Lecture slides for the governing hybrid organisations

Looking for the options: Hybrid governance, Analytical perspective
Source: Jan-Erik Johanson & Jarmo Vakkuri (2017)
Governing hybrid organizations. Exploring variety
of institutional life. Abingdon & New York, Routledge.

In press, to be published in
August 2017
MA course in English, spring
2018,3rd semester.
University of Tampere,
Faculty of Management

 Private enterprises in charge of public duties:Public buildings,mines,supplies
for the army,grazing lands,and tax collection (’tax farming’).
 First descriptions were related to the contracts for feeding of sacred hens in the
hill of Capitolium 390 BC.
 Societas publicanorum:limited liability public service corporations,shares,
flexible organisation,division between administration and politics,in other
private business limited liability through the joint slave ownership and ’slave
CEO’.
 Criticism for malpractice:fraudulent behaviour in transportation,detachment
from unprofitable public contracts, cruelty in mines,excessive tax collection.
 In the imperial era the centralized civil service replaced the private companies
in administering public duties.The autocratic rule of the Emperors replaced the
oligarchic rule of the Senate.
 The written historical sources originate from the descriptions of the Senators
and followers of the Caesars who were in competitive position in relation to the
publicani.Caesars followed their whips and whims,and the conduct of civil
service was not always exemplary.

I
II III
IV
Follow Me!
a
b c
a b

 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.

Monstruous hybrid (mixing
of syndromes)
A cute little pet
Listen a story about Chimera

 Syndrome as a compatibility problem, not as a disease.
 Guardian syndrome is important for the integration.
 Commerce syndrome is important for survival.
 Consider two tribes: a tribe of fishermen and an agricultural tribe.
Separate community effort to fulfill goals and exchange with the other
are equally important functions.
 Hybrid organisations mix integration and exchange.Therefore, there
are risks involved.

Guardian Syndrome Commerce Syndrome
• Shun trading
• Exert prowess
• Be obedient and disciplined
• Adhere to tradition
• Respect hierarchy
• Be loyal
• Take vengeance
• Deceive for the sake of the task
• Make rich use of leisure
• Be ostentatious
• Dispense largesse
• Be exclusive
• Show fortitude
• Be fatalistic
• Treasure honor
• Shun force
• Compete
• Be efficient
• Be open to inventiveness and novelty
• Use initiative and enterprise
• Come to voluntary agreements
• Respect contracts
• Dissent for the sake of the task
• Be industrious
• Be thrifty
• Invest for productive purposes
• Collaborate easily with strangers
• Promote comfort and convenience
• Be optimistic
• Be honest

Hybridihallinta
”Labradoodle”
Labradoodle Crossbreed between a
labrador and a poodle.
 Inflicts very little allergies.
 May suffer from health
problems.
 Has not been approved as a
pure dog breed.
 Some say that it should not
have been created in the first
place.

 Greek mythology: a
combination of a lion, a goat
and a snake (or scorpion or
dragon)
 It can breath fire
 Was considered as a bad
omen predicting disasters
 Refers to things highly
imaginative or implausible
Chimera

Questions
 How should we understand
the space in between public
and private?
 What kind of empirical
categorisations are used to
classify hybridity?
 How do hybrid
organisations legitimate
their activities?
 How are hybrid activities
valued in society?
Answers
 Micro,-meso ja macro.
 Singular, Dyadic, and Triadic.
 ”Conceptual waste”,
”Muddling through”,
”Deviation from optimum”.
 External – internal.
 Hybrids by design vs. by
default.
 Impure goods, Combinations
of orders of worth.

Johanson & Vakkuri (2017) Governing hybrid organisations. Exploring diversity of institutional life. Abingdon & New York, Routledge..

Johanson & Vakkuri (2017) Governing hybrid organisations. Exploring diversity of institutional life. Abingdon & New York, Routledge..
Coxa- Hospital (Case 4.2)
National innovation system (Case 3.3)
Global air travel (Case 3.4)
Health policy (Case 3.1)
Cleantech –industry (3.2)
Energy company
In Vietnam (Case 4.1)
PPP Road construction
In China (Case 2.2)
System of National Accounts (Case 3.5)
European PPP pension
Provision (Case 5.1)
Publicani in the Roman
Republic (Case 2.1)

