| csi_logo_mit_uni_hd 1 Centre for Social Investment | [CSI] Towards understanding social enterprises as hybrid organizations - Governance issues in different stages of organizational development Masarykova Univerzita, Brno October 6th, 2017 Martin Hölz, M.A. CSI_klein | 2 Governance issues in different stages of organizational development csi_logo_mit_uni_hd csi_logo_mit_uni_hd Agenda §Conceptual framework •Social enterprises as hybrid organizations •Two “philosophies” of governance •Organizational development model of Pümpin/Prange (1991) §Empirical findings §Conclusions and implications A) •Centre for Social Investment | [CSI] CSI_klein | Conceptual framework •Economic logic Centrum für soziale Investitionen | [CSI] 3 Social logic •Social enterprises, social enterpreneurial organizations and non profit organizations with strong economic features as •strong hybrid organizations Weak hybridity Strong hybridity quellen CSI_klein | Two „philosophies“ of governance Centrum für soziale Investitionen | [CSI] 4 •participative, stakeholder-focused • • •Democratic models •Multi-stakeholder models • •- Democratic decisions - Based on institutional background - - Prevalent in social sphere •hierarchic, manager-focused • • •Stewardship models •Managerial /founder hegemony • - Top down decisions - Based on expertise • - Prevalent in economic sphere - •degree of stakeholder participation Sources: Conforth 2003; 2004; Huybrechts 2010 Evtl. noch original quellen CSI_klein | • • Centrum für soziale Investitionen | [CSI] 5 Organizational development model: Pümpin/Prange 1991 •pioneer stage • •- • • • • • • • • • • • • •- entrepreneurial •- founder-focused (collective initative) •- low hierarchies - unstructured - •growth stage • • • • • • • • • • • - professionalisation - more formalized - specialization • • • • •maturity stage • • • • • • • • • • • - unit-structure - expertise - resource stability - lower flexibility turn stage - declining inovativeness and motivation - insufficient performace - crisis Quote biss Quote augsburger CSI_klein | Empirical findings Centrum für soziale Investitionen | [CSI] 6 Sample: •Heterogeneous sample [after purposeful sampling] •emergence circumstances •legal forms •size, and age •business models •fields of work •18 guideline-based interviews with founders or CEOs of hybrid organizations • •Qualitative analysis via grounded theory methodology and computerized assistance (Atlas.ti) • • • CSI_klein | Empirical findings Centrum für soziale Investitionen | [CSI] 7 •participative, stakeholder-focused • • •4 •hierarchic, manager-focused • • •14 - •degree of stakeholder participation In other words, I don´t experience the decisions as hierarchically made, but very much based on arguments, not on power structures. It is a matter of mutual exchange, there is no board member that as got decades of experience so he could dictate the issue. Org. with multi-stakeholder governance approach, growth stage [...] there are some decisions that have been made out of entrepreneurial loneliness. Org. with founder-dominated governance approach, maturity stage Evtl. noch original quellen CSI_klein | Centrum für soziale Investitionen | [CSI] 8 •participative, stakeholder-focused •degree of stakeholder participation Empirical findings - signs of hybridity 1/3: Governance philosophy changes in social issues •hierarchic, manager-focused • • •Economic issues •Social issues • •Hybrid combination of governance structures It depends, for example the vision is aligned with the curatorship, and as well with the employees. [...] we hold a conference once a week where all employees meet. [...] there we discuss the week to come and make the important decisions altogether. […] If there are emotional decisions such as issues concerning our vision or our logo they will be presented and discussed in this Monday conference. Org. With founder-dominated governance approach, growth stage Evtl. noch original quellen CSI_klein | • Centrum für soziale Investitionen | [CSI] 9 •participative, stakeholder-focused •degree of stakeholder participation Empirical findings - signs of hybridity 2/3: Meet institutional logics within stewardship model •hierarchic, manager-focused • Questions of operating business that reach the board level land on his writing desk more quickly and probably; in return questions of orientation for the future, questions of identity formation and reinforcement, this rather depicts a task for theologians. Org. with stewardship governance approach, post-renewal stage CSI_klein | Centrum für soziale Investitionen | [CSI] 10 •participative, stakeholder-focused •degree of stakeholder participation Empirical findings - signs of hybridity 3/3: Combination of legal forms from different spheres •hierarchic, manager-focused • •8 organizations combine legal forms from different spheres Now for example we have a project running that deals with ´solarfood-processing´ in Burkina Faso, this is located at the firm because it is a PPP Project and is financed by the Austrian Development Agency. As an association you can´t do anything, there you have to drive another rail. On the one hand this is complicated, but to me it is a perfect situation, because I can say: “Okay, what kinds of call for projects are there? Do I write my project application via the association or are there furtherances in a commercial sense?” Org. with stewardship governance approach, growth stage CSI_klein | Empirical findings: Governance along organizational development Centrum für soziale Investitionen | [CSI] 11 • • •pioneer stage •maturity stage • • • •growth stage • • • • •turn stage •Most organizations developed along predicitions of organizational evolution theory Quote biss Quote augsburger CSI_klein | • Empirical findings: Governance in pioneer stage Centrum für soziale Investitionen | [CSI] 12 •pioneer stage • •- Early drift towards manager-focused approach • •- Flexibility, speed and depth as motives, especially in market-based environments The group consisted of 30 to 50 people; yes there were journalists, social workers, social scientist […] and additionally there were some 5 to 10 people concerned who were relatively active and who took part in the discussion and contributes some valuable ideas and other aspects, such as participative management in the board. […] But it became apparent that basically you will be in need of personal resources if you want to run the project for the longer term. […] If you don’t act now this will become a debating society, and probably a quite intensive work of the Good Men done by middle classes. You don’t have to rate this in a negative way, it is just like the other cases, the food bank or other areas where charity is done Org. with stewardship governance approach, maturity stage Quote biss Quote augsburger CSI_klein | Empirical findings: Governance in growth