Hybrid Organizations in Public Administration

Hybrid Organizations

In order to understand the structural change and implementation of hybrid organizations in public administration it is necessary to gain a comprehension of what defines hybrid organizations as opposed to public and private organizations. Differences between these three types of organizations exist in managerial approaches to goals and rules, and they also vary in regards to effectiveness with achieving distinct aims and objectives (Lan and Rainey, 1992). The extent to which these types of organizations are similar or differ illuminate organizational and managerial approaches that may function well for certain approaches but not for others.

A study conducted by Lan & Rainey (1992) explored private, public, and hybrid organizations in order to assess and explore differences in regards to goals, rules, and effectiveness. The researchers sought to demonstrate specific factors involved in common assertions held with regard to private and public organizations by utilizing hybrid organizations as a model for comparison. By conducting an in-depth examination of these common assertions and comparing all three types of organizations, it is possible to devise a more accurate perception of the characteristics of each type of organization that contribute to their effectiveness.

It is a commonly held assertion that public organizations are characterized by greater numbers of rules, more procedures, and more authoritarian constraints than demonstrated by private organizations, and research findings have demonstrated support for these beliefs (Lan & Rainey, 1992). However, research has determined that other resoundingly supported assertions regarding increased complexity, vagueness, and multiplicity among public organizations in relation to private ones are unfounded and significant differences in these realms do not exist (Lan & Rainey, 1992). The lack of differences among all three types of organizations and blurring of sectors in general lends to potential difficulties in establishing identities and definitions for each type of organization (Lan & Rainey, 1992). The blurring of lines between private and public organizations results from the many similarities shared by these types, and it is this interrelation and overlap that led to the evolution of hybrid forms of organizations that blend together features of public and private organizations (Lan & Rainey, 1992). Hybrid organizations can be perceived and understood as organizations that lie in the middle of a continuum between government agencies on one end and private enterprise on the other (Lan & Rainey, 1992).

What components lend to definitions as to what comprises public and private, and thus hybrid, organizations? The three components that could be considered as most integral in understanding the distinction between private and public organization are interest, access, and agency (Lan & Rainey, 1992). Significance regarding definitions of these types of organization involves their importance in research and establishment of theory (Lan & Rainey, 1992).

Lan & Rainey (1992) used three categories of classification in their investigation of core differences between organizations. Public organizations were defined as those that were government owned and exclusively received public funding. Private organizations were defined by the researchers as corporations or firms that were owned privately and funded through sales rather than public funding. Hybrid organizations were classified as those that are professional, service-based organizations involved in the delivery of goods that are somewhat public, and demonstrate a blend of private and public ownership. Furthermore, examples given of hybrid organizations included hospitals and schools, organizations that cannot exclusively be categorized as private or public (Lan & Rainey, 1992).

Lan & Rainey (1992) posited four hypotheses in their exploration of hybrid organizations in relation to private and public organizations. The first hypothesis involves perceived differences in regards to goals and effectiveness with each type of organization. Specifically, the authors hypothesized that public managers perceive goals within their organization as lacking in clarity, difficult to measure, and more difficult to achieve than that demonstrated by private organizations (Lan & Rainey, 1992). Furthermore, it is hypothesized that the perceptions of hybrid managers exist somewhere between those of public and private managers (Lan & Rainey, 1992). In regards to perceptions of effectiveness in achieving goals, it was hypothesized that hybrid organizations would demonstrate perceptions somewhere between those of private and public organizations due to the fact that the goals they pursue are different in regards to political oversight and orientation to profit (Lan & Rainey, 1992).

The second hypothesis posited in the study by Lan & Rainey (1992) involved procedures and rules within the organizations. Specifically, the authors suggested that public managers would demonstrate more procedures and rules than private managers, with more constraints on manager authority, and that hybrid organizations would once again fall somewhere in the middle in regards to these factors. This hypothesis aligns with commonly held assertions regarding differences between these types of organizations (Lan & Rainey, 1992).

