Digitalization and the Economies of Scale in Russian NPOs

Overview & Synopsis

Economies of scale, or the reduction of the average costs as a result of the organization’s growth,can be observed not only in for-profit but also in non-profit organizations. Non-profit organizationshave certain characteristics that can influence their decisions on expanding their scale of services.Numerous studies point at the presence of economies of scale in NPOs. Today, economies of scaleare changing under the influence of digital technologies. Researchers in Russia who study econo-mies of scale, first of all, analyze their effect on various spheres of the economy, and also show thepossibilities of their application. Economies of scale and the impact of digitalization on this effect inRussian NPOs have not yet been investigated enough. This article intends to fill in these gaps. Forthe analysis, data from the Monitoring the Status of Civil Society research conducted by the Centrefor Studies of Civil Society and the Nonprofit Sector (HSE) in 2017 and 2018 were used. The analysiselucidates the widespread use of digital technologies by non-profit organizations. The results of thelogarithmic model evaluation with the least squares method and robust regression method showthat there are significant economies of scale in NPOs. There are no connections between econo-mies of scale and digitalization in NPOs. The author did not obtain any evidence of the existence ofeconomies of learning—i.e., the reduction of the average costs as a result of gaining experience inproviding services over time—in Russian NPOs. The results emphasize the importance of support-ing small non-profit organizations and assisting non-profit organizations in the process of master-ing digital technologies.