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A hybrid organization is an organization that mixes elements, value systems and action logics of various sectors of society, i.e. the public sector, the private sector and the voluntary sector. Examples include organizations employed in the provision of public services that were originally established by societal actors, such as (in the European context) most social housing providers, public schools and hospitals. Other examples are public sector organizations that, due to the New Public Management revolution, behave in a more business-like way and organizations as the state-owned enterprise that also compete on the market place.
As hybrid organizations combine essentially incongruous elements, tensions can arise. These tensions can have positive and negative economic, performance related, cultural and governance related effects for the organization, its principles, and its customers. Purposeful development of hybrid structures and its sustainability may be problematic as it requires ensuring the coexistence of conflicting values. For example in the area of Open-source software and business collaboration this means both maintaining and spanning boundaries between public and private, open and closed, and contractual worker and professional developer. In result some hybrid organizations get involved in special form of dual hypocrisy, discrepancies between their talks and actions, to fit in business and Open Source realms.
Oliver Williamson (1991) has introduced the concept of a "hybrid form" in transaction cost economics. A hybrid form can be defined as "a set of organizations such that coordination between those organizations takes place by means of the price mechanism and various other coordination mechanisms simultaneously" Examples include franchising, joint ventures, and business groups. Prior to this, Borys and Jemison (1989) introduced "hybrid organizational arrangements", aligning the concept with strategic alliances, R&D partnerships, joint ventures and licensing. The authors reviewed prior research that was available and provided qualitative framework for classification of different types of hybrid organizational arrangements consisting of breadth of purpose, boundary determination, value creation and stability mechanisms. The classification is further used to provide research propositions directing for future studies in organization theory research area, besides looking at specific forms and their research issues.
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