Hybrid Organizations

For decades, CSR has been emphasized among enterprises. However, hybrid organizations have taken the responsibility one step further by designing their business models based on alleviating a particular social or environmental issue (Haigh et al., 2015). The term hybrid organizations reflect the mashup between traditional for-profit and nonprofit organizational practices (Haigh et al., 2015).

Regarding income generation, they attract capital similar to what can be found at these organizational structures (Haigh et al., 2015). In this thesis, we aim to delve deeper into hybrid entrepreneurs seeking to initiate change to alleviate or compensate for sustainability issues (Haigh et al., 2015). When working against a problem of this complexity, the whole business practice needs to be environmentally sustainable. Hence, sustainability demands more than just minimizing the organization’s negative impacts (Ehrenfeld, 2005). It is not enough to reduce carbon footprints, employ a couple of disabled people, or conduct other activities solely meant to tame the problem, as such solutions do not address the whole challenge and the complexity of sustainability (Ehrenfeld, 2005).

Sustainability has become a familiar concept these days. The word sustainability is on everyone’s minds, yet we find many to lack the knowledge of what the concept truly contains. It is defined as the development that secures the needs of the present without compromising the needs of future generations (Verdenskommisjonen for miljø og utvikling [WCED], 1987, p. 42). From WCED’s definition of sustainability, we see a link to the definition of business sustainability regarding timing. Business sustainability in itself is defined as the ability of firms to respond to their short-term financial needs without compromising the ability to meet future needs (Bansal & DesJardine, 2014). Hence, financial needs is a key term in business sustainability, and this is where it contrasts with hybrid organizations. For an organization to be sustainable, the main focus can still be on financial gains as long as it does not compromise future needs. On the contrary, hybrid organizations take it one step further by focusing on solving a sustainability problem, which demands more energy. Regarding timing, it is essential to make investments that do not deliver short-term returns but rather have long-term benefits (Bansal & DesJardine, 2014).

The community is important for hybrid organizations. A shared feature of these organizations is that they create strong relationships with communities through employing local people (Haigh & Hoffman, 2012). Typically, managers in such organizations seek to involve the employees in decision-making, train them in sustainable activities and pay an above-market wage to enable them a high-quality life (Haigh & Hoffman, 2012). In addition to caring for the local community, hybrid organizations are team players and value collaboration as a means for solving sustainability issues. They are known to invite entrants into their market, which contrasts with traditional companies aiming to create entry barriers (Haigh &

Hoffman, 2012). The hybrids’ view of not creating economic growth only for its sake serves as an explanation to the different practices highlighted above. Instead, they use economic growth to create positive social and environmental change (Haigh & Hoffman, 2012). To be able to differentiate between a hybrid organization and a sustainable organization emphasizing a triple bottom line, one can examine how the organization values timing (Bansal & DesJardine, 2014). Sustainability requires trade-offs regarding investing less for smaller profits today or investing more for greater profits later (Laverty, 1996). Hybrids are those organizations carrying a long-term perspective, aiming at creating a future to look forward to.

2.2.1 The Advantages of Hybrid Organizations

There are different reasons why traditional organizations move towards a hybrid business model. Some are required by new regulations from the government, others feel obliged due to demands from environmental activist groups or from the consumers who boycott unsustainable businesses (Holt & Littlewood, 2015).

Another reason for turning to a hybrid model is to attract the best employees, as hybrid companies have proven to be more sought after among millennials (Lee &

Jay, 2015), and the trend proposes this to be similar for the generations to come.

Further, the existing workforce in a company might demand more sustainable practices as they prefer working for companies perceived to perform well on this matter (Holt & Littlewood, 2015). Thus, organizations that succeed at becoming more sustainable receive an increased value among customers and employees (Lee

& Jay, 2015). The increase in perceived value among customers and employees benefits hybrid organizations. The hybrid organization is able to gain relationships with stakeholder groups, which can eventually turn into a competitive advantage (Lee & Jay, 2015). The relationship can further lead to more loyal customers, in addition to a word-of-mouth promotion (Lee & Jay, 2015). Hence, there are many advantages of becoming a hybrid organization, also linked to its workforce. For example, the workforce of a hybrid organization is willing to work with greater efforts and lower compensational demands and carries a higher job satisfaction and lower turnover intentions (Lee and Jay, 2015). These advantages are probably the most significant ones, as we argue that the employees make the organization succeed.

2.2.2 How Can Organizations Move from Traditional to Hybrid?

Financial values are essential for most organizations. For organizations to survive in today’s market, it is critical to have a positive bottom line. Therefore, the central challenge to overcome when becoming hybrid is to align the profit-generating activities with the impact-profit-generating ones (Holt & Littlewood, 2015).

Profit in this sense is the value captured for the organization’s owners, and impact is the value created for the society. To become fully or partly hybrid, Haigh and Hoffman (2012) have addressed three steps to which organizations can implement.

We will elaborate upon all three steps as they can prove valuable when looking into how Storebrand and Siemens have succeeded in implementing a more sustainable organizational structure.

1. Rethinking the Organizational Mission

In the first stage, Haigh and Hoffman (2012) emphasize the importance of including a societal issue into the organization’s mission. The issue can concern social and environmental aspects; nonetheless, it should be a set of issues that the organizational leaders are passionate about. The organization communicates its core concern by including a set of issues in the organizational mission. This allows the employees to express their values more entirely at work, leading to a more engaged workforce.

2. Redefining the Policies on How to Engage In the Market

At this stage, the organization will have to develop a new strategy. The authors propose that the organization can receive assistance from other hybrid organizations to establish one. Hybrid organizations seek to change industries through direct interventions, and therefore a well-developed strategy additional to an adaptation of their practices in other organizations is essential.

3. Establishing a Long-Term Perspective Which Considers a Broader Context A long-term perspective has been stated to be essential for hybridity previously. Moreover, this stage emphasizes how one should include society and the environmental aspect when looking at long-term benefits.

As argued above, the most critical aspect for an organization is its workforce, and it is the culture that guides what issues they emphasize and how they are acted upon (Howard-Grenville & Hoffman, 2003). Consequently, for the social initiatives to become successful, they must be aligned with the organization’s core culture (Howard-Grenville & Hoffman, 2003). Therefore, we aim to grasp the cultural dimension at Storebrand and Siemens through our research to examine whether the company culture has provided support when highlighting the importance of sustainability.