Human Services and the Voluntary Sector: Towards a Theory of Comparative Advantage

Abstract

This article explores whether human service organisations in the voluntary sector possess characteristics which might assure them of possible comparative advantages over the for-profit and public sectors with respect to certain sorts of users. We argue that there are inherent structural characteristics of organisations in each sector (for example, ownership, stakeholders and resources) which predispose them to respond more or less sensitively to different states of ‘disadvantage’ experienced by their users. These states are defined as financial, personal, societal and community disadvantage. We suggest that voluntary organisations have a comparative advantage over other sector agencies in areas where their distinctive ambiguous and hybrid structures enable them to overcome problems of principal–agent gap, median voter reluctance, weak messages from politicians to staff and lack of market interest.By taking ideas of comparative advantage into account, a coherent case can be developed regarding the strengths and weaknesses of the expanded role of voluntary agencies in welfare provision. In essence, the article contends that a diminution in stakeholder ambiguity, resulting from organisational growth, lowers the comparative advantage of voluntary agencies.