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How did HOs emerge?
• The context around organizing changed
• 1950s: retain and reinvest the profit
• 1970s: using an asset in a company in different ways, making a profit for shareholders,
investing, shipping off production to lower developed countries
• 1990s: CSR, response to the problems, not being the most responsible with different laws
and regulations in different countries, once we are responsible
• Now organizations need to be responsible more and take action
Why do HOs matter?
• Doing business with the poor
• Collaborating to bring skills together from different sectors
• Trying to solve social problems in the best way
• Trying to change problematic systems
→ Must overcome unique organizational challenges in order to succeed
Norms, attitudes and regulations evolve
Hybrid Organizations =
• Organizations at the interface between for-profit and non-profit sectors that address social
and ecological issues
• Social enterprises address social problem by means of markets
HOs with Socials/Environmental focus
• MISSION motive
• Stakeholder accountability
• Income reinvested in social projects
• E.g. United Nations, Kiva, Grameen, WISEs
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,HOs with Economic focus
• PROFIT motive
• Shareholder accountability
• Profit redistributed to shareholders
• E.g. Patagonia
Hybridity matters for issues hybrids face
1. Legal structure
a. Matters for ownership, profit management, social legitimacy and access to finance
2. Financing
a. Matters for disruption in resource allocation
3. Customers and beneficiaries/mission drift
a. Matters for when the same, focusing on growth doesn’t fetract
4. Organizational culture
a. Matters for interpersonal conflict and decision-making paralysis (verlamming)
Value spillover
• Maximizing the value
• Created for the transacting partner (the client)
• More money to the firm
Automatic value spillovers
• Reduce negative value spillovers
• Profit is aligned with impact
• E.g. harmful lamps causing fire, once making safe lamps they will have less value spillovers.
Doing business to help people but its just part of the business, but is solves a problem and
makes a profit
Contingent value spillovers
• Profit is linked with impact
• Requires training, awareness rising and mentoring
• E.g. investing in child education, healthy food, etc, complicated from once involving training,
etc, the value link is contingent on something
Different types of HOs
• Market hybrid
o The people who buy the lights are the poor people, they get the benefit immediately,
automatic value spillover, give value and make money at the same time in the
business
• Blending hybrid
o clients are the beneficiaries, giving them a loan and overcoming poverty will take a
few more steps so contingent value spillover
o The hybrid serves the poor, but the service does not necessarily lead to reduced
poverty
o To achieve social impact, blending hybrids need to blend their commercial offer with
extra interventions such as training
• Bridging hybrid
o the employees benefit, automatic value spillover, the more they work the more profit
for the organization.
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, • Coupling hybrid
o The people who work there are beneficiaries who also need training and counseling
o The organization could prioritize clients
A spectrum of ‘hybrids’ based on profit-focus
Traditionally, sector-based/centered perspective
• Different in countries
• Helpful for thinking about formal sector boundaries
• Focus on end state, thus over-emphasize the ‘stable and
static’:
• These sectors exist (but they are actually changing a lot)
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, HOs: challenge beliefs
• Growth
o Traditional strategy work implies growth – increasing market share
o Vs willing to sacrifice growth for goals, ‘patient capital’ or
‘below-market rate’
• Profit
o Profit will be the focus, even in CSR
o Vs profit is not the only goal, may voluntarily limit
• Connection with social/ecological systems
o Firms have traditionally externalized social and ecological systems
o Vs non-financial systems core to purpose, participatory ownership, suppliers and
communities involved, not just the cheapest materials
• Value of nature
o Nature as natural resource, as limitless source and bottomless sink to absorb
waste
o Vs nature provides more than natural resources, wider view of value
• Competitive practices
o Seek to gain and control competitive advantages
o Vs may have more transparency or diffuse practices
• Enactment of sustainability
o Recycling, reducing emissions
o Vs go beyond reducing harm
Hybrids as transitionary in a larger shift in thinking
• Evolution → fish developed nerves for feeds before having them, became land animal
• Different organizational structures walk us toward a sustainable future
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