REVESCO. Revista de Estudios Cooperativos

ISSN: 1885-8031

 

https://dx.doi.org/10.5209/REVE.77443

 

¿Cómo preservan su misión las pequeñas y medianas organizaciones con objetivos híbridos? Un enfoque de capital social

Lorea Narvaiza Cantin[1], Félix Arrieta Frutos[2], Cinta Guinot Viciano[3] y Cristina Aragón Amonarriz[4]

Recibido: 1 de septiembre de 2020 / Aceptado: 28 de junio de 2021 / Publicado: 13 de septiembre de 2021

Resumen. La habilidad de las organizaciones híbridas para alcanzar simultáneamente objetivos diferentes y potencialmente conflictivos puede causar tensiones con sus stakeholders. El objetivo de este paper es explorar cómo las pequeñas y medianas organizaciones (PMO) tratan de equilibrar a través del capital social sus objetivos sociales y económicos cuando está en riesgo su hibridez. Para alcanzar este objetivo seguimos un enfoque de estudio de casos para explorar como tres PMOs gestionan su hibridez. Los resultados muestran la importancia de equilibrar los diferentes tipos de capital social, tanto los vínculos que vinculan a agentes similares (bonding) como a diferentes (bridging) para ser capaces de encarar los riesgos de bloqueo y dependencia que amenazan su naturaleza híbrida. Identificamos las condiciones que las PMOs tienen que satisfacer para evitar estos riesgos y desplegamos un conjunto de estrategias para alcanzar una hibridez sostenible. Finalmente, destacamos la relevancia de los ecosistemas que sostienen a las PMOs en la consecución de sus objetivos híbridos.

Palabras clave: Capital social entre semejantes; Capital social entre dispares; Servicios sociales; Organizaciones híbridas; Caso de estudio.

Claves Econlit: D22; L29; L32; M14.

[en] How can small and medium-sized organizations with hybrid objectives preserve their mission? A social capital approach

Abstract. The ability of hybrid organizations to achieve different and potentially collusive aims simultaneously can cause tension with their stakeholders. The aim of this paper is to explore how small and medium-sized organizations try balance their threatened social and economic goals through social capital   in order to achieve hybridity. We follow a case study approach to explore how three small and medium-sized organizations deal with hybridity. The results show the importance of balancing different types of social capital, such as bonding and bridging, to be able to face the lock-in and dependence risks that challenge their hybrid nature. We identify the conditions that SMOs should fulfill to avoid these risks and we roll out a set of strategies for SMOs to achieve sustainable hybridity. Finally, we highlight the relevance of supportive ecosystem backing SMOs’ hybrid purposes consistently.

Keywords: Bonding social capital; Bridging social capital; Social services; Hybrid organizations; Case study.

Summary. 1. Introduction. 2. Hybrid organizations and social capital. 3. Methodology. 4. Findings. 5. Discussion. 6. References.

How to cite. Narvaiza Cantin, L.; Arrieta-Frutos, F.; Guinot-Viciano, C.; Aragón-Amonarriz, C. (2021) How can small and medium-sized organizations with hybrid objectives preserve their mission? A social capital approach. REVESCO. Revista de Estudios Cooperativos, vol. 139, e77443. https://dx.doi.org/10.5209/reve.77443.

1. Introduction

Social enterprises pursue the dual mission of achieving both financial sustainability and social purpose (Doherty, Haugh and Lyon, 2014). Social enterprise’s dual mission contributes to the fight against some structural problems that persist in modern society in terms of inequality, environmental problems and social exclusion that surpass the economic sphere and involve the contribution to social goals, social utility and social and territorial co­hesion (Castro, Santero, Martínez, and De Diego, 2020). In this vein social economy is a scientific field that is very relevant and has a great future for society (Monzón & Chaves, 2020). Pache and Santos (2013) state that social enterprises are a prime example of a hybrid organizational form in that, by spanning the boundaries of the private, public and non-profit sectors, they bridge institutional fields (Tracey et al. 2011) and face conflicting institutional logics (Pache & Santos 2013). Recent authors also argue that hybrids contribute to Sustainable Development Goals (Tabares, 2021).

Hybrid organizational forms are defined as structures and practices that allow the coexistence of values and artefacts from two or more categories (Doherty, Haugh and Lyon, 2014). Hybrid organizations combine two logics simultaneously in their mission, namely their financial goals and social objectives (Pfeilstetter & Gómez Carrasco, 2020; Doherty, Haugh & Lyon, 2014). As many authors celebrate, hybrid organizations are an opportunity to “civilizing the economy” (Grassl, 2012: 109-10). Following several authors hybrid organizations, are positive for society as a type of firm focused on the mitigation of social and environmental issues (Battilana & Lee, 2014; Tabares, 2021). Hybrid organizations not only strive for profitability, but also strive to address some of humanity’s most pressing issues. Moreover, hybrids seek to create social and environmental improvements through their practices and products (Haigh & Hoffman, 2012). In this vein, hybrid organizations are experimenting with ways to combine businesses’ industrial and innovation strengths to become a potent means to effect change (Haigh & Hoffman, 2012).

Hybrid organizations break this traditional customer-beneficiary dichotomy by providing products and services that produce social value (Battilana et al., 2012), in line with the so-called “shared value” paradigm introduced by Porter and Kramer (2011). Shared value is integral to a corporate strategy, profitability and competitive advantage (Porter & Kramer, 2011). Shared value is not about redistributing existing value, but about enlarging the total economic and social value. In that sense, shared value is different from corporate social responsibility, philanthropy or sustainability (Alberti & Belfanti, 2019). However, shared value (as sustainability or corporate social responsibility) implies dealing with conflicting goals. Indeed, to simultaneously achieve different and occasionally conflicting goals can be difficult and often results in tension (Powell, Gillett and Doherty, 2019). In addition to the usual type of tension caused by the scarce availability of financial resources and the costs of physical resources (Austin, Stevenson, and Wei-Skillern, 2006; Dacin, Dacin and Matear, 2010), further friction can be provoked by the stakeholders of these hybrid organizations. The relationships with both workers and business partners may be a source of tensions or solutions (Powell et al., 2019). These relationships range from formal agreements, such as joint ventures, partnerships, licensing (Austin 2010), and social franchising (Tracey & Jarvis 2007), to less formal mechanisms such as sharing ideas freely and allowing others to scale up an innovative approach (Lyon & Fernandez, 2012).

