0.05) deter-minants of multinationalisation within 7 yearsof having entered a single country were (i) thatover time the charity had networked exten-sively (Appendix item D[v]), (ii) that itsmanagement had been internationally orien-tated (B2[ii]–[iv]) and (iii) that philanthropicimperative had overridden practical operatingdifficulties (B4). The SPSS Cox regressionprocedure used for the analysis allows thetesting of the hypothesis that an explanatoryvariable is itself time dependent, i.e. that it risesor falls systematically at the various points atwhich it is measured (for instance if a charitynetworked more widely 4 years after its firstforeign entry compared to 2 years consequent


to initial foreign operations). This hypothesiswas tested for both the extent of networkingvariable and managerial inclination. There wasno evidence (r< 0.05) of time dependency ineither case3. Figure 1 plots the Cox survivalfunction (i.e. in the present context theprobability of not having entered five or morecountries by a certain time) computed at themean values of the independent variableslisted in regression D. The figure shows howthe probability of a charity with these meanvalues will be serving less than five countriesfalls over time. It can be seen that thelikelihood of this hypothetical organisationnot serving five or more nations decreases toless than half within 4 years and to less than30% by the end of year six.Long term JVs and DFI represent the highest

levels of financial commitment to foreignoperations. The outcome to binary logisticregression E suggests that the likelihood of acharity engaging in these activities dependedsignificantly on the same variables as deter-mined the probability of early multinationalisa-tion (see regression D), plus the negativeinfluence of the perception that a charitylacked the experience and organisational skillsneeded to work in foreign environments. Theregression successfully allocated 69% of allcases.


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Conclusion

The survey broadly confirmed the findings ofthe qualitative phase of the investigation. ‘Toein the water’ approaches to internationalisa-tion that involved entry to a single countryfollowed by operations in several countrieswithin a few years of the organisation’s firstinternational experience were common. Thisrepresents a different pattern of internationa-lisation to that reported in much of theliterature on the internationalisation of com-mercial enterprises (see for example Johansonand Vahlne, 1977; Kim, 2003; Maitland et al.,2005). Clearly, neither the Uppsala model northe foreign market entry models that followedcan adequately explain charity internationali-sation behaviour. The Uppsala model failed interms both of its emphasis on psychic distanceand its prescription of the timing and stages offoreign entry. Equally, it seems that ‘big bang’theories and models of simultaneous entry tonumerous foreign countries cannot predictcharity internationalisation in a satisfactorymanner. Apparently the typical pattern ofcharity internationalisation has unique charac-teristics, some of which merit substantialfurther investigation. As well as describingthe methods that charities appear to use mostoften when operating abroad.The present research established that, for

many of the sample organisations, the third andfourth years following initial foreign entrywere critical. The primary motivation for‘going international’ was an organisation’sphilanthropic imperative, i.e. its determinationto serve the needs of beneficiaries in foreigncountries regardless of the problems andinconveniencies that might be encountered.Apparently, the age and size of the charity didnot matter (in contrast to prior findings cited inthis regard by Karadeniz and Gocer, 2007 andWickramasekera and Oczkowski, 2007).Rather, motivation arose from the belief thatpressing needs existed and that the charity inquestion provided better services than thoselocally available in a foreign nation. As reportedin many studies undertaken in the commercialsphere (e.g. Malhotra et al., 2003; Ruzzier


et al., 2006; Hutchinson et al., 2007; Zhouet al., 2007), networking played a crucial rolein the internationalisation process. Managerialpredilection for foreign operations (see Mal-hotra et al., 2003; Maitland et al., 2005; Glaumand Oesterie, 2007) and a conviction that acharity provided superior services also exertedpowerful impacts on internationalisation de-cisions. In general, the sample charities werenot anxious to be seen by their UK donors asengaging extensively in ‘foreign’ operations.Typically the preferredmode of foreign activitywas the ad hoc PP.