In regards to effectiveness, it is a commonly held assertion that public organizations are less effective than private organizations (Lan & Rainey, 1992). Perceptions regarding effectiveness of organizations may stem from how goals are perceived and whether these perceptions are vague (Lan & Rainey, 1992). The third hypothesis proposed in the study by Lan & Rainey (1992) stated that managers' perceptions of effectiveness in achieving set out organizational goals depending on factors such as perceived clarity of these goals, ease in measurement of the goals, and increased instrumentality used for evaluation of performance. It was suggested that private managers would have lower perceptions on all of these factors, thus resulting in less effectiveness in goal achievement, while private organizations would have greater perceptions, with hybrid organizations demonstrating perceptions between the two ends of the continuum (Lan & Rainey, 1992).

The fourth and final hypothesis proposed by Lan and Rainey (1992) related to organizational effectiveness. In particular, it was suggested that there would be an observed relationship between increased rules and procedures among public managers which would result in a positive association with perceived organizational effectiveness. On the other hand, it was expected that private managers would not exhibit this association due to their decreased organizational rules and procedures, and once again, hybrid organizations would demonstrate results between those shown by private and public organizations (Lan & Rainey, 1992).

Results of the study by Lan & Rainey (1992) added support to findings of previous studies that investigated common assertions held regarding public and private organization. Specifically significant differences were not found between public and private managers in terms of their perceptions of measurability and clarity of organizational goals, and findings did not indicate that vagueness of goals within hybrid organizations is significantly associated with less organizational effectiveness (Lan & Rainey, 1992). Furthermore, hybrid managers and public managers demonstrated higher clarity of goals than private managers, which may be explained by greater adherence to rules among public and hybrid organizations.

Overall, it may be interpreted from the results of this study that hybrid organizations truly are a blending together of definitive aspects of public and private agencies, to form organizations that take on characteristics of both ends of the spectrum. The similarities and differences outlined indicate that hybrid organizations provide an appropriate model for when organizational needs are not met on the private and public ends of the organizational spectrum.

The majority of public agencies in the Western world may be defined as hybrid organizations, meaning that their classification falls between being a completely government run agency and being a private commercial firm (Kickert, 2001). The importance of this type of organization is increasing due to the fact that the number of these types of agencies is growing. Due to the increased prominence of hybrid organizations, it is important that governance in these types of agencies be appropriately comprehended and explained by individuals involved in the development of public management theory (Kickert, 2001). In order to further understanding with regard to governance of hybrid organizations, Kickert (2001) examined case analyses from a total of eleven executive agencies within various Dutch ministerial departments. The departments included in the study were Agriculture, Nature, and Fisheries; Education and Sciences; Justice; and Transport and Public Works.

Kickert (2001) argues that the most effective strategy for democratic government departmental agencies is a theoretical approach that blends management theory from both private and public organizations. The author describes how hybrid organizations have a widespread presence throughout the public sector, and that these types of agencies are integral to the functioning of modern-day democratic society (Kickert, 2001). The importance of hybrid organizations within society has increased in recent times due to the growth in the privatization of what were once entirely public services (Kickert, 2001). Hybrid organizations operate under the expectation that they will function similarly to private businesses in that they should be characterized by efficiency and a client-centered orientation, even though the operations performed by hybrid organizations are largely public in scope (Kickert, 2001). This blending of expectations and tasks from each end of the public -- private spectrum often leads to some tension and ambiguity within these hybrid organizations (Kickert, 2001). Also, there are marked differences between various hybrid organizations depending on where the agencies fall on the continuum between being public and private. Variables upon which hybrid agencies differ from each other include markets, products, financing, and ownership, and various agencies use differing management practices and approaches (Kickert, 2001).