Battilana, Sengul, Pache and Model (2015) identified one effective approach to overcome the mentioned difficulty based on a double task: giving organization members the responsibility for social and economic activities and creating interaction arenas where each group can discuss the trade-offs that they face. These arenas are called spaces of negotiation. This solution is rooted in the literature that advocates investing in relationships with stakeholders as a source of value to create a more significant social impact (Austin, 2010). Additionally, closer relationships allow a priori a better understanding among stakeholders, and greater strategic effectiveness (Battilana & Dorado 2010; Brown & Iverson 2004). These spaces of negotiation, based on intense socialization and ongoing routines, enable organization members to have a better understanding of the organization’s goals and mutual interdependencies (Battilana et al., 2015). All these authors therefore show that coordination in hybrid organizations may be better achieved by means of formal structures and processes that support those spaces of negotiation. However, in small and medium-sized organizations (SMOs) where socialization may be weakened by the above-mentioned tensions and where formalization is scarce, spaces of negotiation may not work. In these contexts, given that social capital (SC) is a strategic resource for SMOs, the aim of this paper is to study how SC can help SMO maintaining hybridity.

In this respect, in the study of the social economy, SC appears as a particularly significant contributor (Evans & Syrett, 2007), and Schneider (2009) argues for strategies to develop SC, in particular when hybrid purposes split organizations. SC is defined as the “sum of the actual and potential resources embedded within, available through, and derived from the network” (Nahapiet & Ghoshal, 1998, p. 243), SC is thus required for building networks that foster the exchange and sharing of ideas and information, as well as consensus building (Aragón-Amonarriz, Iturrioz-Landart, Narvaiza-Cantin and Parrilli, 2019). Bonding SC refers to the networks within firms, while bridging SC are the networks that go beyond the boundaries of organizations (Nahapiet & Ghoshal, 1998). In order to understand how SC can help SMOs achieve hybridity, our paper carries out an in-depth analysis of three cases of SMOs with a hybrid mission, located in the province of Gipuzkoa in the Basque Country (Spain). This methodology allows us to study a subjective reality and to gain access to in-depth information with interpretive wealth. The study presents several contributions. First, we identify two specific risks in excessive bonding and bridging in SMOs, to be precise, the lock-in risk and the risk of dependency. Secondly, we propose several strategies that SMOs can design, and furthermore, we identify the conditions that SMOs and their partners need to fulfill to avoid the previously mentioned risks. Finally, we point out the importance of an ecosystem that supports and shares the hybrid purposes systemically so that SMOs can achieve hybridity.

The paper is structured as follows. First, we explore the role of SC in preserving the hybrid mission of SMOs. Second, we present our research methodology, third we provide the findings obtained from our analysis of the case studies. Finally, we discuss the implications of our findings, our limitations and we propose future research avenues.

2. Hybrid organizations and social capital

According to most definitions sustainability in organizations is understood, as an inclusive business approach in which the different stakeholders of the company are integrated in its development and whose purpose is the creation of long-term value (Van Marrewijk, 2003; Montiel, 2008; Dyllick & Muff, 2016). The key point in sustainability, is that the value created should be economic, social and environmental (Dyllick & Hockerts, 2002) and therefore it should benefit all stakeholders (both internal and external) besides its owners and managers. This approach is, therefore, linked to the stakeholder theory. In this vein, the concept of shared value creation can be incorporated with total flexibility to sustainable organizations (Dyllick & Muff, 2016).

A strategy based on shared value is a long-term bet. Although its results may require more time and greater initial investment "...the return will be greater economic value and broader strategic benefits for all participants" (Porter & Kramer, 2011:4). Therefore, this is a strategic approach with a holistic (global and integrated) focus. Following Florin and Schmidt (2011), the shared value strategy encompasses a paradox: the potential conflict of economic and social or environmental goals. It is perhaps one of the least understood and less researched topics in this domain. The challenge of managing the shared value strategic paradox arises from social organizations’ hybrid mission (Harjula 2006, Zahra et al. 2009).

The hybrid purposes of SMOs are usually based on the founders’ social imprinting, understood as “the founding team’s early emphasis on accomplishing the organization’s social mission” (Battilana et al., 2015, p. 1659). These founders use both social welfare and commercial logics in order to fulfill the organization’s two-fold mission (Pache, Battilana and Spence, 2018). The founders transmit socio-economic values and purposes through formal and informal relationships with other hybrid organizations (Thomasson, 2019). As a consequence, the sustainability of the hybrid purposes will be at risk if founders step down, weaken or retire, since then the foundational pillars will fade, and founders’ social imprinting cohesive role will be dismissed, and stress, anxiety, and uncertainty can destabilize the hybrid purposes (Azis, 2000). Moreover, when SMOs with hybrid purposes are exposed to harsh market conditions, this can lead to a reduction in their economic productivity and weaken their social performance (Battilana et al., 2015), damaging the socio-economic equilibrium of their purposes (Aragón-Amonarriz, Iturrioz-Landart and Narvaiza-Cantin, 2017) and hindering the development of SC. For instance, in the case of a financial crisis, which causes tension, the pressure to improve efficiency leads to austerity measures and increases workers’ anxiety (Cervero-Liceras, McKee and Legido-Quigley, 2015). In both situations, the lack or scarcity of formalized routines in SMOs favors the polarization of relationships, making it more difficult to reach a consensus between the different purposes. And it is in such cases that the hybrid purposes are put at risk.

Identified strategies, such as the creation of spaces of negotiation (Battilana et al., 2015), or implementing a process of separating, negotiating, aggregating, and assessing the value created (Castellas, Stubbs, & Ambrosini, 2019) are seldom applied in SMOs. In this type of organization, processes are rarely formalized, and a personalist management style prevails. In this context, SC, understood as the “sum of the actual and potential resources embedded within, available through, and derived from the network” (Nahapiet & Ghoshal, 1998, p. 243), is likely to influence collective action and the flow of information. Therefore, business sustainability depends on the sustainability of its relationships (Murillo & Vallentin, 2012). Indeed, given that SC is a strategic resource for SMOs, our research question is: how can SC help SMOs preserve their hybrid character?

