Advancing Research on Social-Business Hybrid Organizations Social-Business Hybrids
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Advancing Research on Social-Business Hybrid Organizations Social-Business Hybrids

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Advancing Research on Social-Business Hybrid Organizations
Social-Business Hybrids

Research-oriented

Organizer: Marya Hill-Popper Besharov; Cornell U.
Organizer: Wendy K. Smith; U. of Delaware
Organizer: Julie Battilana; Harvard U.
Presenter: Marya Hill-Popper Besharov; Cornell U.
Presenter: Wendy K. Smith; U. of Delaware
Presenter: Nardia Haigh; U. of Massachusetts
Presenter: Andrew J. Hoffman; U. of Michigan
Discussant: Klaus Weber; Northwestern U.
Presenter: Julie Battilana; Harvard U.

Social-business hybrid organizations combine market and social welfare logics: they pursue a social mission but rely on commercial activities to generate revenue and sustain their operations. Scholars have recently started to examine the challenges these organizations face and strategies and practices by which they attempt to manage these challenges. In order for research on hybrids to advance and make significant theoretical and practical contributions, scholars need to address several important questions. For example, under what conditions do social-business hybrids emerge? How are these organizations similar to and different from other types of hybrids and traditional for-profit and non-profit organizations? Under what conditions can social-business hybrids retain their hybrid nature? What factors influence their performance? The purpose of this PDW is to advance research on social-business hybrids by providing a forum for these issues. Julie Battilana will first provide an overview of critical questions for research on social-business hybrids. Four panelists—Marya Besharov, Nardia Haigh, Andrew Hoffman, and Wendy Smith—will then offer insights into this emerging field of research. A discussant, Klaus Weber, will offer commentary and facilitate a large group question and answer session. Participants will then break up into smaller discussion groups, each facilitated by a panelist and/or co-organizer. We will conclude with a collective discussion of insights gained and next steps for research on social-business hybrid organizations. By facilitating conversations about common challenges and opportunities, the PDW will help develop a community of scholars pursuing research on social-business hybrids, using diverse theoretical lenses and methodological approaches.

Search Terms: hybrid organizations , social enterprise , institutional logics

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  • 1. PDW Submission #13975 1 Title: Advancing Research on Social-Business Hybrid Organizations: Emergence and Internal Dynamics Primary sponsor: Organization and Management Theory Potential co-sponsors: Social Issues in Management, Organizations and the Natural Environment, Public and Nonprofit Abstract Social-business hybrid organizations combine market and social welfare logics: they pursue a social mission while engaging in commercial activities to generate revenues. Although they offer a promising way to create both social and economic value, hybrids face challenges as they must simultaneously attend to potentially competing logics, identities, goals, and metrics. As hybrids are on the rise, organizational researchers have started to examine the challenges they face and strategies and practices by which they attempt to manage these challenges. Yet, in order for research on hybrids to continue to make significant theoretical and practical contributions, scholars need to address several important questions. First, what makes hybrids different from typical for-profits, not-for-profits and public sector organizations? Second, under what conditions do hybrids emerge? Finally, how do the internal dynamics of hybrids, including structures, practices, and processes, enable them to avoid mission drift and retain their hybrid nature over time? The purpose of this PDW is to advance research on hybrids by providing a forum for exploring these issues. The PDW builds on and extends the learning and community developed at last year’s well-attended and lively PDW sponsored by OMT on the same topic. It includes contributions from leading scholars engaged in research on hybrids, a large group question and answer session, and smaller roundtable discussions. By facilitating conversations about common challenges and opportunities, the PDW seeks to enrich research on hybrids.
