Doctoral Research

Doctoral Research: Capacity building in nonprofit organisations in the development aid sector: explanatory research of capacity building in Indonesia in 2008 and an investigation into the diffusion of capacity building techniques between sectors


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Abstract: The terms capacity building and capability building are frequently heard in organisations and questions have been raised as to whether practices used in the private sector are transferable to the development aid sector.

Gaps were revealed in the literature relating to conclusive definitions of capacity building; the difference between organisational capacity building and capability building; how capacity building is practised in nonprofits in Indonesia; and the diffusion of capacity building techniques between private sector businesses and nonprofits in the development aid sector. Addressing these gaps this study was designed to specifically:

- understand the methods and characteristics of capacity building in nonprofit organisations in the development aid sector in Indonesia and to understand the relationship between these methods and those used by private sector businesses in the contrasting developed world;

- understand how this information can be applied to a nonprofit organisation in a way that will optimise the effectiveness of capacity building;

- build meso level theory regarding the diffusion of practices between the two sectors, enabling inter-sector learnings and sector enhancements in capacity building.

The methodology adopted in the study was qualitative, explanatory, applied research. Capacity building in five Indonesian nonprofit case study organisations was researched and a private sector study was also conducted with focus groups in the private sector in New Zealand. Using a grounded theory approach the case study findings were distilled and differences and similarities between sectors were identified. An iterative process of analysis of the data facilitated explanation building and the formulation of new inductive meso level, interpretative theory.

Adopting this methodology, explanations for the six research questions were developed and theory was built relating to nonprofit organisations in the development aid sector and private sector businesses in the developed world. Clear definitions of capacity and capability building emerged and demonstrated that the two are different although capability building is an important part of capacity building. Ten principles were developed: principle of influence, principle of planning for capacity building, principle of structure in capacity building, principle of leadership, principle of scope, principle of shared meanings, principle of capacity building strata, principle of capacity building components in both sectors, principle of inter-sector definition of capacity building and principle of effective diffusion. The study showed best practice activities adopted in private sector businesses in the developed world to be applicable in nonprofit organisations. It also identified and presented ways by which the diffusion of best practice capacity building between sectors can be implemented effectively.

This study is aimed at providing an understanding to nonprofit organisations, government departments, aid donors and private sector businesses. It provides a series of implications for all of these stakeholders and provides information on the way organisational capacity is built in nonprofit organisations in the development aid sector. In this way the study can assist improve the effectiveness and efficiency of capacity building practices, enable sector enhancements and presents opportunities for inter-sector collaboration.

Chapter Author

Chapter author in Miller, P. and Dreyer, W. (Eds), 2011, Doctoral Research in Management and Business in New Zealand, Southern Cross University Press, Lismore