Regarding the composition of networks, SC has been increasingly conceptualized in two distinct ways: bridging and bonding (Cox, Oh, Simmons, Graham, Greenhill, Lintott, ... & Meriton, 2019). Bridging SC refers to the networks whose linkages extend beyond the boundaries of the organization, whereas bonding SC refers to the networks that remain within the boundaries of the firm. The latter is based on the internal relational resources that facilitate trust and cohesion and are beneficial when it comes to pursuing the collective organizational goals (Nahapiet & Ghoshal, 1998). Bonding SC connects the members of homogeneous groups (Granovetter, 1985; Putnam, 2000; Woodhouse, 2006) and acts as a “super-glue” internally. In SMOs the hybrid purposes usually rely on the individual altruism of the founders, who integrate their social and work motivations into the SMO project (Bargsted, Picon, Salazar, & Rojas, 2013; Tan, Williams & Tan, 2005). In the beginning, the project is only shared with a few members of the core node. Because of the easier relationships within homogeneous groups, bonding SC can offer a more robust explanation for variations in prosocial behaviors (Coffé & Geys, 2007). The strong bonding SC of a team is the pillar of the project, particularly when it responds to the social identity needs expressed by its members and forges a collective identity (Hasenfeld & Gidron, 2005).

However, this strength can become a weakness if the strong bonding SC also entails a lock-in risk. For example, if due to a financial crisis or to market requirements, key members of this node center their interest on economic purposes rather than social ones, they will influence the whole organization in this direction. They may well remain supporters of hybrid purposes, but the market context can require the hiring of new members or collaboration with new stakeholders, and if they are not open to new incomers or allies, the sustainability of the project will be at stake. In the case of new incumbents with complementary logics (social or economic) entering the organization, they first have to be accepted by the original members, otherwise tensions arise. This can then result in the organization being split into two homogeneous groups: one supporting social purposes and the other preserving the economic purposes. Although each one can develop a strong SC, hybridity is at stake.

Granovetter (1973) suggests that wider networks with weaker ties (i.e., bridging SC) can be surprisingly effective when it comes to accessing information or resources that have not yet been obtained. In this sense, two kinds of ‘bridges’ can restore the divided hybrid purposes. First, bridges must be built inside the organization between the two different groups, in order to share and exchange information and ideas, and to reach a consensus among the groups that represent different interests (Aragón et al., 2019). In fact, meaningful bridges can bring together individuals who differ in socially relevant dimensions (Baggetta, 2016). And it is expected that these bridges will be formalized. In this sense, the ability to develop a formal structure can be crucial for the survival of these organizations (Hasenfeld & Gidron, 2005). Second, the higher the level of connectedness of hybrid SMOs to other organizations that control important resources (e.g., members, funds, legitimacy, and technical expertise), the greater their chances of survival (Hasenfeld & Gidron, 2005), because they increase their ability to mobilize members and garner support. According to most research on collaborations (Galaskiewicz & Colman, 2006; Young, Salamon, & Grinsfelder, 2012; Child, 2016), in the case of both for-profit and non-profit organizations, connecting can be useful for acquiring more resources. Indeed, for both types of organizations, bridging SC means that the bonds of connectedness created between these diverse groups act as a “lubricant” (Anderson & Jack, 2002). Furthermore, commitment increases when the logics used by hybrid SMOs are in accordance with the personal beliefs of their members and supporters (Hasenfeld & Gidron, 2005). For these reasons, we state that balancing integration through bonding and networking by bridging (Evans & Syrett, 2007) can help SMOs to preserve their hybrid nature.

In our study, we focus on the difficulties in achieving or preserving hybrid purposes in SMOs. We also identify the collaborative strategies implemented by organizations to balance economic and social issues. In other words, we seek to analyze how bonding and bridging SC can help achieve or preserve hybrid purposes in SMOs.

3. Methodology

In this paper, we have carried out a qualitative research approach based on the analysis of case studies. Case study research is a useful method for research work that aims to provide a first-hand understanding of people and events (Yin, 2004). We chose this method since it seems to be the most appropriate one for our research that it focuses on a contemporary phenomenon within a real-life context (Yin, 2003).

 

Case study

 

We selected three companies to show that when hybridity is at risk, SC can help restore it in these organizations. Companies A, B and C all deliver social services in the province of Gipuzkoa (see Table 1).

The selection of these organizations was made according to two criteria: i) they could illustrate how SC influences hybridity in organizations; and ii) they were representative of different types of organization, since two of them have a social origin, whereas the other one has a business origin. We chose three SMOs (with 40 to 81 employees) since these are usually the type of organizations that provide social services in Gipuzkoa (Table 1).


Table. 1. Description of the organizations

Organization

Case A

Case B

Case C

Type

FPO

NFPO

NFPO

Year of creation

2011

1997

1986

Origin

Economic logic

Social logic

Social logic

N. Owners

3

4

8

Number of employees

40

81

65

Turnover

0.5 million euros/year

2.5 million euros/year

Not available

Activity

Social care

Social care

Social care

Initial steps

Initial aim: business opportunity, an unsatisfied market need is identified

 

Leaders background: Business School students

 

Legal form: limit liability

 

Objective: Business performance

Initial aim: to create their own jobs for women

 

Leaders background: former workers in the industry

 

Legal form: Third sector, social cooperative

 

Objective: to support a group of people with social insertion difficulties

 

Initial aim: formalize real work developed by autonomous workers into worker social cooperative required by the townhall.

 

Leaders background: former workers in the industry

 

Legal form: Third sector, social cooperative (now it is a not-for-profit association)

 

Objective: to offer a social service to people on need and create a firm to have employment.

Current situation

Current aim: Display a sustainable business project with social mission

 

Leader team: with a higher sensitivity towards social issues.

 

Workers: Mixed origins

 

Strategy: Alliance to access market

 

Objective: Social and business performance. Social sensibility is due to a partner with social logic.

Current aim: Sustaining the social project

 

Leader team: New profiles in management team

 

Workers: social workers with professional management.

 

Strategy: diversification to avoid excessive concentration

 

Objective: Social and business performance.

Current aim: Sustaining the social project

 

Leader team: with a higher sensitivity towards social issues.

 

Workers: social workers and management.

 

Strategy: fulfill a social need, creating fair employment in social care

 

Objective: Social performance with sustainability of the project.

Source: own elaboration

Data collection

 

Following Yin (1994), and in order to analyze the profile of each organization before the interviews, we first studied them through secondary sources of information, such as websites, corporate documents, publications, and press releases. In addition, it should be noted here that several authors of this paper have extensive experience in collaborating with firms from the social care sector, as well as with policymakers. In particular, they have long standing relationships with the organizations participating in our research.