The results obtained by Kickert (2001) indicated what was termed as "devolution" of hybrid agencies within the Dutch public sector. Devolution is described as having the ability to sometimes result in reduced autonomy for an organization, apparent in increased ministerial control over policy, and governance relationships have demonstrated increased transparency and explicitness (Kickert, 2001). The author suggested that hybrid organizations have an important role in government of the Netherlands, and that their presence will remain for some time. Therefore, it is unrealistic and impractical to continue for a strict, distinct separation between private and public organizations (Kickert, 2001). Approaches utilized within hybrid organizations must strike a balance, as the application of management strategies successfully used in private organizations to the operations of hybrid organizations does not lead to effective results (Kickert, 2001). Furthermore, it is important that theorists take into account the functioning of hybrid agencies in the development of public sector theory due to the ever-increasing presence of hybrid organizations within the public realm (Kickert, 2001).

Organizations can no longer always be effectively classified as public or private. The expansion of public services to include private elements has necessitated the development of hybrid organizations in which components are adopted from each end of the spectrum. Governance in these types of organizations must maintain balance in order for optimal functioning and successful outcomes.

What contributes to the sustainability of hybrid organizations? Since the increasing presence of hybrid organizations is a relatively new phenomenon, these types of agencies often struggle with tensions due to the blending of private and public approaches inherent within them (Battilana & Dorano, 2010). These tensions were studied by Battilana and Dorado (2010), who determined that in order for hybrid organizations to effectively sort out confusions stemming from their combined logics, a common organizational identity must be developed. These researchers reached their conclusions based on their studies of microfinance organizations, which first appeared in the 1990s in response to the need for non-governmental agencies that provided loans to the poor. Furthermore, these microfinance agencies were what are now called hybrid organizations, as they strike a balance between public approaches (service to the poor) and private approaches (provision of financial services) (Battilana & Dorado, 2010). These types of microfinance organizations essentially pioneered the advent of hybrid organizations, combining logics from contrasting ends of the private -- public continuum. It has been suggested through past research that new types of hybrid agencies display characteristics that are highly unstable and are unlikely to remain hybrid by definition over long periods of time (Battilana & Dorado, 2010).

The study conducted by Battilana and Dorado (2010) sought to explore whether organizations are able to maintain their hybrid characteristics through the examination of two microfinance organizations. Results for the investigation revealed that efforts to effectively establish common organizational identities needed to pay particular attention to policies involving hiring and socialization (Battilana & Dorado, 2010). These findings enabled the researchers to identify two different approaches to establishing identities for hybrid organizations that contribute to longevity for these new types of organizations. The approaches devised are centered around socialization and hiring policies. The first approach is apprenticeship, essentially a clean-slate approach blended with a socialization strategy focused on means (Battilana & Dorado, 2010). The aim of this approach is to effectively aid newly hired employees to learn the skills necessary to function in a new occupation, and its success is highly associated with the organizations initially hiring individuals that do not have many preconceptions about the occupation and are instead focused on how operations involved are most effectively performed. This acts to reduce likelihood of conflicts and tensions in order to ensure the development of identity for the hybrid organization that contributes to sustainability of the blended private and public logics involved in management and policies (Battilana & Dorado, 2010).

Battilana & Dorado (2010) describe how the apprenticeship approach to hybrid organization identity development requires high levels of discipline in order to limit growth of the organization to ensure that employees thoroughly learn all the skills associated with tasks within their occupations. This could be seen as a potential disadvantage to this approach, along with the necessary continual attention that is necessary to ensure that effectiveness of operations is in fact achieving the set out goal of hybrid organization sustainability and does not become the end focus in and of itself (Battilana & Dorado, 2010).