Discussion

Research into the internationalisation of com-mercial firms has noted the importance of (i)managerial predispositions to engage inforeign operations and (ii) networking, asdeterminants of foreign entry decisions (fordetails see Cavusgil, 1984; Axinn and Matthys-sens, 2001; Javalgi et al., 2003). These factorsappear to be equally relevant to the inter-nationalisation of the activities of UK-basedfundraising charities. A major differencebetween the present findings and those ofinvestigations involving for-profit businesses ishowever the insignificance of psychic distanceas an influence on behaviour (see in particularKim, 2003; Chetty and Campbell-Hunt, 2004).Often the countries in which a charity’sservices were required most urgently werethose with cultures, languages, politicalenvironments, working conditions, socialand economic infrastructures and so on thatdiffered enormously from those found in theUK. Such disparities did not deter the samplecharities from undertaking foreign operations.The main impetus for internationalisationamong the participating organisations wasthe desire to do good and to help the needy,wherever and whenever the need arose.Managerial instincts and inclinations also droveinitial international entry decisions. Organis-ational size did not significantly affect inter-nationalisation behaviour; nor did the particu-lar sector in which a charity functioned. This


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pattern of international expansion is differentto those previously observed among commer-cial firms, but the findings are importantnevertheless considering the rapid growthand increasing social and economic impactof the nonprofit sector occurring throughoutthe world (see Anheier, 2005).

Implications

The outcomes to the study contribute to whatis known about the internationalisation beha-viour of organisations in a number of respects.It appears that the sample charities typicallyfollowed a pattern of internationalisation (the‘toe in the water’ approach) somewhatdifferent to that commonly observed in thecommercial sector. Also the primary motiv-ations for entering foreign countries and themethods adopted differed to those frequentlyreported in the business internationalisationliterature (see above). However, some sim-ilarities with the for-profit domain emergedfrom the study, especially vis-a-vis the roles ofmanagerial instinct and networking. The factthat networking was widely practised and thatits benefits were widely appreciated impliesthe desirability of public and private sectorbodies continuing to develop internationalnetworking arrangements. Already the UKCharities Aid Foundation has initiated systemsto facilitate a charity’s search for overseaspartners. Similar innovations by other charitysupport organisations would clearly be worth-while. The Transnational Giving Europe Net-work and the European Association forPlanned Giving currently provide networkinghelp to charities that wish to fundraise abroad(see Jump, 2007), but not in relation to findingpartners for operational activities. Extensionsof these networking arrangements would be ofgreat benefit to charities undertaking orconsidering international projects. A some-what surprising aspect of the results wasperhaps the apparent reluctance of the sampleorganisations to broadcast to their UK donorsthe extents of their foreign operations. Thisseems to contradict the proven willingness ofBritish people to donate to international relief


organisations. For example, four out of five UKhouseholds are estimated to have donated tothe 2004/2005 Asian tsunami appeal (CAF,2006). On the other hand, the sample didcomprise British charities that additionally

engaged in foreign operations, as opposed toorganisations dedicated 100% to overseaswork. Future research might assess whetherthe respondents’ fears that domestic donorsmight be alienated by images of a charityspending donors’ gifts on foreign activities arein fact justified. Possibly charity managers needto be encouraged to portray the benefits oftheir overseas operations in more appealingmanners.

Limitations and areas for future

research

A number of limitations apply to the investi-gation. The data were self-reported and only aminority of the sampling frame participated inthe study. Nonetheless the response rate wasreasonable for a mail survey of this nature,there was no evidence of early or late responsebias, and since the questionnaire did not queryperformance outcomes no common methodvariance problems arose. A major drawback(yet one that applies to all mail survey researchin the internationalisation field) was theimpossibility of incorporating into a question-naire of restricted dimensions a sufficientnumber of items to enable the exploration indetail of the exact internationalisation path-ways followed by the responding organis-ations. ‘Gradualism’, for instance, has manymeanings in the foreign entry context so that aseparate and quite lengthy questionnairewould be required to examine all potentiallyrelevant aspects of gradualistic or nongradua-listic behaviour. For example, entry to a singlecountry followed by deep reflection andextensive monitoring of performance priorto entering a second nation might be regardedby some respondents as ‘gradualistic’. Otherpeople might interpret gradualism to meanentry to several countries one after another, oras tackling progressively more difficult kinds offoreign operation, or as increasing the level of