 Innovation system as a catalyst of innovations
 Old: basic research, applied research, commercial applications.
 New: university, enterprise and government interaction as a source of innovation (triple
helix).
 Specialisation into particular industries implies that industries differ from one
another. Usually there is no unified national innovation system.The significance
of an innovation system is difficult to verify.
 Forerunners:(Greece,Ireland) efficient production and commercialization.
 Laggards: Problems with both innovation production and commercialisation
(Netherlands,UK),
 Problems with commercialisation:(Canada,Finland,Korea,New-Zealand)
 Problems with innovation production:(Italy,Norway,Mexico Portugal).
 If universities take a position in developing innovations,students and basic
research might suffer.
 The wealth of industrialized countries is both antecedent and consequence of
innovations.

Looking for the options: Hybrid governance, Reasons for hybrids
Governing hybrid organizations.Exploring variety

 Strategy: public organisation is capable of achieving change in
the environment of an organization. Private enterprises are
geared to adaptation to the environment. Hybrids might be
better equipped to influence their environment than private
enterprises
 Performance: Performance measurement is ambiguous also in
business and government organisations.The combination of
profit-seeking and public policy goals in hybrids requires the
simultaneous use of two different yardsticks.

Strategies as goal-oriented
future actions
 Strategic design. Advancing
goals through programming
 Strategic scanning.
Advancing goals through
combining resources
 Strategic governance.
Advancing goals through
sharing work and
connecting with others
Performance as evaluation
of past actions
 Principle of economy.
Performance as parsimony.
Minimum costs and efforts.
 Principle of efficiency. The
best possible output with
given resources
 Principle of effectiveness.
The best possible value and
outcome with given
resources

 The combination of public policy goals and for-profit activity.
Environmental sustainability as source of business
opportunities rather than as a counterforce.
 Interest of capital investors in new technologies.The concern of
citizens of the degradation of environment.
 Changing environmental problems into business opportunities.
 ”doing well by doing good”.
 Conceptual battle and boundary concepts in the background:
”biotech”, ”infotech”,“cleantech”.
 Continuous problem of demarcation: Is low-emission diesel
engine part of cleantech?

 The categorisation into public and private goods is far from
clear
 The categorisation is ambiguous, vulnerable to change, and it
depends upon the structure of the institutions in a given society
 A straightforward interpretation is that hybrids would be
related to impure goods such as toll goods and common pool
resources
 In practice, hybrids are part of the production of public goods
as well. e.g. private enterprises in providing supply of weapons
and personnel for the army or building a spacecraft

 There were no highways in
mainland China in 1988, the
length of highways was 104 400
kilometers in 2013.
 Highway construction as public-
private partnership.
 Highway companies: 19 stock
listed companies.
 Road tolls provide revenue for
the companies as well as income
for the local governments.
 Road tolls as a device for
regulating road congestion.

The main features in the orders of worth (Table 2.1)
Adapted from Boltanski and Thévenot 2006, Thévenot et al. 2000, Boltanski et al. 2005.
Order of worth Main features
Inspired world Creativity, passion, emotion
Domestic world Reputation, trustworthiness, authority
World of fame Popularity, media, vogue, trends
Civic world Collective welfare, equality, rules, and regulations
Market world Price, competition, short-term
Industrial world Technical efficiency, engineering, long-term
Green world Environmental friendliness, sustainability, future generations
Project world Connectivity, flexibility, social capital, networks

 Orders of worth do not recognize public or private sectors.
 There are two possible worlds for the market activity: market
world and industrial world
 For public sector the nearest equivalent would be the civic
world (and domestic world)
 For strategic design the long term-orientation of the industrial
world is important point of reference
 For strategic scanning, the inspired world is important point of
reference
 For strategic governance, the project world and the domestic
word are important points of reference

 Hybrids combine the practices of public and private sector, but
they combine also orders of worth
 Hybrids do not have a conceptual position in existing
categories.Therefore, they are vulnerable to grievances
 Examples:
 Why are public services provided by private enterprises (Market
world) if it endangers the equality of citizens (civic world)?
 Why to employ practices such as public-private partnerships even if
they provide uncomfortable mixing of market and civic worlds?
 Why do societies intervene with market actions even if there are no
conspicuous implications for social policy?

