Hybrid organizations: a classification within economic sectors

The traditional categorization of economic sectors into private, public, and nonprofit often fails to account for hybrid organizations exhibiting characteristics of multiple sectors. This creates confusion and hinders research. This study addresses this gap by proposing a more comprehensive model that incorporates hybridity. The increasing prevalence of organizations blurring these lines – nonprofits needing self-generated revenue, governments outsourcing to nonprofits, public management adopting market-like competition, and for-profit organizations emphasizing corporate social responsibility – necessitates a refined understanding. The research question guiding this study is: How can hybrid organizations be classified into a conceptual model of economic sectors? To answer this, the study reviews existing economic sector models, the concepts of ownership, hybrid organizations, and institutional logics. It then proposes a typology of economic sectors that links private, public, and nonprofit sector hybrid organizations within the Canadian context.

Existing research extensively covers hybridity within specific organizational types, such as social enterprises and for-profit hybrids. However, interdisciplinary research on hybridity across economic sectors remains scarce. This study fills that gap by focusing on the broader interdisciplinary aspects of hybridity, aiming to create a typology that integrates all three sectors. The study acknowledges the existence of a fourth sector encompassing families and households, but limits its scope to organizations due to the focus on economic activity at the organizational level. While some scholars debate whether this fourth sector belongs within the nonprofit sector, the proposed typology comprehensively includes organizations, with informal voluntary activities either falling outside the scope or being categorized under the nonprofit sector.

The study employs a conceptual approach, drawing upon existing literature to define and categorize hybrid organizations. The core methodology is a synthesis of existing theoretical frameworks and empirical observations to create a novel typology. The researchers reviewed relevant literature on economic sectors, ownership, hybrid organizations, and institutional logics, analyzing existing models to identify their limitations in handling hybridity across all three sectors. A critical element of the analysis involves the theory of institutional logics, focusing on the symbolic and material elements structuring organizational legitimacy. The authors examined various institutional logics proposed in the literature, including ownership, funding sources, governance, operational priorities, and human resources. Based on their analysis, ownership (organizational form) and funding (resource dependence) emerged as the most relevant for identifying and classifying hybrid organizations. This is because they provide the clearest differentiators among the three traditional sectors: Private-sector organizations have shareholder ownership and rely on revenue from clients; public-sector organizations have government ownership and rely on taxation and transfers; nonprofit organizations have voluntary ownership and rely on donations, dues, and grants. This foundation allows for the development of a typology that maps the tensions between these institutional logics in hybrid organizations.

The study proposes a typology of organizational forms based on the institutional logics of ownership and funding (resource dependence). This typology distinguishes six main types of hybrid organizations: 1. **Private-Public Hybrids:** These include Public-Private Partnerships (PPPs) and State-owned Enterprises. PPPs involve collaborations between for-profit enterprises and government entities, combining private sector efficiency and public accountability. State-owned enterprises are government-controlled but operate with business-like models, generating revenue through user fees while offering public services. Examples include infrastructure projects (PPPs) and crown corporations (State-owned). 2. **Public-Nonprofit Hybrids:** This category encompasses hospitals, universities, colleges, and political parties. These organizations blend public funding and voluntary ownership, often operating as para-public entities while delivering social benefits. Hospitals and universities receive significant government funding while maintaining nonprofit status, while political parties are linked to government yet rely on member dues and donations. 3. **Private-Nonprofit Hybrids:** This includes social enterprises and cooperatives. Social enterprises pursue social missions alongside profit generation, blurring the lines between private and nonprofit sectors. Cooperatives are member-owned and democratically controlled, balancing social objectives with profit generation for members. Examples of social enterprises are organizations involved in environmental sustainability, ethical production, or socially responsible finance. Examples of cooperatives include worker cooperatives and consumer cooperatives. The study presents these findings in a table that outlines the typology, using ownership and funding as the primary axes, and a figure illustrating the relationship between the three sectors and their hybrid forms. The figure visually shows how hybrid organizations occupy the space between the pure forms of the three sectors.

The proposed typology addresses the research question by providing a framework for classifying hybrid organizations across the three economic sectors. By focusing on the fundamental institutional logics of ownership and funding, it offers a parsimonious yet informative approach. This contrasts with existing models that either fail to integrate all three sectors or lack the detail needed to capture the nuanced variations within hybrid organizations. The Canadian context serves as a valuable case study, highlighting the diversity of hybrid forms within a specific institutional environment. The model’s simplicity enables researchers to categorize hybrid organizations more effectively, facilitating comparative analysis and further research. The visual representation enhances the clarity and understanding of the conceptual model, allowing researchers to better grasp the complexities of hybridity and its implications for policy and practice.

This study contributes to the field by providing a parsimonious typology of hybrid organizations based on the institutional logics of ownership and funding, organized using a 3x3 matrix. It offers a clear classification system for researchers to understand the variety of hybrid forms existing across the private, public and nonprofit sectors. Future research could extend this model to other international contexts, explore the stability and change of hybrid organizations over time, and investigate the factors driving their evolution. Further research could include examining the impact of specific policies and regulations on hybrid organization development.

The typology primarily focuses on the Canadian context, which might limit its direct applicability to other countries with different institutional arrangements and regulatory frameworks. It primarily considers hybrids exhibiting tensions along two institutional logics, potentially overlooking organizations with three-way hybridity. While the model acknowledges the continuum nature of hybridity, the use of discrete categories for classification necessitates a degree of simplification, potentially overlooking the complexities found in real-world organizations. Finally, this is a conceptual model, and empirical validation would strengthen its generalizability.