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an organisation’s financial investment systemi-cally over time. It was not feasible to explainand probe these matters within the confines ofthe present study. Further research would beuseful into the precise characters of ‘toe in thewater’ and alternative approaches to charityinternationalisation.The study was (necessarily) exploratory in

design and intended to map the primarydimensions of the topic as a foundation forfurther and more detailed work in the field. Auseful next step would be a study of potentiallinks between on the one hand the variousentry modes and antecedents to charityinternationalisation identified in the presentinvestigation and, on the other, measures ofperformance and achievement for the overseasactivities of charitable organisations. Is the PP(by far the most popular form of legalstructure) the best way of handling foreignoperations? What are the strengths and weak-nesses of the various entry modes reported bythe participating charities and what consider-ations might contribute to the improvement ofthe outcomes achieved from each method? Itwould also be valuable to undertake additionalresearch into the antecedents of charitymanagers’ inclinations to enter foreigncountries and into the operational con-sequences of disparate levels of philanthropicimperative. The present study only coveredfundraising charities. It would be interesting toreplicate the investigation among other typesof nonprofit organisation, e.g. arts associations,trade unions, public sector healthcare provi-ders, advocacy bodies and other genres oforganisation that sometimes venture abroad.

Biographical notes

Dr. Roger Bennett is a professor at LondonMetropolitan Business School. His researchinterests are in the area of nonprofit marketingcommunications, focusing particularly on theadvertising imagery employed by charitableorganisations. Roger’s career has includedperiods in the mining and metallurgical indus-tries, in a leading commercial bank and inmanagement consultancy. He is the author


of many books and a large number of journalarticles on various aspects of marketing andbusiness management.Rehnuma Ali-Choudhary is a lecturer in theCentre for Research in Marketing at LondonMetropolitan University. She has researchinterests in the field of public sector marketing,particularly in relation to the analysis of thebrand identities and brand personalities ofpublic sector institutions. Rehnuma is cur-rently engaged on a wide ranging study ofthe branding strategies and policies of UKuniversities. She has published extensively inacademic journals in the nonprofit marketingarea.

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Appendix: The questionnaire

A. Entry and modes of operation

(i) In approximately what year did you start operating

(ii) In approximately how many countries do you prese

1 2–4 5–9 10

(iii) When you first started operating abroad, in how m

insert)......................

(iv) Approximately how many years elapsed between t

were operating in the following numbers of countri

each relevant box.)

Number of countries 1 2–4Approximate number of years

(v) When you started operating abroad, which of the fo

International project partnerships Direct supply ofrom the UK

Direct foreign investment, i.e. thepurchase of foreign assets

Sent out UK sta


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the mediating role of social networks. Journal

of International Business Studies 38: 673–

690.

Zimet J. 2006. US Philanthropy in the Twenty-first

Century: A Driving Force in the Landscape of

Aid?. Agence Francaise de Developpement: Paris.

abroad? (Please insert year)..........

ntly operate?

–15 16–21 More than 21

any foreign countries did the charity operate? (Please

he very first time you operated abroad and when you

es? (Please insert the approximate number of years in

5–9 10–15 16–21 More than 21

llowing did you do first?

f materials Joint ventures Licensing

ff Membership ofstrategic alliances

Other


DOI: 10.1002/nvsm

(vi) What are your current modes of operating abroad? (Please circle as many as are relevant):

International project partnerships Direct supply of materialsfrom the UK

Joint ventures Licensing

Direct foreign investment, i.e.the purchase of foreign assets

Sent out UK staff Membership ofstrategic alliances

Other

(vii) What is the percentage of your foreign donations in relation to your total donations?

0% Less than 5% 5–15% 16–30% 30–50% More than 50%

(viii) What is the percentage of your foreign expenditure in relation to your total expenditures?

Less than 5% 5–15% 16–30% 30–50% More than 50%

B. Motives for operating abroad

Sources: Pla-Barber and Escribe-Esteve (2006); Hsu and Pereira (2008)

Please indicate the strength of your agreement or disagreement with each of the following

statements by placing a tick in the appropriate box.

Key: VSA¼very strongly agree, SA¼ strongly agree, A¼ agree, N¼ neither agree nor disagree,

D¼ disagree, SD¼ strongly disagree, VSD¼ very strongly disagree

General

(i) Our services are superior to those available from locally based foreign organisations in the countries in

which we operate.

(ii) We have more to offer than local charities in our field in the foreign countries in which we operate.

(iii) We started operating abroad because we were approached by foreign agencies/govt/charities/individuals.

(iv) We started operating abroad consequent to observing other charities operating abroad.

Managerial inclination

Sources: Preece et al. (1998); Fillis (2002).

(i) We started operating abroad due to the influence of a newly appointed manager.

(ii) Our top management has always been very internationally focused.