 Vouchers. Instead of allocating public
budgets and funding to service-
providing organisations, funds are
allocated to the users of the service.
The user is able to utilise her voice
when making choices. This may
contribute to higher levels of variation
in terms of service volume and quality.
 Contracting out. This is based on an
assumption that public service
provision is fundamentally a ‘make or
buy’ decision (Williamson 1999). The
buy decision may have implicated new
types of internal quasi-markets
(a purchaser-provider split) or
externalised public service systems.
 Privatisation. At the macro level of
society, an extreme form of indirect
control is privatisation, in which
control is actually delegated to
private economic agents. for
example, energy, transportation, and
telecommunications. It has not been
able to evade the hybridity of parallel
institutional logics.
 Public-private partnerships
(PPPs). The impetus to mix
governments with markets has
created an industry of new forms of
interaction between public and
private sectors. Public-private
partnerships may assume several
different forms and thus create
families of conceptual positions.

Looking for the options: Hybrid governance, Conceptualising hybrids

Animals are divided into (a) those that belong to
the Emperor, (b) embalmed ones, (c) those that
are trained, (d) suckling pigs, (e) mermaids, (f)
fabulous ones, (g) stray dogs, (h) those that are
included in this classification, (i) those that
tremble as if they were mad, (j) innumerable
ones, (k) those drawn with a very fine camel’s hair
brush, (l) others, (m) those that have just broken a
flower vase, (n) those that resemble flies from a
distance.
(Borges 1966, 108)

Impure types, demarcation from the original species
Forms of hybridity in public admistration context:
Politics and administration
Public administration and business activity
-As a governance structure
-As an entity
-As a relationship

ccc
No specific
features
Markets
Unprotected hazard
Hybrid contracting
Firm
No contractual
safeguards
Market
support
Private
Regulation
Specific features
Contractual safeguard
Administrative support
Public
Public agency
Williamson 1999

 Cooperatives, mutual companies and public enterprises and
non-profits illustrate entities which do not conform to the
ownership perspective.
 Rationale: the cost of ownership (Hansmann 1996). Those that
would suffer most for not owning, are the most likely owners
 University as an example: Public ownership might help to sort
out possible grievances between students, academic oligarchy,
private enterprises and public authorities.

 Ambiguous organisations in terms of ownership,goals,resource
acquisition and control.
 Education includes features of both public and private goods.In terms of
control, societies have always been eager to control university activities.
 Academic oligarchy: in addition to public and private regulation,there is
the aspect of self-regulation.
 Logics of performance measurement: multiple measurers (government,
business, and students),There is no one single yardstick. How universities
serve for profit motives, education policies and willingness of citizens to
invest in human capital?
 e.g. Does university produce new knowledge? (academic oligarchy)? Does
the higher education conform to the requirements and is it comparable
with other units (government).Can I get a good job by acquiring higher
education? (student)
 In what ever way you evaluate the performance,it cannot be done
satisfactorily in any one single way.

 Public-private partnerships, (PPP)
 Long-lasting cooperation between public
and private actors in producing services
and products by sharing risk, cost and
resources (Koppenjan, Enserink 2009)
 Forms: Public leverage, outsourcing,
licencing, joint venture, open strategic
partnership (Schelcher 2005)
 A step further: Any meaningful interaction
between public and private actors

Dimension Publicleverage Outsourcing Lisencing Joint venture Open strategic
partnership
Significance for the
public sector
Inciting private
sector investments
Savings, quality,
efficiency, improved
management
Public sector
attention to the
private sector
Access to private
resources, transfer of
risk to private partner
Attachment of private
interest in public action
Mode of operation Industrial subsidies Public service provision
in private enterprises
Private enteprise
acquires right to
produce public
services
Agreement in which
the private partner
acquires capital and
is resposible for the
operational cost
Long-term unofficial
cooperation
Financing Public public User fees,
Often public
supporrt
Private,
public
reimbursement
Public, Private funding
is possible
Example Subsidies for
declining industrial
areas
Carbage disposal,
Social services
Many public private
pension schemes
Infrastrucuture
projects
Civic engagement

 Public-private arrangements have become more common in European
pension provision since the 1990’s (within private sector).
 Three models: 1) public leverage, 2) licensing,3) franchising.
 Accountability:1) public leverage: defining private service as mandatory,
usually no specific accountability mechanism; 2) licensing:public
authority requires private producers to comply with the stipulated
requirements, accountability can be evaluated according to the
requirements; 3) Franchising:public authority defines the product and
grants production right to private enterprise,the forms of accountability
vary.
 Two basic forms of accountability: 1) accountability to the key
stakeholders (social partners,employers in particular).2) mandatory
private arrangements.The accountability is realised between service
provider and public authority.
 The freedom of choice has increased,but the voice of he beneficiary is
muffled. If accountability is defined, it is connected to the employers as
financers of the schemes,not to employees as beneficiaries.