Secondly, we gathered primary data from each organization between 2016 and 2019, this period has been considered stable both politically (the same political party in this period) and economically (years of stable economic cycle). We also conducted in-depth interviews with the founder or general manager of each company, and with the workers of most of them, since we considered them to be legitimate representatives who could speak on behalf of their respective organizations. Additionally, we interviewed a sector expert who was the General Director of Public Social Service Organizations in Gipuzkoa at the time of our study, and also the general manager of the main client company of one the cases analyzed (case B) (Table 2) from 1982 to 2015.

Table. 2. Description of key informants

Name of organization

 Key informants name

Type of Source

Interviewee’ Description

Description of the evidence

Case A

Founder

Semi-Structured interview

One of the three founders of the cooperative. With 5 years of business studies. Business Administration Graduate

Interview audio taped on the 8th May 2016 in the firm facilities.

Transcription of the interview of 11.569 words.

Notes taken during one-and-a-half-hour interview.

Case A

Employee

Semi-Structured interview

Employee with less than 1 year in the company

Interview audio taped on the 30th January 2018 in the firm facilities.

Transcription of the interview of 2292 words.

Notes taken for 45 minutes interview

Case B

General manager

Semi-Structured interview

The General Manager of the cooperative with more than 3 years of experience in the cooperative.

Interview audio taped on the 21st of July 2016 in the firm facilities to F.A.

Transcription of the interview of 7.576 words.

Notes taken during one-and-a-half-hour interview.

CASE B’s main client

Director

Semi-Structured interview

The Director of its main client Residence Y from 1982 until 2015.

Interview audio taped on the 28th of May 2019.

Transcription of the interview of 1912 words.

Notes taken during one-hour interview.

Case C

General manager

Semi-Structured interview

The General Manager of the cooperative with more than 32 years of experience in the association.

Interview audio taped on the 18st of January 2018 in the firm facilities.

Transcription of the interview of 1,489 words.

Notes taken during one-hour interview.

Case C

Administrator-Employee

Semi-Structured interview

The administration staff of the manager with more than 32 years of experience in the association.

Interview audio taped on the 18st of January 2018 in the firm facilities.

Transcription of the interview of 989 words.

Notes taken for one hour and a quarter interview.

Public social services organizations

General Director

of Public Social Services Organizations

Semi-Structured interview

General Director from 2015 until today and several positions in social services public institutions

Interview audio taped on the 17th of December 2019 in Public Social Services facilities.

Transcription of the interview of 1912 words.

Notes taken during one-and-a-half-hour interview.

Mixed data

Annual Reports

Web based and press reports and information

Strategic Orientation and Annual Results

Last five years

Mixed data

Academic Articles

Referred in the Reference Sections

Different articles regarding hybridity

Last five years

Mixed data

University and

Business Collaboration

Agreement

Workshop in 2016 with social care companies, university’s researchers and policy makers to interact and find solutions for the social care sector’s problems.

 

The authors of the paper, policy makers and managers from social care organizations

More than five years collaboration with policy makers and social care organizations.

Mixed data

University and

Business Collaboration

Agreements

 One of the authors collaborated in advising on the creation of the company in the social field
 

One of the authors of the paper

Managers of one of the organizations

More than seven years collaboration

 

Mixed data

Municipal social services

 

Consulting to find companies

 

Two of the authors of the paper

Municipal social services

More than six years collaboration defining challenges with both local and regional social services.

Source: own elaboration

Based on the literature (Battilana et al., 2015; Cox et al., 2019; Narvaiza et al, 2017), we designed a question guide for the three-part interview. In the first section, we asked the interviewee for an overall description of the organization and of himself/herself. In the second section, we asked about the organization’s mission and goals, and also about the hybrid nature of the organization. The third section focused on aspects concerning the (internal and external) SC of the organization. General managers were asked all the questions included in the guide; the questions regarding section 2 and internal SC were addressed to employees, and the questions related to section 2 and external SC were addressed to the external stakeholders (Table 3). Additionally, we checked the conclusions reached in the study with an expert in the social services sector.

Table. 3. Summary of the interviews’ structure: Main dimensions and key issues

 

DIMENSIONS

KEY ISSUES

 

 

 

1) Organization and interviewee

Interviewee Description

-    Interviewee’s position in the organization

-    Background and studies

-    Information about the founders/employees

-    Difficulties as entrepreneurs

 

Unit of Analysis Description

-    History of the firm

-    Aim and main services delivered

-    Main numbers and activities

-    Type of organization

-    Evolution and actual situation (clients, area, organigram, employees)

 

 

 

2) Hybrid nature and purpose

Mission & goals

-    Mission of the firm

-    Business and social goals (Growth, Efficiency)

-    Risk of goal degeneration

-    Risk of deprivation

 

The social-economic balance in the firm: hybrid nature

-    Background of the firms (social vs. business)

-    Importance of economic and social issues and priorities

-    Key events, decisions

-     or main stages (how to rebalance the hybridity; how to compensate unbalance…)

 

 

 

 

 

 

 

3) Social capital: internal and external

Internal social capital: leadership and managers

-    Types of leadership

-    Leadership’s profile (social or business background)

-    Formal and informal leadership

-    How decisions are taken: centralization vs. decentralization

Internal social capital: employees

-    Types of Employees

-    Employees’ profile (Education and skills of employees…)

-    The role of external agents in hybridity (hinder/strength) Commitment

-    The evolution of the relationship in the past

-    Risks within the relationships for the future

-    Employees’ participation in decision making

External social capital

-    Relationship with other partners (administration, clusters, suppliers, clients, prescriptors, other networks, competitors)

-    Partners’ profile

-    Characteristics of the relationships

-    The role of external agents in hybridity (hinder/strength)

-    The evolution of the relationship in the past

-    Risks within the relationships for the futur

Source: own elaboration

Data analysis

 

The interviews were transcribed and then assessed through a preliminary reading to gain a first-hand grasp of the content. Using a cross-interview analysis, we examined all the data in-depth comparing the insights that emerged from all the interviews so as to identify similar constructs and themes (Ozcan & Eisenhardt, 2009; Eisenhardt & Graebner, 2007).

To guarantee reliability, we established a formal protocol for the case study, where we defined its general purpose, the procedure for gathering the data, and an interview guide. To be able to produce the final case report, all the documents were entered into a database (Yin, 2003).

Furthermore, to ensure construct validity, we used various sources of evidence and checked the results coming from the statements of the organizations’ founders or general managers (Yin, 2003). The chain of evidence was built up from press items and each organization’s website, as well as from face-to-face in-depth interviews with the leader or one of the managers of each organization, and with a worker. Regarding internal validity and, in order to reduce systematic errors, we based our design on the relevant literature and put forward some propositions. External validity was also confirmed by analyzing the three cases.