(iii) Our top management has always had a lot of enthusiasm for international operations.

(iv) Managers in this charity have always had a natural inclination to want to operate in foreign countries.

Resources

Sources: Ogunmokun and Ng (1998); Fillis (2002); Hsu and Pereira (2008).

(i) We decided to internationalise because we had spare resources here in the UK.

(ii) We have had plenty of staff resources for international operations.


DOI: 10.1002/nvsm


(iii) Management and staff in this charity have possessed a lot of knowledge and experience of foreign

operations.

Philanthropic imperative

Items devised for the present study.

(i) We have entered countries where the need was clearly the greatest.

(ii) Practical difficulties associated with foreign operations have been overridden by the philanthropic needs of

beneficiaries in the relevant country.

(iii) Our primary motive for entering a country has been the needs of beneficiaries rather than the practical

feasibility of operating in the country concerned.

(iv) We have gone wherever there was acute need for our services regardless of the problems and incon-

veniences involved.

(v) When deciding which countries to enter we have been unconcerned about whether their language, culture,

economic and social characteristics and infrastructures were comparable to those in the UK.

C. Approaches to expansion

Sources: Preece et al. (1998); Kim (2003); Morgan (2006).

(i) We would like to increase the extent of our foreign operations in future.

(ii) We extended our international activities gradually, step by step, as we gained experience of foreign

operations.

(iii) We did not extend our foreign activities until we were sure we had learned all the lessons available from our

most recent experience of international operations.

(iv) We increased our investments in foreign operations progressively through a series of stages, each stage

building on experience gained during the previous stage.

(v) We have routinely undertaken formal risk appraisals before entering a new country.

(vi) We have routinely undertaken formal and systematic planning for our foreign operations.

D. Networking

Sources: Pla-Barber and Escribe-Esteve (2006); Chetty and Agndal (2007); Zhou et al. (2007).

(i) Networking with other organisations has reinforced our self-confidence in operating abroad.

(ii) Networking has developed our know-how of foreign operations.

(iii) Networking costs too much money relative to the benefits involved (reverse scored).

(iv) Networking takes too much time relative to the benefits involved (reverse scored).

(v) Over time, we have networked routinely and extensively with foreign nonprofit organisations and agencies.

E. Benefits and barriers to internationalisation

Benefits

Sources: Zhou et al. (2007); Hsu and Pereira (2008).

(i) Through the process of internationalisation, we have gained many new skills in relation to the management

of operations dispersed across different geographical areas.

(ii) Our experience in other countries has helped us to generate new ideas.

(iii) Our experience in other countries has enabled us to develop wider perspectives.


DOI: 10.1002/nvsm


(iv) Our experience of foreign operations has enabled us to improve the way we manage the charity here in the

UK.

(v) Internationalisation has furnished the organisation with useful skills that would not be obtained otherwise.

Barriers

Sources: Bendapudi et al. (1996); Hutchinson (2007).

(i) We lack the financial resources necessary to expand our foreign operations.

(ii) We lack the experience necessary to expand our foreign operations.

(iii) We lack the organisational skills necessary to expand into foreign operations.

(iv) It is difficult to operate abroad because beneficiaries’ needs differ widely in different countries.

(v) We do not want to be seen as ‘foreign’ by our UK donors.

F. Psychic closeness

Sources: Fillis (2002); Kim (2003); Welch et al. (2001); Alexander et al. (2007).

In the early stages of our foreign operations, we initially entered countries

(i) that were culturally close to the UK,

(ii) with legal systems similar to the UK,

(iii) that were convenient and/or safe to enter,

(iv) where language was not a problem,

(v) that were economically developed,

(vi) with similar political and social systems to those of the UK.

G. Proactivity

Items devised for the present study.

(i) We have proactively looked for alliances with foreign partners.

(ii) We have proactively cultivated ties with foreign government agencies.

(iii) We have proactively sought foreign network contacts to help us with our overseas operations.

(iv) We have proactively sought ties with foreign voluntary organisations in our field of operations.

H. General

(i) Our organisation was established in (Please insert year).................

(ii) The total number of employees in our organisation is approximately...................

(iii) This charity is concerned with the following type of issue (e.g. cancer care, animal welfare)........................

(iv) I have been working in this organisation for ..................... years.


DOI: 10.1002/nvsm


Documents

Internationalisation of British fundraising charities: a two-phase empirical study