The other approach suggested by Battilana and Dorado (2010) to develop organizational development for hybrid agencies is integration. This approach presents the combination of a diverse hiring practice with socialization that is end-focused. The aim associated with this approach is the blending together of diverse components representing various private and public logics in order to form a new integrated group that commonly are focused on the same single goal of developing identity, and therefore sustainability, for the hybrid organization (Battilana & Dorado, 2010). The results of this approach may be the facilitation of quick operationalization, but risks remain regarding possible division and polarization into subgroups based in differing identities due to the tensions between private and public logics (Battilana & Dorado, 2010). These risks could be controlled through close attention and diffusion of the emergence of these subgroups within the hybrid organizations (Battilana & Dorado, 2010).

Moreover, sustainability of hybrid organizations as valid and effective groups for achieving successful outcomes necessitates the development of identity. Developing this identity often proves challenging due to the blending of contrasting principles adopted from the private and public organizational spheres, and the fact that the concept of hybrid organizations is relatively new. Therefore, establishing core characteristics that are common across the majority of hybrid organizations would aid in identity development, and thus longevity and sustainability.

One of the most prominent characteristics associated with hybrid organizations is change necessitating appropriate and effective management control. Systems for management control must be developed with particular attention to the specific features associated with hybrid organizations (Boland et al., 2008). Boland et al. (2008) explore this need for effective management control through the examination of case examples within the engineering, oil and gas, architectural, and construction industries. The results of this study revealed that the most prominent components integral to the design of management control systems within hybrid organizations are path creation and morphogenesis. These components are important to the development of synthesis for the hybrid organization rather than decomposition, which is achieved through particular attention to specific practical elements within the organization, including the histories, trajectories, and industry standards associated with the agencies. The hybrid organizations examined in the study by Boland et al. (2008) were characterized by fast-moving change involved in materials used, practices, and technologies. They were also considered to be high-risk enterprises that were heavily reliant on systems for management control (Boland et al., 2008).

Hybrid organizations are often created in order to facilitate the development of especially diverse resources and skillsets in order to successfully address and accomplish difficult organizational tasks (Boland et al., 2008). Results of the study by Boland et al. (2008) indicated that effective hybrid organizational management is greatly facilitated by morphogenesis and path creation, which enable the formation of hybrids through the action of synthesis and not from decomposition. Decomposition of hierarchical elements with the intention of infusing market elements within hybrid organizations tends to work against the important process of adding hierarchical elements into systems that are market-based in order to create hybrids (Boland et al., 2008). Conceptual understandings of morphogenesis and path creation and their involvement in the development of management control systems within hybrid organizations point to the need for a redesigning of hybrid forms in order to achieve this sought after control (Boland et al., 2008). This redesigning is executed through path creation, in which industrial contracting procedures are changed, effective organizational elements are borrowed from other organizations, and effective management control systems are developed from exploring strategies beyond those that have always been assumed to be the only approach (Boland et al., 2008).

Furthermore, the findings of this study suggest that new theoretical approaches with regard to effective management control within hybrid organizations should be developed (Boland et al., 2008). Managerial effectiveness is crucial to successful outcomes for any organizational type, including hybrid organizations. Identifying factors that contribute to effective and successful management practices not only promotes more efficient operations within the organization, but may also aid in the development of identity for the organization by pinpointing characteristics that are common across all hybrid organizations.

It is important to explore the issues of leadership and governance in the context of hybrid organizations and attempt to understand how and to what extent these organizations differ from standard forms of organizations in regard to challenges, issues, requirements, solutions, as well as emerging patterns and styles (Anheier, 2011). Anheier (2011) investigated the differences between leadership and governance between hybrid and other types of organizations through an examination of the influence that changes at the macro level have on all other levels within an organization, examining hybrid organizations in terms of associations between organizational theory and governance approaches. It is noted by the author that the approaches currently used in hybrid governance do not adequately address challenges within this type of organization.