  • 2. Advancing Research on Social-Business Hybrid Organizations PDW Submission #13975 2 Workshop Overview Research streams on corporations and not-for-profit organizations have evolved in parallel, but mostly separate tracks. Scholars who have studied both sectors have so far focused on comparing and contrasting their functioning (Ben-Ner, 2002; DiMaggio & Anheier, 1990; Hansmann, 1987). These comparisons have led to a growing reflection not only on what not-for- profit organizations can learn from corporations (Dart, 2004; Dees, 1998; Dees & Anderson, 2003; Eikenberry & Kluver, 2004; Foster & Bradach, 2005) but also on what corporations can learn from not-for-profit organizations (Drucker, 1989). Other studies have described how organizations in these two different sectors can collaborate with one another (Austin, 2000). This extant research emphasizes how each sector can work across their differences to benefit from their distinct value. However, none of these studies have looked into the specificities of social- business hybrid organizations that are neither typical for-profit corporations nor typical not-for- profits. Social-business hybrid organizations combine social welfare and market logics: they pursue a social mission while relying on commercial activities to generate revenues in order to sustain their operations. In the last ten years, these hybrid organizations, which used to exist mostly in the education and healthcare sectors, have spread across industries such as financial intermediation, retailing, consumer products, apparel, food processing, and software development (Battilana, Lee, Walker, & Dorsey, 2012a; Dorado, 2006; Hoffman, Gullo, & Haigh, forthcoming; Tracey, Phillips, & Jarvis, 2010). They have also spread throughout developed and developing countries (Global Entrepreneurship Monitor, 2010). Commercial microfinance organizations, which provide loans to the poor under market conditions, are one example. They combine a social welfare logic, which guides their mission to help the poor, and a
  • 3. Advancing Research on Social-Business Hybrid Organizations PDW Submission #13975 3 market logic, which dictates that the interest rates they charge generate sufficient profits to fulfill their fiduciary obligations and sustain their activities. Other examples of hybrid organizations include workforce integration enterprises that are prevalent around the world. These organizations strive to help long-term unemployed people transition back into the workforce. To do so, they train and employ these people to produce goods and services, which are in turn sold on commercial markets. Workforce integration enterprises are simultaneously guided by a social logic, which prioritizes their workforce integration mission, and a market logic, which demands that they provide competitive products to the commercial market, in order to sustain their organization (Battilana, Pache, Sengul, & Model, 2012b; Pache & Santos, forthcoming). Social-business hybrid organizations confront different, and potentially incompatible, prescriptions from the market and social welfare institutional logics that they combine (Besharov & Smith, 2012; Kraatz, 2009; Kraatz & Block, 2008; Pache & Santos, 2010). The market logic dictates that they generate revenues to sustain their activity, whereas the social welfare logic dictates that they focus primarily on the accomplishment of their social mission. As a result, their members and especially leaders of social enterprises (i.e., Smith, Besharov, Wessels, & Chertok, 2012) must grapple with institutional complexity. This entails coping with multiple institutional logics, each prescribing different and sometimes contradictory beliefs and work practices (Greenwood, Raynard, Kodeih, Micelotta, & Lounsbury, 2011). Research is needed to help us understand the nature and management of these complex challenges. The different beliefs and work practices prescribed respectively by market and social welfare logics are such that combining and sustaining them within a single organization is a significant challenge. Indeed, recent empirical studies highlight the risk of rising tensions between organizational members due to these competing logics, which potentially lead to
  • 4. Advancing Research on Social-Business Hybrid Organizations PDW Submission #13975 4 organizational instability (e.g., Tracey, Phillips & Jarvis, 2010). Confirming this risk, some social-business hybrids have recently been criticized for drifting away from their social mission, thereby becoming typical corporations (Strom, 2010; Weisbrod, 2004). Even the Bangladesh Rehabilitation Assistance Committee (BRAC), one of the largest and most respected international development NGOs in the world, has recently been targeted for focusing on profits over the needs of their clients in their microfinance operations (IRIN, 2011). In spite of the challenges facing social-business hybrid organizations, a few qualitative, inductive studies (Battilana & Dorado, 2010; Battilana et al., 2012b; Jay, forthcoming; Pache & Santos, forthcoming) suggest that some have been