 Bilateral government agreements (ASA) over the routes between
two destinations. Overall there are more than 3000 agreements
globally.
 Restrictions of foreign operators within national airspace.
 Private airlines, state-owned airlines (flag carriers) and hybrid
airlines.
 Hybrid contracting in global alliances: Star Alliance, Oneworld,
Skyteam.
 Landing rights to government -owned airports.
 Aircraft manufacturing: public subsides (army acquisitions) and
direct government stakes, government guarantees for aircraft
purchasing
 Main manufacturers:Bombardier (Canada),Embraer (Brasil),Boeing
(USA),Airbus (Europe).
 Wide-body aircrafts.Two manufacturers:Boeing and Airbus.

 PERSPECTIVES
 Hybrid organisations
(organisation)
 Global air travel (hybrid
industry)
 Other
 National bilateral contracts in
establishing routes
 State influence on aircraft
manufacturing
 Public airports and
distribution of landing slots to
aitlines
 ACCORDING TO THE
NUMBER OF ACTORS
 Singular
(public/private/hybrid)
 Dyadic (Public –private
cooperation in global
alliances)
 Triadic (global alliances)

Taxonomy in biology:
Scientific names of animals and hierarchical levels
of taxonomy (According to Carl von Linné 1707-1778)

 Organisations resemble living creatures in a sense that
they are born and they face institutional life and death
 BUT Organisations do not reproduce sexually. They do
not possess DNA that would dictate their life and death
 Organisations can inherit acquired characteristics
 For any classification it is noteworthy that
organisations may alter their actions due to the
classifications
 Organisations are social beings.Therefore, univocal
and exhaustive classification of organisations is very
difficult

 The system of national accounts aims at statistical classification of economic activity according to globally
accepted principles.
 Background: the need for public intervention to combat the Depression in the 1930s, the increased role of
government in economy, the need to calculate the available resources for the war effort and recovery after the war.
 The national accounts were designed to inform macroeconomic policy by supporting macroeconomic analysis and
providing a conceptual basis for the formation of long-term strategic development and reform (Ward 2006; Vanoli
2005).
 By identifying the distinct roles of different institutions, national accounts give guidance on the mandates and
incentive structures of corporations, households, governments, and nonprofit institutions
 For the purposes of the SNA, institutional units that are resident in the economy are grouped together into five
mutually exclusive sectors (and many subunits) composed of the following types of units:
1) Nonfinancial corporations
2) Financial corporations
3) Government units, including social security funds
4) Nonprofit institutions serving households (NPISHs)
5) Households

Level of analysis Main distinction The result of distinction
Level one
All institutional units
No distinction between institutional units is
possible (kingdom)
Totality of units
Level two
Geographical location
Distinction between resident and foreign
(rest of the world) institutional units
(phylum)
Domestic, foreign
Level three
Type of institutional unit
Distinction between types of households
(class)
Institutional households, households
Level four
Pricing
Distinction according to market principle
(order)
Nonmarket producer, market producer
Level five
Area of activity Distinction between the institutional nature of
organisations (family)
Nonprofit institutions serving
households, nonfinancial institutions,
financial institutions, government
Level six
Control
Distinction according to controlling entities of
the unit (subarea of activity only) (genus)
Public, private, and foreign control of
market producers

Denial: Public – private partnership (PPP)
 PPP first appeared in classification in the latest 2008 edition
 PPP arrangements are categorized into either public or private
according to the distribution of risk
 PPP is ”conceptual” waste and its independent existence is
denied

Restricted approval: Originally non-profit institutions
were subjected to serving households
 The initial categorisation could not grasp the variety of non-
profit activities
 Solution: A more detailed classification outside the System of
National Accounts

