What determines the government’s policy instrument choice for steering nonprofit organizations? The role of government capacity and contextual complexity

ABSTRACT This article investigates the factors that account for variation in the use of policy instruments for steering NPOs across Chinese provinces. Drawing on instrument choice theory, this article advances a theoretical framework that links government capacity and contextual complexity to variation in government instrument choice. Pooling five-year data from 26 Chinese provinces, two panel regression models are estimated to examine the variation in provinces’ use of regulatory and incentive instruments for steering NPOs. The findings indicate that provinces’ use of these two categories of policy instruments is not predetermined but bounded by their own government resources and external contextual factors.