Exploring the management of third sector service diversification

This paper develops understanding of the under-explored topic of how diversification of a Third Sector organization’s service provision may be managed. Insights emerge from an empirical exploration of the role of stakeholder relations in assessing the feasibility of an established Third Sector organization’s proposed implementation of a service innovation in addition to their current offerings. A rich data set developed through an extended programme of qualitative data collection is analysed from three complementary theoretical perspectives – legitimacy, trust and stakeholder management – separately and in combination. Assessment of the quality of stakeholder relations (in terms of the sociological concepts of trust and legitimacy) and an evaluation of the influence and connectivity of stakeholders in relation to the innovative concept suggests that stakeholder relations are a critical consideration for those seeking to manage diversification within the Third Sector. Whilst the specific findings emerge from a single case study, we argue for the analytical generalizability of outcomes. Relatedly, we propose a future research agenda to further develop managerial insights and theory based on the findings of this exploratory study.