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The classic dichotomy between the realms of state, market and society is eroding. New, hybrid organizational forms emerge which try to combine the cultural orientations of both worlds. But how feasible is hybridity and how can the tension it produces be funnelled into positive action? And how can we produce synergy through hybridity?

Hybrid Organizations - Introduction

Hybrid organizations are bodies that operate in both the public sector and the private sector, simultaneously fulfilling public duties and developing commercial market activities. As a result they become a mixture of both: a part of government and a commercial enterprise. This especially leads to value pluralism: managers and workers in hybrid settings, as well as the politicians steering and controlling them, have to combine public and private interests, values, cultural orientations and syndromes.

Examples of hybrid organizations include waste management companies that collect both household and business waste, universities that provide consultancy services on a commercial basis, social housing providers that compete with commercial property developers, public schools that offer trainings for companies and hospitals that provide private medical check-ups.

Hybrid organization are no new phenomena (just think of the British East India Company) but their number is currently on the increase. There are several reasons for that:

1. Erosion of authority: Public organizations have lost much of their authority and their legitimacy. Vertical steering has made place for horizontal steering in networks. Regulation has been replaced by steering on output.

2. Autonomisation: A lot of executive agencies have been put at arm’s length of their department. They nowadays operate autonomously from their public owners.

3. (Re)introduction of market forces: Market forces have replaced governmental interference in various sectors, e.g. public utilities. The state has a new task as a regulator.

4. Speed of change: Technological and societal changes occur with unknown speed and put the state under ever increasing pressure. Public organizations are forced to act quickly and to look for solutions also outside the governmental realm in order to guarantee the quality of their services.

5. Lack of funding: Due to cuts in their budgets, public organizations are forced to find different means of income in the for profit-sector.

Hybrid organizations have strong as well as weak points. The combination of public duties and commercial activities can have significant synergy effects. But there is also the risk of unfair competition and that market activities could oust public activities. For more about these governance-issues see the texts under the tab governance.