stage 1/2 Centrum für soziale Investitionen | [CSI] 13 • • •pioneer stage •growth stage • • • • - Higher attention and increased number of stakeholders - - New challenges for stakeholder dialogue and transparency policies Of course, we are now in a situation, we have got some XX 000 customers, you can’t make an individual conversation anymore; [...] ; it is quite the opposite to our former behaviour: now we behave and say: you must give us your money in confidence, we will do good things with it, frankly speaking. On the contrary we used to say: we are a bank that acts in such a way that we want to give our customers space so that they can practise ways of behaving with money; this is a matter of practise. Org. with stewardship governance approach, maturity stage Most of our corporations are quite big, they publish annual reports as well as annual financial statements, you can find them on the internet. Ten years ago we thought about that restructuration and spilt in a whole number of corporations, in order to create non-transparency for the benefactors, this was a firm goal. If they recognize by now that we plan a profit margin of 2% this will sound totally harmless, but if the social committee realizes: 2% margin are 2 to 3 million, I don’t want to hear this outcry Org. with stewardship governance approach, post-nenewal stage Quote biss Quote augsburger CSI_klein | Empirical findings: Governance in growth stage 2/2 Centrum für soziale Investitionen | [CSI] 14 • • •pioneer stage •growth stage • • • • •- Economic logic mostly dominates in trade offs with social logics • •- Motives are mostly a long term resource-perspective and leaders‘ responsibility There are points of conflict, for example the issue on communalization vs. internationalization. Of course there are different organizational logics that we are aware of. If somebody works in an association in Germany, he will be interested in earning as much money as possible for the association; he will be interested in our focus on Germany; we should not be distracted, we should not set ourselves up internationally, we should work off all state parliaments, then proceed to the communal level, and at the very end we focus on international projects. When somebody like us has the vision that we must handle international orders I represent the opposite pole who says: no, we handle the order from the US. This helps us in our argument to justify why international collaboration yields more resources to the project than the other way round. If we set up this project in the US or in Ireland for example, this will mean that we will do this only in case the technical part is financed; from this the German organization will benefit. In this case the link is the LLC that is responsible for the technical aspects mainly. If the LLC is equipped with more resources, the association will benefit. Org. with stewardship governance approach, growth stage Quote biss Quote augsburger CSI_klein | Empirical findings: Governance in maturity stage Centrum für soziale Investitionen | [CSI] 15 • • •pioneer stage •growth stage • • • • - Controlling or trusting employees? •maturity stage • • • [...] we regularly go outside and have a look around, is the seller present, how does he look like, does he have any problems, can we help him, sometimes there are a few issues concerning the environment, so you have to manage them. Org. with stewardship governance approach, maturity stage Quote biss Quote augsburger CSI_klein | Empirical findings: Governance in turn stage 1/2 Centrum für soziale Investitionen | [CSI] 16 • • •pioneer stage •growth stage • • • • - Over-complexity and self-centration as reasons for crisis •maturity stage • • • • turn stage Well [name of the organization] consisted of a 7 members government, for 7 sectors. You must imagine: these 7 members were part of a board of 13 members, with the rest of them being honorary and unpaid members; this board was controlled by a supervising board that consisted of 43 people; this had to go wrong. [...] Org. with stewardship governance approach, post-renewal stage The thing was that you wouldn´t reflect at all, critically reflect, together with others, what you had been doing, or whether your actions and behaviour are of social relevance, or whether there were clients that would demand our offer. We relinquished public funding because we didn’t want to agree upon construction projects, we had no professional discourse, we had been a locked-in institution. In my opinion this is the reason for this crisis, we forgot about the environment and focussed only on ourselves, [...]. Org. with stewardship governance approach, post-renewal stage Quote biss Quote augsburger CSI_klein | Empirical findings: Governance in turn stage 2/2 Centrum für soziale Investitionen | [CSI] 17 • • •pioneer stage •growth stage • • • • - Stakeholder participation as one renewal strategy •maturity stage • • • •turn stage Today we have a situation in which the executive managers of these corporations develop their own ideas, they have always had them, but they were hold down; maybe they articulated them five times, but nobody in the central office cared about it. [...] We seize these ideas now. They still have their ideas, and last years we met for different workshops, the next one will be in February, where all these topics are put forward [...] Org. with stewardship governance approach, post-renewal stage Quote biss Quote augsburger CSI_klein | Conclusions and implications Centrum für soziale Investitionen | [CSI] 18 •Conclusions - Hybrid organizations in our sample rather tend to a hierarchic, manager-focused government approach…, • - … but with strong tendencies to participative, (internal)stakeholder-focused structures especially in social-issues • •- Governance structures mostly develop along the predictions of classical organizational evolution theory • - Social enterprises can be described as hybrid organizations - double bottom line - hybrid tendencies within their governances structures - specific mixture of (legal) organizational forms Quote biss Quote augsburger CSI_klein | Conclusions and implications Centrum für soziale Investitionen | [CSI] 19 Research implications -Methodological limitations indicate focus on methodological issues (representativity; longitudinal data gathering; measuring instruments for hybridity, organiational development stages etc.) - -Further qualitative research to identify innovatiness in governance structures, possible tradeoffs between philosophies, motives etc. - -Large scale quantitative research to find specifities for different areas of activity, cross-national comparisons on legal forms, on welfare state regimes etc. Quote biss Quote augsburger CSI_klein | Centrum für soziale Investitionen | [CSI] 20 •Thank you for your attention! • •martin.hoelz@csi.uni-heidelberg.de • •