able to combine the market and social welfare logics in a sustainable way and even excel. Yet we still know little about the conditions under which social-business hybrids are likely to emerge and survive. In particular, what institutional and legal structures promote the emergence of these hybrids? At the individual level, what experiences and characteristics lead actors to initiate social-business hybrids? Under what conditions can social-business hybrids retain their hybrid nature over time? What are the factors that influence their social and economic performance? Addressing these questions is crucial at a time like now when hybrids, which provide alternative models of organizing in the aftermath of the 2008 financial crisis, are on the rise (Davis, 2010; Golden-Biddle, Dutton, & Feldman, 2012; Sabeti, 2011). They are considered by some observers to be a promising fourth way of organizing (as opposed to typical corporations, not-for-profit, or public sector organizations) (Strom, 2007), but it is now time to open up the black box of hybrids in order to understand their specificities. The purpose of this PDW is to help scholars studying social-business hybrids advance their conceptual and empirical research projects by providing a forum to discuss these issues and
  • 5. Advancing Research on Social-Business Hybrid Organizations PDW Submission #13975 5 to stimulate novel ideas for future research questions, theoretical positioning, study design and analysis, and publication strategies. Because they diverge from both typical for-profit and not- for-profit organizations, social-business hybrids force us to rethink traditional categories of organizations and thus require new management theorizing. By facilitating a collective discussion on the common challenges and opportunities in studying social-business hybrids, the PDW will help build a community of scholars focused on this topic and will help advance their research. Relevance to OMT This PDW will provide a forum for the expanding group of scholars who study social- business hybrids to develop theoretical frameworks and methodological tools for studying an increasingly important type of organization. In this way, the PDW furthers OMT’s mission to “advance robust theoretical understanding of organizations, organizing, and management.” In addition, the topic of this PDW also fits this year’s conference theme on “Capitalism in question.” Indeed, social business hybrids are neither typical for-profits nor typical not-for- profits. Rather, they offer an alternative promising way to create both social and economic value. Format The co-organizers—Julie Battilana (Harvard Business School), Marya Besharov (Cornell University), and Wendy Smith (University of Delaware)—will introduce the PDW with an overview of critical questions for research on social-business hybrids. The four panelists will then offer distinct, empirically grounded perspectives on social-business hybrids. Filipe Santos (INSEAD) will speak about the key theoretical challenges and knowledge gaps in studying
  • 6. Advancing Research on Social-Business Hybrid Organizations PDW Submission #13975 6 social-business hybrids and discuss how his research addresses these challenges. Jill Kickul (NYU) will offer thoughts on the key challenges facing practitioners within social-business hybrids, discuss how research to date has addressed these challenges, and suggest next steps for better connecting theoretical with practical concerns. Matt Lee (Harvard Business School) will summarize his empirical research on the antecedents of performance in social-business hybrids and will comment on challenges and next steps in advancing our understanding of internal dynamics and organizational outcomes. Finally, Helen Haugh (University of Cambridge) will discuss her empirical research on community interest companies (CIC), the new legal form for social-business hybrid organizations in the UK. Drawing on her analysis of the creation and adoption of the CIC, she will suggest directions for future research on how regulatory change affects the creation of social-business hybrids. Our discussant, Jim Walsh (University of Michigan), will then comment on and respond to the panelists’ presentations, and the panelists and discussant will field questions from participants. Next, we will break up into roundtable discussions in which participants will have the opportunity to discuss research questions, theoretical positioning, study design and analysis, and publication strategies. Roundtables will be facilitated by the PDW co-organizers and panelists. Each roundtable will then report to the full group their key insights, and the PDW will conclude with a brief conversation about the next steps for research on hybrids. • Introduction by the co-organizers (10 min.) • Remarks from panelists and discussant (50 min.) • Large group question and answer session with panelists and discussant (30 min.) • Break (15 min.) • Roundtable discussions (45 min.) • Insights from roundtable discussions (20 min.) • Concluding thoughts and next steps for hybrid research (10 min.)
