Managing Tensions and Divergent Institutional Logics in Firm–NPO Partnerships

Abstract

This paper investigates the process through which firms and non-profit organizations (NPOs) reconcile divergent worldviews in the development of firm–NPO partnerships. Drawing on data from two long-lived firm–NPO partnerships, this study suggests that the dynamics of reconciliation in situations of institutional complexity can be better understood by examining how firms and NPOs manage the interplay of both market and social logics in an inter-organizational context. We have found that during the initial stages of collaboration, partners manage differences by engaging in joint pilot projects and by demonstrating management’s commitment to the partnerships. Subsequently, after firms and NPOs sign a formal partnership agreement, they seek to maintain a sustainable mode of interaction by adopting three distinct mechanisms for managing tensions arising from the partnership: negotiating activity scope, monitoring and learning, and modifying organizational practices. Our research findings contribute to the literature on cross-sector partnership and institutional complexity by highlighting the means by which organizations reduce tensions associated with divergent institutional logics and maintain successful partnerships.