The study by Anheier (2011) explored questions around governance in hybrid organizations from three different standpoints. The first perspective was to investigate governance from a large-scale, macro context, looking at altering structures involved in government from national and international levels. The second perspective was to examine the organizational levels that demonstrate an increase in salience and frequency of forms related to hybrid organizations. The third and final perspective utilized by Anheier (2011) was to explore specific characteristics of individuals involved in governance functions, looking at behaviors, legal obligations, patterns of leadership, and organizational levels. The most prominent investigation in the study was to examine how changes at the macro level affect changes at the other levels, and how the lower levels affect the macro level (Anheier, 2011).

Anheier (2011) emphasized the necessity of identifying a missing link, both empirically and conceptually, that exists between organizational theory and strategies of approach to governance. It is noted that there is a failure among hybrid organizations to appropriately address and accommodate distinct characteristics and challenges to government. Furthermore, there is a need to bridge approaches to governance with organizational studies in order to fully conceptualize governance within hybrid organizations (Anheier, 2011).

In regards to importance of this type of research, Anheier (2011) suggested that there are three key components. One component contributing to the importance of the research is that policy shifts on the macro level of governments clearly impact society due to changes in roles among businesses and government. Second, hybrid organizations influence governance on both the meso and micro levels, and there are specific challenges to leadership as well as opportunities that emerge. The third and final component is the crucial impact that potentials and problems of governance has on both field and organizational levels in regard to policy oversight, achievement of political goals, as well as democratic control (Anheier, 2011).

Anheier (2011) suggested that there are two important questions around hybridity and governance that have not received adequate attention. The first question asks what effects changes on the macro level have on forms and behaviors associated with hybrid organization emergence, and how these forms and behaviors affect the macro level. In response to this question, the authors hypothesize that changes in regards to public governance that occur institutionally result in the emergence of hybrid organizations. It is also suggested that certain environment characteristics are more likely associated with hybridization of organizations. These characteristics included: the development of responsibility networks instead of linear chains; a disintegration of public authority; establishment of state regulated market forces; speediness of change on societal and technological levels; and an increase in subjects in the third sector that are more likely to undergo reform (Anheier, 2011). Furthermore, hybridization is understood as being associated with increased uncertainty and unpredictability, and that they may be transient in nature (Anheier, 2011).

The second question of importance suggested by Anheier (2011) is to investigate the problematic issues in leadership and governance associated with hybrid organizations. The author describes how problems in this type of organization have multi-faceted results. These outcomes include, objective functions lacking in clarity, divergent assessments due to different criteria of organizational performance, organizational necessities and business orientations not matching up, as well as a various array of potential legal problems (Anheier, 2011). The involvement of the third sector is also described by the author in terms of an increased emergence of hybrid organizations associated with political, social, and cultural shifts that lead to changes in supply and demand conditions for somewhat public services and goods. To thoroughly investigate the role of this third sector, Anheier (2011) suggested certain questions that should be addressed. These questions involved examining the effects that changes in macro governance has on hybrid organizations, specifically looking at conditions that are indicative of the emergence of such organizations. Also, the author posited examination of the capacity of hybrid organizations to function effectively while bridged between different sectors. Furthermore, third sector involvement was to be questioned by looking at how macro level governance is affected by hybrid organizations (Anheier, 2011). Through this investigation, Anheier (2011) intended to establish a research agenda that would provide a valuable contribution to discussions involving governance associated with hybrid organizations.

By discussing particular governance issues associated with hybrid organizations we are required to identify and address factors involved in characterizing these organizations and then establishing identity. First it is necessary to recognize that hybrid organizations demonstrate a blend of traits from public and private spheres. This blending of traits then results in the emergence of a new organizational identity which requires managerial and governance strategies that are distinct and separate from those of private and public organizations. Furthermore, identity development is also fostered by understanding how hybrid organizations function in relation to greater society at large, as well as in relation to individuals, thus providing macro and micro conceptions.