Looking for the options: Strategies for different types of organisations

The young lieutenant of a small Hungarian detachment in the
Alps sent a reconnaissance unit into the icy wilderness. It began
to snow immediately, snowed for two days, and the unit did not
return.The lieutenant suffered, fearing that he had sent his own
people to death, but on the third day the unit came back.Where
had they been? How had they made their way?
“Yes, they said, we considered ourselves lost and waited for the
end.Then one of us found a map in his pocket.That calmed us
down.We pitched camp, lasted the snowstorm, and then with the
map we discovered our bearings.And here we are”.
The lieutenant borrowed this remarkable map and had a good
look at it. He discovered to his astonishment that it was not a map
of the Alps, but a map of the Pyrenees.
(Weick 1995, 54)

Johanson & Vakkuri (2017) Governing hybrid organisations. Exploring diversity of institutional life. Abingdon & New York, Routledge.
Strategic design Strategic scanning Strategic governance
The role of strategy
The strategy defines
ways to expand and
organise current
actions (programming)
The strategy enables the
mapping of novel ways to
match resources to fulfil
goals (combining)
The strategy defines the basis
for sharing work with
external partners (relating)
Assumption about
the environment Disturbed-reactive Turbulent fields Turbulent fields
Primary type of
capital
Financial Human Social
Managerial control Budget Division of labour Contract
Main challenges Unanticipated situations Rigid resources,
misinterpretation of
resources
Contracting costs,
overwhelming external
stakeholders

THREE PERSPECTIVES ON THE STRATEGY OF
HYBRID ORGANISATIONS (FIGURE 4.1)
How is it going to be?
What do we have? With whom are we
going to be with?
Threats and opportunitiesStrenghts and weaknesses

 Pv Power in Vietnam (Case 4.1) (Binh 2016)
 Part of the Vietnamese oil and gas group (Petrovietnam),overall
approximately 30% of GDP.
 Pv Power: Securing energy production, management of power plants,
production of electricity.
 Previously the use of domestic coal. Following the economic growth,
increased import.
 Import restrictions:Only three companies can import coal.The approval of
prices by public authorities.Ambiguous rules in accepting prices.
 In the evaluation of bids, there are two main criteria: the continuity of
supply and competitive pricing. Not all producers wish to take part in
bidding and brokers sometimes make false promises.
 Unclear rules result in difficulties in deciding on acceptable prices and
requirements for continuity. Negotiations between ministries and state-
owned enterprises.

 Public – private hospital (Coxa:Tampere,Finland). Previous
quality problems in hip and joint replacement surgery.
 Systematic management training (TQM) within Pirkanmaa
health district.
 Possibility to establish private hospital within public health
care system.
 Coxa was a result from long-term negotiations among the
stakeholders.
 Both public and private owners,representation of
stakeholders within the board.
 The construction of the hospital as public- private
partnership.
 The use of profits for use within one’s own organisation.
 The results of the care have been improving.The finances are
good.

 Russia: SOEs control many important industries
 Mass media,military-industrial complex, infrastructure,
natural resources, financial services, public sector
accounts for 40% of stock market capitalisation
 Political elite controls foreign trade,economy is structured
around industry groups with holding company structure led
by tycoons (oligarchs)
 In industry groups, the success of subunits is dependent
upon the contacts to the oligarch.The success of an oligarch
is dependent upon the contacts to the members of political
elite
 The result:parasitic politico-economic structures which
enables the influence of political elite on society as a whole

 Patron-client structure:Public
authorities as patrons, oligarchs as
clients
 Client provides financial benefits
and acquires political support for
patron. Patron gives political
protection.
 The most important patrons:
president,prime ministeri,the
mayor of Moskow.The most
important oligarchs are connected
to these institutions
 In practice,the same structure in
89 districts and cities
 In the Putin era, some of the
oligarchs have been removed, but
they have been replaced with
others
Owner
Enterprise(Grosman & Leiponen)

Private enterprises Public agencies Hybrid organisations
Strategic
design
Strong position in
lucrative industry
Ideal position in proximity to
power or the enlargement of
bureaus
Beneficial position between
private and public spheres
Strategic
scanning
Inimitable and unique
combinations of internal
resources
Command of valued
expertise and information in
the policy process
Privileged access to both
public and private
resources
Strategic
governance
Exploitation of lack of
contact between other
firms.
Brokering in the policy-
making process, divide-and-
rule through power and
alliances
Exploitation of lack of
contact between other
organisations,
brokering between
government bodies and
business enterprises

Looking for the options: Performance of organisations

Super-goals
 Relatively permanent
criteria for measurement
purposes.
 The aim is to identify
optimality and deviance.
Hybrids and supergoals
 The dual goals of hybrids
are vulnerable to changes
of emphasis.
 Hybrids are different in
comparison to others, but
they do not constitute a
homogeneous group.
 Vulnerability of change may
induce adaptation.