To validate the interviewees’ claims, we performed a triangulation analysis of our data sources. Interview notes were then compared to highlight similarities and differences. The results that emerged from the first step of this analysis were compared with data from the corporate documents and press items. Additionally, the qualified opinion of a policymaker with over 30 years of experience in the sector was required in order to contrast our findings. By means of this data triangulation process, the different types of data collected from various sources were matched, which enabled us to develop more robust theoretical concepts and establish causal relationships (Patton, 1987).

4. Findings

The province of Gipuzkoa has a social care model that stands out for its commitment to making agreements with the third sector to be able to provide care services, named the ‘Gipuzkoan model’ (Arrieta & Etxezarreta, 2012). The territory’s social care system is based on this model, with transparent public-private relationships where hybrid companies and entities, including public ones, play important support roles. In this regard, public institutions not only support these social entities but also supervise the implementation of programs developed by them.

In all the companies of this case study, we observed that certain elements have helped shape a basic social care ecosystem that supports the development and performance of hybrid functions (social and economic) within each company. However, not all the initiatives and actions have been successful.

4.1. Organization A (for-profit organization- FPO)

Company A (FPO) started as the entrepreneurial project of three students after finishing their business studies. Thus, their background, knowledge, competencies, and profiles were mainly rooted in the business sector. After having identified a business opportunity and an unsatisfied market need, they set up a business project to meet this need. The legal status of the business is that of a limit liability company. Currently, its main objective is to develop a sustainable business project with a clear social mission, its leader being very sensitive to social issues. This social orientation has been transmitted to the company’s activity. The workers have diverse profiles, with some of them having a social background while others have a more entrepreneurial background. The company has 40 employees, and its turnover is EUR 0.5 million per year. Its main objective is to carry out both social and business activities, and in order to do so, the company’s main strategy is to forge different alliances to be able to enter the market with partners with a social orientation.

4.1.1. Bonding social capital

In case A, bonding SC has occurred in different ways.

It should be noted here that formal relationship were not found in the companies under study. In small and medium-sized enterprises, informal structures and relationships are common. However, formal labor relationships are one of the typical elements of firms.

In employee-employer relationships, a key variable is the employees’ working conditions, even more important than the results of the company itself. Another variable is training. Both variables increase the social sensitivity of employees.

Working conditions play an essential role when it comes to hiring and retaining people in FPOs. The managerial team of organization A emphasized the importance of these conditions being decent and appropriate.

‘It’s important that we assure employees that their working conditions will be fair, that they won’t be exploited. Because when families hire people on their own, they do take advantage of these workers.’ (Founder and Manager, organization A, May 8th, 2016).

 

Another way to retain employees is the company’s commitment to training.

‘Yes, of course, you do it (…) if your task in a certain activity is to give people dignity and increase their quality of life, then, even if your work day is finished, you continue working because that person still needs you’ (Employee, organization A, January 30, 2018).

 

Therefore, establishing a fair and formal relationship with workers gives them stability, which then increases bonding SC in the SMO.

Organization A was founded by three members with the same business background knowledge whose objectives and vision were highly aligned. In their master’s final project, they thought up a company specializing in care services for the elderly. The three members had very similar backgrounds and studies, and shared a very similar culture, the same language and the same goals linked to the business area. In addition, in this case, one of the key elements that can explain the management’s alignment with the hybrid mission is the managers’ commitment to the social sector.

‘I love it. Honestly, I do. It is a tough sector because we see a lot of misery […] we become more human in that sense.’ (Founder and Manager, organization A, May 8, 2016).

 

The leader of organization A has become, over time, a “hybrid manager” with both business and social concerns.

The type of relationship established in company A between employees and employers is of great relevance.  It is characterized by horizontality, and its emphasis is on the importance of developing personal trust relationships.

‘Everything that concerns the company is talked about and discussed. And the same goes for the workers. They aren’t afraid to tell us anything.’ (Founder and Manager, organization A, May 8, 2016).

 

One employee at company A agreed that she was treated appropriately and fairly by her bosses, but she considered that working conditions were poor.

 ‘Up until now, he’s one of the most reasonable bosses I’ve had. Apart from the salary, which I do not agree with, as I told you, until now, he has looked after his workers’ (Employee, organization A, January 30, 2018).

 

These relationships build up trust inside the organization and strengthen the commitment of employees despite the poor working conditions.

4.1.2. Bridging social capital

Apart from developing internal SC, basically with workers and managers, enterprises seek to engage with other external stakeholders, such as clients, suppliers, shareholders, town halls, and the community, amongst others, who are crucial for supporting their hybrid nature.

In organization A, they decided to hire people with a more social profile and experience in the sector. This decision changed not only the profile of the founding team but also affected the definition of the organization’s objectives. Thus, apart from the business objectives, social objectives were also included.

Hiring new workers meant incorporating new voices in the project and being open to enriching it with employees that complemented the initial team, which was more business-oriented. By integrating new profiles, the business project increased its number of goals and took a step towards a culture of hybridity.

However, an unsuccessful experience should also be mentioned here regarding some partners from Barcelona who had 20 years of experience in the sector and joined the project:

    ‘After that, we looked for the support of a social worker and a nurse from a Barcelona company. […] But they were at another level. They had already been working in the sector for 20 years, and they were looking for something else’ (Founder and Manager, organization A, May 8, 2016)

 

Although the new Barcelona partners had a social background, they were looking for short-term profitability, and this did not fit in with the founders’ goals and priorities. Friction arose and, as a consequence, the decision to end the relationship was made:

‘Above all, I think what happened was that we were a recently created company. We were in our second year,’ and we didn’t even have a salary. We still hadn’t taken off and couldn’t afford to try to make a profit of it, and so at that moment, it didn’t make any sense. That’s why we stopped working with them. Our partners wanted short-term profits, but this was not our priority’ (Founder and Manager, organization A, May 8, 2016).

 

In this case, bridging did not succeed in achieving hybridity because the goals of both parties did not match. The objectives of the Barcelona partners were short-term since they were seeking immediate high profitability. Moreover, they did not have a long-term vision, whereas the founders of organization A did not prioritize short-term results but rather had a more social vision of the company’s purpose.

Another essential way in which company A maintains and promotes its dual mission is because of the support of key players.

