Hybrid Organization: Serving Both Economic and Social Objectives

Abstract: We define hybrid organizations as inter-organizational forms that exist across the boundaries of sectors. They merge objectives of different organizations or entities. As organizational innovations, they are at the intersection of changing state-market relations, offer novel institutional designs and rely on the growing role of civil society organizations as key stakeholders to creation economic and social value. Two types can be differentiated. The first type is when one focal organization embraces two distinct objectives: economic and social outcomes. The second type is obtained when at least two (or more) organizations from distinct sectors with distinct identities (firms, NGOs, non-for-profit, associations…) agree on mutual interests and decide to collaborate through pooling their resources, competencies, and objectives. In this paper, we explore the micro-foundations of hybrid organizational forms and compare the two types of hybrid organizations to explain when and how they are capable to take advantage of governance mechanisms – board composition, accountability and reporting systems. We also analyze how they internally incorporate the elements of their (potential) competing logics and how they maintain their hybrid nature over time. Moreover, we discuss what factors contribute to hybrid sustainability? We contribute in three directions. First, we identify the inter-organization collaboration as a distinct type of hybridity. We offer a comprehensive analysis of hybridity challenges and means of addressing them. Second, our framework advances that appropriate organizational governance, by monitoring dual performance objectives and aligning the interests of multiple principal stakeholders, remedies to internal tensions and institutional pressures. Third, our proposed analytical framework of hybrid organizations sheds new light on the novelty of hybrid organizational forms and discuss how they can continue to create value.