  • 7. Advancing Research on Social-Business Hybrid Organizations PDW Submission #13975 7 References Austin, J. E. 2000. The collaboration challenge: How nonprofits and businesses succeed through strategic alliances. New York: Jossey-Bass. Battilana, J., & Dorado, S. 2010. Building sustainable hybrid organizations: The case of commercial microfinance organizations. Academy of Management Journal, 6: 1419- 1440. Battilana, J., Lee, M., Walker, J., & Dorsey, C. 2012a. In Search of the Hybrid Ideal. Stanford Social Innovation Review, 10(3): 51-55. Battilana, J., Pache, A.-C., Sengul, M., & Model, J. 2012b. Combining social welfare and market logics: Understanding the determinants of social performance of socioeconomic hybrid organizations, Working Paper. Cambridge, MA: Harvard Business School. Ben-Ner, A. 2002. The shifting boundaries of the mixed economy and the future of the nonprofit sector. Annals of Public and Cooperative Economics, 73(1): 5-40. Besharov, M. L., & Smith, W. K. 2012. Multiple logics within organizations: An integrative framework and model of organizational hybridity, Working Paper. Ithaca: Cornell. Dart, R. 2004. The legitimacy of social enterprise. Nonprofit Management and Leadership, 14: 411-424. Davis, G. F. 2010. After the ownership society: Another world is possible. Research in the Sociology of Organizations, 30B: 331-356. Dees, G. J. 1998. The meaning of social entrepreneurship: Stanford Graduate School of Business. Dees, J. G., & Anderson, B. B., 40(4): 16-27. 2003. Sector-bending: Blurring lines between nonprofit and for-profit. Society, 40(4): 16-27. DiMaggio, P. J., & Anheier, H. K. 1990. The sociology of nonprofit organizations and sectors. Annual review of sociology(16): 137-159. Dorado, S. 2006. Social Entrepreneurial Ventures: Different Values So Different Process of Creation, No? Journal of Developmental Entrepreneurship, 11(4): 319-343. Drucker, P. E. 1989. What Business Can Learn from Nonprofits. Harvard Business Review, 67(4): 88. Eikenberry, A. M., & Kluver, J. D. 2004. The Marketization of the Nonprofit Sector: Civil Society at Risk? Public Administration Review, 64(2): 132-140. Foster, W., & Bradach, J. 2005. Should Nonprofits Seek Profits? Harvard Business Review, 83(2): 92-100. Global Entrepreneurship Monitor. 2010. Global Report: 83: www.gemconsortium.org. Golden-Biddle, K., Dutton, J. E., & Feldman, E. 2012. The Response: What does this book contribute to the underderstanding of social change and organizations. In K. Golden- Biddle, & J. E. Dutton (Eds.), Using a positive lens to explore social change and organizations: Building a theoretical and research foundation: 475-491. New York: Routledge. Greenwood, R., Raynard, M., Kodeih, F., Micelotta, E., & Lounsbury, M. 2011. Institutional Complexity & Organizational Responses The Academy of Management Annals, 5(1): 317-371. Hansmann, H. 1987. Economic theories of non-profit organizations. In W. W. Powell (Ed.), The Non-profit Sector: A research handbook: 27-42. New Heaven, CT: Yale University Press.
  • 8. Advancing Research on Social-Business Hybrid Organizations PDW Submission #13975 8 Hoffman, A. J., Gullo, K. K., & Haigh, N. forthcoming. Hybrid organizations as agents of positive social change: Bridging the for-profit & non-profit divide. In K. Golden-Biddle, & J. Dutton (Eds.), Exploring Positive Social Change and Organizations: Building and Theoretical and Research Foundation. New York: Routledge, Taylor and Francis Group. IRIN. 2011. Microfinance institutions pushed loans, admits major NGO, IRIN: United Nation Office for the Coordination of Humanitarian Affairs. Jay, J. forthcoming. Navigating paradox as a mechanism of change and innovation in hybrid organizations. Academy of Management Journal. Kraatz, M. S. 2009. Leadership as institutional work: A bridge to the other side. In T. B. Lawrence, R. Suddaby, & B. Leca (Eds.), Institutional work: 59-91. Cambridge: Cambridge Univeristy Press. Kraatz, M. S., & Block, E. S. 2008. Organizational Implications of Institutional Pluralism. In R. Greenwood, C. Oliver, R. Suddaby, & K. Sahlin-Andresson (Eds.), The Sage Handbook of Organizational Institutionalism: 840. London: Sage. Pache, A. C., & Santos, F. 2010. When worlds collide: The internal dynamics of organizational responses to conflicting institutional demands. Academy of Management Review, 35(3): 455-476. Pache, A. C., & Santos, F. forthcoming. Inside the hybrid organization: Selective coupling as a response to competing institutional logics. Academy of Management Journal. Sabeti, H. 2011. The For-Benefit Enterprise. Harvard Business Review, 89(11): 98-104. Smith, W., Besharov, M., Wessels, A., & Chertok, M. 2012. A paradoxical leadership model for social entrepreneurs: Challenges, leadership skills, and pedagogical tools for managing social and commercial demands Academy of Management Learning & Education, 11: 463-478. Strom, S. 2010. The nonprofit hybrid model: a marriage of differing missions, New York Times. New York. Strom, S. 2007. Businesses try to make money and save the world. New York Times. New York. Tracey, P., Phillips, N., & Jarvis, O. 2010. Bridging Institutional Entrepreneurship and the Creation of New Organizational Forms: A Multilevel Model. Organization Science, 22(1): 60-80. Weisbrod, B. 2004. The pittfalls of profits. Stanford Social Innovation Review, 2(3): 40-47.