Company A began to work closely with foundation H, which has extensive experience in the field of care and protection for the elderly. When this link was established, the hybridization of the mission became clearer, and since then, the social purpose has also been considered as part of the company’s mission. Company A’s main agent is foundation H since without its support, the company’s development would have been different and, more importantly, as stated in the interview, the company might even have ‘had to close’.

‘Foundation H is almost like one more employee. This means that our relationship is so close that we meet every now and then to see how things are going’ (Founder and Manager, organization A, May 8, 2016).

 

Second, another fundamental pillar of the whole ecosystem is the support of public networks, which in the case of company A, are the municipal basic social services. This combination of a solid ally and support from the public social service system has allowed company A to consolidate its position in the sector.

‘Social services now recommend us because they have noticed that our company works well. That is, we inspire confidence.’ (Founder and Manager, organization A, May 8, 2016).
 

Finally, however, relationships with business networks have not helped company A because they have no knowledge of the sector and are probably more interested in other industries.

‘We were in Z [business network], but ...we felt different because most companies were technological ones’ (Founder and Manager, organization A, May 8, 2016).

 

Thus, the goals of company A and those of the business network (highly focused on technology) were not aligned, and in this case, the company’s attempt at bridging was not successful and therefore, this bridging effort did not contribute to maintaining its hybridity.

The relationship between company A and its main agent, foundation H, is one of great trust and commitment, as is the case with the public network ecosystem. The public social system has become a company A ‘endorser’, and this is because they see the company as trustworthy and that it inspires confidence.

Another explanatory factor regarding alignment refers to the trust established with clients. Company A has a main client with whom high-trust relationships have been developed, and these trust relationships have helped raise the awareness of companies in the basic social services field in which they work. In company A, this client is foundation H, which has a consolidated track record in the elderly and dependent care sector.

‘Because of H and other partners, and their social workers, we don’t need to draw up work contracts.’ (Founder and Manager, organization A, May 8, 2016).

 

To sum up, we advocate the importance of sharing goals and values with partners (e.g., Barcelona allies), institutions (town halls) and agents (Foundation H) in order to develop trust and commitment among them, but formal procedures do not seem to be necessary for SMOs.

4.2. Organization B (non-profit organization-NPO)

The original idea of this enterprise was for women working in the social work industry to create their own jobs and to create jobs for women who had problems with integration and employability. The project leaders had worked previously in the said industry, and they had decided to create a social cooperative in the third sector. The main objective was to support a group of women with social integration issues and provide them with jobs. The organization’s aim at the time of this study was to support this social project. With this purpose in mind, new members with business skills were added to the original management team. Consequently, the workers’ profiles are, on the one hand, social work-oriented and, on the other hand, professional business managers. In 2016, the company had 81 members of staff and a turnover of EUR 2.5 million.  Its main objective was to carry out both social and business activities, and it had adopted a diversification strategy to avoid excessive risk concentration in certain services and clients. The company provided three types of services, but 85% of billing came from only one of their services and from one of their six clients (which involved the comprehensive management of a nursing home). Company B benefits from tax advantages thanks to its legal status.

4.2.1. Bonding social capital

In NPOs, emphasis is placed on the staff’s working conditions and training, sometimes even at the expense of the company’s earnings. In fact, improving these working conditions and employee training has sometimes put company B at risk.

In organization B, the structure of the management team is a central element, similar to its importance in organization A. Also, since its creation, company B’s commitment to the sector has been essential. For example, the company always tries to hire social workers from the town where they deliver the service.

‘We are committed to each community and, even though it has not been written down, it is a real commitment because .... we always try to hire people who live in the same town.’ (Manager, Organization B, July 21, 2016).

 

In organization B, the importance of personal growth is also a clear priority.

‘Looking after the worker’s satisfaction is also another way to become professionally successful because if your employees are happy, then the service they give will be a good one, don’t you think? But sometimes this may clash with other developments that we would like to achieve as managers.’ (Manager, organization B, July 21, 2016).

 

Since its founding, organization B has had a very clear social vision. Nonetheless, during the company’s existence, this firm intent has often been challenged, putting the development of the organization at risk. Therefore, the company’s board (formed by the workers themselves) has discussions which allow them to share social and economic objectives.

I think that sometimes we lose our business perspective, even though it is indispensable, because we are in the social services sector … which is about people, but it is also a sector where you have to be profitable because if not, the company will not be financially viable …’ (Manager, organization B, July 21, 2016).

 

Since the cooperative’s inception, there has been one person with very strong leadership skills who has fostered its development. Her ability to lead has also determined the position of company B’s governing board in relation to the other technical staff. This person has a social vision of the organization:

‘There is a person among the founders of the cooperative that has powerful leadership qualities; […] I think that for all of us who form the founding team she is a bit like the flagship of the cooperative’ (Manager, organization B, July 21, 2016).

 

Due to the founders’ prior experience, i.e., creating jobs for women with social integration issues, their main priority was creating jobs.

4.2.2. Bridging social capital

With regard to non-profit entities (NPOs), company B benefits significantly from a robust triple alliance between key institutions within the ecosystem, which rely on the support of both public and business networks alike. On the one hand, the company works with both the public sector and the municipal primary social service sector.

‘We work with Town Hall A and Town Hall B., and we have worked a bit with Town Hall Z.’ (Manager, Organization B, July 21, 2016).

 

On the other hand, the existence of a key agent, which is the main client, is also crucial to the company’s development. Company B’s main customer is nursing home Y.

‘Company B can’t be explained without talking about our main client, who is somewhat under the shadow of the growing company B. This customer is nursing home Y.’ (Manager, Organization B, July 21, 2016).

 

The opinion of the former general manager of nursing home Y about company B is very illustrative.  Nursing home Y had been helping them in day-to-day activities, such as schedule control, management issues, and proposals for workers, amongst others.

‘…Both the Town Hall’s and nursing home Y’s supervision regarding the organization of timetables, management, and staff proposals has helped them a great deal’ (Former General Manager of nursing home Y, 2019).

 

However, as time went by, in the towns where there was only one organization competing in calls for tenders, new competitors emerged, and consequently, there was more competition in prices. Having a main client might have been a strength, but later it became a weakness because of the issue of high dependency. 

‘It was getting quite big, 100 workers. And the service they provided was brilliant. It was amazing. They have been in relation and dependence with Y (90% of their business), but they had no interest in engaging in other things. They thought that their relationship with nursing home Y was going to last forever, but the last call was won by only one percent…. Nursing home Y has played a great role in helping them, and then, because of their decision to focus only on Y, this turned into a weakness’ (Former General Manager, nursing home Y, 2019).