Hybrid organizations have certain distinct characteristics that combine elements from the public and private as well as for-profit and non-profit worlds that they bridge (Hoffman et al., 2010). Hoffman et al. (2010) investigated hybrid organizational change as it occurred on two different levels. The levels explored were the firm level, where hybrid organizations resulted in the development of products to encourage well-being in the environmental and social realms, and the institutional level, where product acceptance is diffused by hybrid organizations among many markets and industry, as well as competitors. These authors proposed a model to facilitate understanding of social change among these levels, which was called the Sustainability-Drive Business Model.

The model developed by Hoffman et al. (2010) has three key components. First, social change is conceptualized as an organizational objective. Second, the model assumes relationships that are mutually beneficial between suppliers and communities of suppliers, as well as employees and customers. The third and final element is the presence of progressive interaction between the hybrid organization and institutions, such as those associated with competitors, markets, and industry in general (Hoffman et al., 2010).

There are certain practical implications associated with the model proposed by Hoffman et al. (2010). The main implications include the fact that the model provides an example that can be used in the development of strategies for the hybridization of organizations. Another implication is that hybrid organizations present challenges to widely held conventional assumptions associated with business. Furthermore, the model also bridges two ends of an organizational dichotomy and brings sustainability into main stream thought, which promotes risk extinction (Hoffman et al., 2010).

Hybrid organizations provide a challenge to commonly held assumptions regarding business. The principles under which hybrid organizations function promote a reconsideration of traditional assumptions (Hoffman et al., 2010). These challenging principles include: viewing the firm as interconnected physically and socially to other societies as well as the ecosystem; profit as a motivation is conceptualized as one of many firm objectives; economic growth is seen as multi-faceted, involving aspects such as community consciousness, intensiveness of information, as well as different qualities of economic activity; nature is conceptualized as valuable in regards to social, spiritual, and cultural aspects; and relationships between all levels within and associated to an organization are seen as dynamic and multi-dimensional (Hoffman et al., 2010). It is suggested that these challenges to common assumptions in business provide a glimpse into the direction that business is heading to into the future (Hoffman et al., 2010).

In regards to directions for future research, it is suggested by Hoffman et al. (2010) that investigation pursue questions surrounding the bridge that hybrid organizations present between priorities on several levels, including social, economic, and environmental factors. Suggested directions include looking at the ways in which hybrid organizations affect standards at the industry level, the dynamics involved in how these organizations perform as institutional entrepreneurs, as well as how hybrid organizations promote change on a social level.

Future investigations in hybrid organizational research should focus on factors that will lend to sustainability of these organizations. Hybrid organizations are becoming increasingly prevalent, and it is therefore critical that factors involved in these organizations achieving successful outcomes be explored. Questions surrounding identity development, governance, managerial control, and relation of hybrids to other organizational types will illuminate how these organizations operate most successfully and how they are most effectively sustained.

Research and development has seen an emergence of a new form of institutional knowledge structure in the form of a hybrid organization (Wagner). These structures are known as science-industry competence centers. These organizations are operational within frameworks that are heterogeneous and fragmented, which results in multi-faceted challenges for management in these organizations, necessitating appropriate conceptualizations and methodologies (Wagner). Wagner suggested that management strategies within this type of hybrid organization could be enhanced through the development of an action-learning approach, which would result in effective solution implementation as well as management practice improvements.

Wagner described how there are features that are typically characteristic of hybrid organizations in research and development. These organizations are collaborative, and create a bridge between industry and science. There are numerous management challenges associated with research and development hybrid organizations. The first challenge to management is based in the fact that relationships among the members of the organization are grounded in trust and power. A second challenge is posed by the coordination of cooperative relations that exists between hybrid organizations. Another challenge may be posed by the disadvantage combination of cooperation and competition that is characteristic of hybrid organizations (Wagner). Overall, these challenges may prevent hybrid organizations from establishing effective identity, policies and strategies. On the positive side, it is assumed that research and development resulting from this type of hybrid organization can immediately and directly contribute to necessary problem solving within the industry (Wagner). Furthermore, Hybrid organizations within research and development provide a collaborative blend of industry, science, and government (Wagner).