State-owned Enterprises in
China
 Over half of thet SOEs follow
hybrid governance as follows:
 Politics: communist party section,
employee association, employee
meeting.
 Corporate governance:
shareholder’s meeting, the board
and supervisory board.
 Differentiated incentives:
ideological education for
management to combat
corruption, financial perks for
employees to increase efficiency
(Hua et al. 2006)

Social enterprises USA vs.
Europe
 USA: ”big government” and increase in
non-profit activity in 1960’s and 1970’s.
 USA:The decrease of government funding
in 1980’s did not change thet social
mission of non-profits,but required
additional resources from the market
activities of non-profits.
 Europe:The unemployment in 1980’s,
availability of public support for the
reduction of unemployment.
 Europe:The emphasis of non-profit activity
on employment and financing from the
public sources (Defourny & Nyssens
2014).

For performance
measurement
 Business enterprises, public
agencies or hybrids do not
have a single common goal
 Measurement is a feature of
successful organisation
 Organisations justify their
existence by being
connected to other
organisations
 The action does not have
other easily manageable
alternatives
Implications for hybrids
 The rationality of
measurement decreases
insecurity
 Measurement decreases
impurity
 Measurement produces
comparability
 Measurement helps to sort
out future direction

Performance measurement
as a form of social action
(Figure 5.1)
Main features
 Measurement is a product
of social action
 Measurement is a medium
for human (inter-)action
 Measurement both
constrains and enables
 Measurement solves
problems, but also creates
new ones

Measurement of economic
performance (Figure 5.2)
Main features
 Measurer: who is the measurer?
 Measuree: the object of
measurement
 Measurement system:The rule
system of calculation,according
to which performance is
quantified
 Measurement result: The results
of measurements to be used for
the decision-making of public
policies, organisations,and
relevant stakeholders

 Measurer: Multiple possibilities 1) students and business, 2)
higher education authorities 3) academic oligarchy.
 Questions:whose value should be increased?
 Measuree: 1) universities as service providers, 2) universties as
implementors of policy goals, 3) universities as academic tribes.
 Question:How should we understand universities as objects of
measurement?
 Measurement system: 1) performance satisfying stakeholder
needs, 2) Performance in fulfilling goals of higher education
policies, 3) performance measurement as device to verify the
creation of new knowledge.
 Question:how to define the rules for measurement systems?
 Measurement results: 1) legitimation for satisfaction, 2)
legitimation over fulfilling political goals or 3) legitimations over
production of new knowledge.
 Question:Who needs to be convinced with the results?

 Accountability over actions which one
has no say.
 Compromises to number of directions.
 ‘Organizations trying to meet conflicting
expectations are likely to be
dysfunctional, pleasing no one while
trying to please everyone.’ (Koppell
2005, 95)
 Measurement as a solution. As a
consequence, more performance
measurements, which require more work,
but do not solve the underlying
contradictions.

 Balancing between access to service, service quality and cost
containment.
 US: organisation, financing, production and management
combines public and private features.
 Financing: public private 50/50. Production predominantly
private.
 The health expenditures as share of GDP (16,4 %) are higher
than in other OECD countries (8,9%), but the coverage is lower
than in other countries
 Cost containment is not equally important to all stakeholders.
 How to evaluate the inefficiency of hybrid governance?
Compared to what? Public, private, and other feasible
arrangements.

Private enterprises Public agencies Hybrid organisations
Economy, the
principle of
parsimony
Minimising product costs in a
competitive environment,
minimising transaction costs
Minimising public expenditures
and the financial burden to
taxpayers
Minimising the cost of collaborative
governance and joint production
Efficiency, the
principle of
optimality
Technical efficiencies, optimal
input-output relationships, scale
efficiencies emphasising the
volume of production, economies
of scope emphasising the
benefits of joint production
Scale efficiencies emphasising
the volume of production,
allocative efficiencies
ensuring the equal
distribution of outputs and
outcomes
Economies of scope beyond
organisational boundaries, producing a
complementary variety of services and
goods
Effectiveness,
the principle of
value creation
Value for customers and
shareholders (the profit motive
and the concept of profitability)
Value for society, taxpayers,
and the public
Value for society, taxpayers, and the
public, value for customers and
shareholders (the profit motive and the
concept of profitability)
Motto ‘Doing good by doing well’ ‘Doing good by doing good’ ‘Doing well by doing good’