 

The former general manager of nursing home Y pointed out that, although it could have been a very fruitful experience for B, this company concentrated all its efforts in nursing home Y, that is, in delivering a great service from a social work perspective, but all the money went into salaries, and they did not consider the managerial implications of this orientation.

‘It could have been a great experience, putting all their energy in Y, but they did not earn a penny. In fact, 99% of what they earned went to wages, and now they face a very complicated future… It is going to be very difficult for them to compete technologically and in prices, which are very high given the structure they have’ (Former manager of Nursing home Y, 2019).

 

Given the maturity and profile of organization B’s management team, including its leader, it became vital to recruit new profiles and retain the talented staff that could become the new leaders in order to preserve hybridity. Members of company B were highly committed to the social dimension of their hybrid mission. But, over the years, and as competition among social service suppliers increased, the leader identified the need to hire workers with more of a business profile who could complement the original social focus of the firm with a more business-oriented perspective.

Below, a new worker with a business management profile explains how the social logic was something new for her and the difficulties she had when she started to work in company B:

‘Members here have a highly developed social conscience. I have had a hard time understanding this as a manager, because I come from companies with another type of structure. […] we are a cooperative, but a cooperative is also a company. They obviously value more the human side of teams rather than just seeking profitability.’ (Manager, Organization B, July 21, 2016).

 

The new manager complemented the other leaders with her more business-like logic, but finally, she understood that the cooperative needed this two-fold perspective, the social and the business one. In this case, hiring a new, more business-oriented person for the management team helped the firm balance the two dimensions of its hybrid mission. Regarding the recruitment of this new manager, the former general manager of nursing home Y gives an account of the situation in 2019, three years after the interview with the new manager:

‘The new manager is gone. She is a very competent woman, but she was always angry with the other bosses due to discrepancies, like participating in another call ... but she left for personal reasons. She could have saved the company. She had a different profile from the rest of the members. The management team of that firm has always had a social profile… She was a lawyer who had worked in other firms, and she had very complete training despite her young age and a very dynamic personality. They lost that opportunity’ (Former General Manager of nursing home Y, 2019).

Although the founders hired a new manager to complement their social vision, they lacked the ability to adopt her criteria and proposals. In the end, she left the company. The founders were unable to develop a managerial vision, and thus, they were not able to build a balanced hybrid organization because they did not accept that they are also a company.

‘The role of nursing home Y has been ... we started very well, but at one point they have not been able to see it, and they have not been able to follow the advice, they have simply been nursing assistants, but they have not been able to behave as a company, to take their scrub off… They have not accepted the other dynamics of being a company.’ (Former Manager of nursing home Y, 2019).

 

The founders and workers of Case B were carers, and their knowledge and skills were related to care services:

‘They are caregivers, and they have the capacity and training for doing just that, and their goal has been to take care of people in the best way possible’ (Former Manager of nursing home Y, 2019).
 

They did not look upon their organization as a company that needed to be profitable in order to be sustainable, and therefore, they were not capable of integrating the business logic which the new manager was willing to introduce.

 ‘At no time did they think they were a company… It seemed as if they were betraying themselves and the rest of the company But, on the other hand, I think that if it had been carried out in another way, it could have been a very profitable business, with a non-profit orientation, because there is no capital to remunerate, it has all the ingredients to expand the social factor’ (Former Manager of nursing home Y, 2019).
 

The former manager of nursing home Y states that the reality could have been a different one if business logic had been successfully incorporated by the new manager into organization B. Excessive bonding on behalf of the founders hindered the new manager from contributing her more business-like vision to the organization.

4.3. Organization C (NPO)

Organization C was founded by a team of eight people who formerly had been freelancers in the same sector. In order to meet the town hall’s needs, they created a cooperative that later became a non-profit association. Its first leaders were former workers from the social care industry. Their mission was to provide a social service to people in need and, moreover, to create a firm that provided employment. The aim of the firm at the time of this research was to support a social project. Its leaders have always been very sensitive to social issues.

Information on the firm’s turnover was not available. Regarding its workers, it had 65 employees with two types of profiles: social workers and managers. Their main objective was to offer social services in a sustainable way in order to satisfy specific social needs, while at the same time providing fair employment opportunities in the social care sector. They offered two types of social services:  home help and other kinds of support for the elderly, such as doing the shopping, accompanying them to doctor appointments, etc. Company C benefits from VAT exemption, given its legal status as a non-profit association.

4.3.1. Bonding social capital

Working conditions and employee training have sometimes put company C’s hybridization at risk, as in case B.

‘Our salaries and work conditions are above average. We really appreciate that our salary is higher than in other organizations’ (Employee, Organization C, January 18, 2018).

‘Every year we do a training course, and this is something we are very thankful for’ (Employee, Organization C, January 18, 2018).

In company C, leaders manage to retain their employees, who are loyal. Organization C, the same as company B, has a strong leadership that is committed to service quality as well as the conditions of its employees, and the risks of the project’s sustainability are assumed by its leaders.

    ‘It is a service company for the elderly and for workers. There was a time when the cooperative’s members had to advance money. And then, when organization C got paid by its clients, they received their wages’ (Manager, organization C, January 18, 2018).
    ‘We don’t have a penny to spare, but nor do we have any debts’ (Manager, organization C, January 18, 2018).
 

This has also been observed by looking at the conditions in which women workers developed their professional activity, as stated in Company C.

‘Our mobile phone is turned on the whole weekend, 24 hours. You’re annoyed if they call you, but you’re also annoyed if they call someone else’ (Employee, Organization C, January 18, 2018).

    ‘We sometimes pay salaries using lines of credit offered by banks. We pay our employees before the 10th of each month, but sometimes members receive their salary only when we get paid by the clients. Sometimes we don’t get paid by the institutions until 15th-18th of the following month’ (Manager, organization C, January 18, 2018).

Public administration should pay sooner. This is a real problem for us. (Manager, organization C, January 18, 2018).

 

The profitability and sustainability of organization C are at risk. The fact that employee training and working conditions are above average in the sector makes employees loyal, but it puts the organization at risk. Furthermore, the management’s full commitment to offering a good service to its clients and providing their workers with fair labor conditions also poses a threat to the organization. Cooperative members pay employees first, and then when it is possible, they get paid. They do not want to manage their treasury and finances in a professional way that can cause them higher economic and financial risks.

