Governance and Accountability of Hybrid Organizations

Abstract

We examine the challenges of governance and accountability facing organizations that pursue a social mission through the use of market mechanisms. We call such organizations socioeconomic hybrids because they combine market and social welfare logics in their activities. We distinguish between two ideal types of hybrid organizations — differentiated and integrated — and we elaborate on the persistent accountability dilemmas faced by such organizations: achieving the dual objectives of profit-making and social mission, and addressing the demands of multiple constituencies. We then theorize about the roles of governing boards in addressing these challenges in order to maintain hybridity. We offer three sets of propositions on the role of boards in: a) monitoring the relationship between social and commercial activities; b) developing appropriate control strategies for monitoring performance; and, c) enacting meaningful forms of downward accountability to beneficiaries. We propose that the mechanisms for addressing these challenges differ between integrated and differentiated hybrid organizations.