Defining the alternatives: Strategy and performance in hybrid setting

 Principle of economy: how to organise processes; heuristics
and external interactions as simply and economically as
possible in the presence of both public and private influence
(financial sustainability).
 Principle of efficiency: balancing goals, administering fruitful
doses of resources and evaluation of external interaction in two
spheres to maximise outputs (equilibrium).
 Principle of effectiveness: what are the long term concequences
of hybrids, how innovations within hybrids are evaluated, what
is the role of hybrids in the social integration)? (value creation)

 Strategic design: How to organise goals and division of labour to
maximise the future benefits? (legacy)
 Strategic scanning: how to combine public and private modes of
operation, resources and innovations in such a way that the
resulting whole is more than sum of its individual parts? (social
welfare)
 Strategic governance: How to combine dual directions of
external relationships in such a way that public and private
stakeholders are present for fruitfull goal attainment and
integration of society? (social capital)

 Process integration: The use of same channel for multiple client
groups (public/private)
 Balancing goals:The control of stakeholders
 Harvesting legitimacy: acceptance from multiple sources
 Legacy:The well-being of future generations

 Combining heuristics: e.g. Ideological education against
corruption, financial incentives for efficiency
 Administering doses for synergy:The balancing of public and
private resources to avoid dependence
 Creating innovations: The balance between public and private
innovations
 Social welfare: The well-being in society in different economic
and social structures.

 Establishing connecting positions: With minimal number of ties
maximal number of connections.The centralization and
decentralisation of external relationship management
 Weighing dual reciprocities: how beneficial the contacts are to
public and private partners. Paradox: community building
most often requires reduction of contacts to other groups
 Integrating communities: Brokering positions shorten the paths
that would otherwise be longer (horizontal and vertical
integration, bottom-up and top-down)
 Social capital: intertwined society

Defining the alternatives: New understanding of hybrid governance

External: problems of
regulation
 Ambiguous organization
structures
 Dual rule structures
 Problems of accountability
Internal: operational
possibilities
 Vitality in specific space
 Institutional survival despite
contradictions
 Hidden strenghts beyond
politics and business

 The role and position of hybrids and hybridity in institutional life is
significantly determined by the extent to which their action and
behaviour is perceived as rational
 a system of hollow politics in which important strategic choices have
been made through somewhat obscure and nontransparent processes
and mechanisms of decision-making
 system of lousy business practices in which, in terms of performance,
bureaucratic red tape and the pursuit of a common good prevent the
pursuit of sensible profit seeking
 We may give credit for no particular reason, and we may also assign
blame to hybrid organisations with insufficient causal reasoning and
improper empirical evidence.

 1) Conscious selection of accountability structures: As agents,hybrids are
not expected to demonstrate accountabilities in all directions or to be loyal
to all principals. Some stakeholders and audiences are more permissive of
the ambiguity of accountabilities,which encourages permissive
accountability structures.
 2) Choosing the modes of value to demonstrate. One important
characteristic of hybrid activities is that, despite high expectations,
hybrids are not able to produce all kinds of value. Hybrids may have an
option to disclose those forms of value they wish to hide.
 3) Selecting the forums to be present.Hybrids may be able to benefit from
the problem of multiple decision-making heuristics and institutional
logics.This may be an excuse for hybrids to justify their decision-making
procedures in favourable forums.

 The significance of hybrids varies according to context
 Hybrids and advanced industrial countries:hybrid activity as an
extension of market activity with a social twist.When considering the
highly coordinated market economies in Nordic countries, hybridity
easily appears to be a government-driven system with a market twist.
In liberal societies hybrids appear as extension of markets with a social
twist.
 Hybrids and state-centric societies: economic activity with the central
influence of the government. In these settings, there is no need to see
hybridity as a transitory phase.Instead, hybridity can be seen as a
device to retain continuous top-down government control of market
transactions.
 Hybrids and developing countries: Could be the only option to organise
large-scale economic activity in the developing world. Hybridity is not
an extension of the existing categories but instead an anchor point for
organising economic structures and government activity in the future.

Lecture slides for the governing hybrid organisations

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Lecture slides for the governing hybrid organisations