This article possibly contains original research. (October 2020)
A hybrid organization is an organization that mixes elements, value systems and action logics (e.g. social impact and profit generation) of various sectors of society, i.e. the public sector, the private sector and the voluntary sector. A more general notion of hybridity can be found in Hybrid institutions and governance
According to previous research hybrids between public and private spheres consist of following features:
- Shared ownership.
- Goal incongruence and different institutional logics in the same organisation.
- Variety in the sources of financing.
- Differentiated forms of economic and social control.
Borys and Jemison (1989) introduced the concept of "hybrid organizational arrangements", aligning the concept with strategic alliances, R&D partnerships, joint ventures and licensing. The authors reviewed prior research and provided a qualitative framework for classification of different types of hybrid organizational arrangements consisting of breadth of purpose, boundary determination, value creation and stability mechanisms.
Later, Oliver Williamson (1991) 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"
This problem is similarly emphasized from the perspective of agency theory. The so-called 'multiple principal problem' combines various collective action problems that can occur with hybridity. Free-riding or duplication in steering and monitoring procedures can result in high costs. Similarly, directive ambiguity or lobbying of the corporations by individual stakeholders can induce inefficiency.
Any tensions can have positive and negative economic, performance related, cultural and governance related effects for the organization, its principles, and its customers. For instance, for state-owned enterprises, Schmitz (2000) argues that the combination of public and private interests brings an optimal combination of incentives for reducing costs and improving quality in comparison with pure production forms. In contrast, Voorn, Van Genugten, and Van Thiel (2017) hypothesize that diversity of ownership may lead to benefits such as specialization and increased efficiency, but also downsides such as increased failure rates.
Examples of hybrid forms of organization include:
- Public service organization that were established by societal actors, such as (in the European context) most social housing providers, public schools and hospitals;
- Public sector organizations that behave in a business-like way, such as state-owned enterprises that also compete on the marketplace;
- Private sector organizations that include franchising, joint ventures, and business groups;
- Microfinance organizations;
- Hybrid corporations engaging in corporate social entrepreneurship, progressing social and environmental activity in addition to returns for shareholders.
Not all hybrid forms are intentional. Hemingway's ethnographic study of a British-based multi-national corporation, where corporate social responsibility was found to be practised informally by some employees, in addition to their formal job roles, pointed out that unless a corporate employee was given dispensation from the profit motive in order to specifically create social value, even the most hybrid of corporations could not be described as a social enterprise staffed by social entrepreneurs (although employees' activities outside of the workplace might be). However, she did find evidence of corporate social entrepreneurship, where some employees had enlarged their own job roles to encompass social responsibility, in one or more forms.
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