4.3.2. Bridging social capital

In the case of company C, there is no main agent that supports them, although they do collaborate actively with the public sector, which is their main supplier and support. They do not participate in any networks. Some time ago, they created a “temporary union of companies” because another foundation was also interested, but this experience was not successful.

‘We don’t have any networks. We made a “temporary union of companies” together with a foundation, but we lost money’. (Manager, organization C, January 18, 2018).

 

Company C tried to improve the salaries of all the workers in the sector, but their competitors did not agree, and hence, a sectoral collective agreement was not achieved.

We tried to reach an agreement with other companies to improve the sector’s labor conditions, but the rest of the firms were not interested in increasing their workers’ wages’. (Manager, organization C, January 18, 2018).

 

Despite their interest in trying to cooperate with their competitors, they could not improve employees’ conditions.

In conclusion, the organization’s management team lacks managerial skills and is more socially oriented. This lack of balance between its social and economic dimensions puts the firm’s survival at stake. Over the years, the organization has survived thanks to VAT exemption, as well as the market knowledge of its members, and their commitment, and to the good relationship with their main service supplier, the town hall.

4.4. The general director of Public Social Service Organizations at the Social Policy Department of the province of Gipuzkoa

The general director of Public Social Service Organizations has held this position for more than four years, and for more than thirty years, she managed a nursing home. She has an academic background in business management and broad experience in the social sector as a manager, and the public administration. She knows about the three cases under study thanks to her different positions.

‘I come from the world of management and I think that good management is crucial. I’ve learned that having both an economic and social vision is enriching and that it is not all about managing things financially. You always have to look for a balance.  You just cannot dedicate everything to the social purpose. Social workers don’t care about the budget, because nothing else matters, only what we do is important. What is important is to relate A with B, and B with A, because both of them are important, and because you cannot leave one without the other’ (General Director of the Public Social Services Organizations, December 17, 2019).

 

As an expert in the social care sector, her view is that both the social and business logic should be integrated into the management of this type of organization.

‘You have to be aware of your limitations… You either have to put one thing aside or the other, a client or a manager, or a good alliance, in order to find a balance’ (General Director of the Public Social Services Organizations, December 17, 2019).

5. Discussion

In this paper, we address the question of how SC can help SMOs preserve hybridity. We focus our research on the role that bonding and bridging SC plays in maintaining the hybrid nature of SMOs. Our findings point out three key considerations regarding this question.

First, the cases studied show that harsh conditions in SMOs can ruin the hybrid nature of SMOs and that, in this regard, bonding SC based on workers’ trust in their leaders can help SMOs to survive over time (cases A and C). However, we found that, even if bonding SC is necessary, it can create a lock-in dependency, thereby ruining the hybrid purposes. We observed that when a SMO has a social origin, and care workers have been founded it, it usually develops a very high level of bonding SC based exclusively on their duty to take care of others (cases B and C). However, this pride in being excellent suppliers of care services, even though it holds the members of the organization together, it usually makes them refuse to develop the necessary managerial skills. This monolithic and closed position puts the sustainability of the project at stake since the organization members are not capable of combining a social vision with an economic/profitable perspective, which leads to a lock-in risk. Indeed, in case B, the managerial team was renewed through a complementary profile, but this strategy failed. One new manager left the SMO six months after being hired because he did not fit in. A second general manager, highly capable and with a great deal of energy, also left the organization due to frequent confrontations and a lack of a common vision with the rest of the members. Although external managers are sometimes hired (case B), their economic vision is often not seen as being as relevant as the caring activity, and a lock-in risk will threaten the hybrid nature of the organization. Liu & Ko (2012) may recommend hiring hybrid staff, but ‘pruning’ these profiles is not an easy task and requires the commitment and openness of leaders. Bridging SC is a mechanism that helps organizations to achieve their hybrid purposes. Using this mechanism, however, requires organizations to be open-minded and capable of integrating both purposes; first, because the market requires it and secondly, as a source of business value. This culture must be embraced by its leaders and accepted by the workers.

Second, our findings show that balancing bonding SC and bridging SC helps SMOs fulfill their hybrid purposes, especially since the balancing effect complements the weaker orientation (social or economic), which serves to avoid a lock-in risk (enhancing the organizational cohesion around hybrid purposes). For organizations to achieve balance, they need to adopt an open culture to be able to integrate the complementary visions in the hybrid mission. Indeed, bridging SC with external partners usually requires partnerships that complement the shortcomings of SMOs. These partnerships can strengthen SMOs since they will complement the original (economic or social) orientation of the organization with a different orientation, avoiding lock-in risks (increasing the organizational cohesion around the hybrid purposes).

Furthermore, SMOs can “enlarge” their organizations through networks, creating stable alliances with regional institutions that ensure the SMOs activity and survival (cases A, B, and C). For instance, in case A, the investors are entrepreneurs, and they expect a financial return from their investments, and this way, the social concern is preserved as long as it is considered a source of value required by the market. In the beginning, the market was difficult to access. They tried to bridge with new partners that shared their economic goals but not their social purpose. But the parties did not complement each other and, consequently, the partnership failed. Case A overcame its challenge thanks to an alliance with a semipublic agent, Foundation H, which provided clients and compensated for their initial legitimacy deficit by displaying a very high level of compliance with social welfare demands. This behavior has been analyzed by Pache and Santos (2010), who stated that organizations with a commercial background tend to compensate for their original legitimacy deficit by displaying a very high level of compliance with social welfare demands. In this sense, collaboration with the main social actors or organizations, foundations, or NGOs may reinforce this hybridization.

Third, in addition to avoiding the lock-in risk, balancing bonding and bridging can serve to prevent the risk of dependency on a third party, in particular when partners (usually public or semipublic partners) share and complement the hybrid mission with a systemic perspective. The company in case B had a strong social perspective but lacked managerial expertise and orientation. As mentioned before, this SMO was unable to integrate a new managerial profile into its organizational structure. The company hired two managers who, in a short period of time, left the company due to conflicts and different views with respect to the worker-owners. The lock-in risk was evident as the worker-owners did not accept the managerial orientation of the new incumbents. In addition to that, the organization had only one client (Nursing home Y) that was managed according to its hybrid vision. This situation created a high dependency risk for Case B. As a consequence, the main client (85% of the firm’s activity), who was conscious of the vulnerable position of B, recommended a set of decisions regarding operational and strategic issues to professionalize and overcome this dependency situation on just one client. Company B had difficulties in adopting this managerial orientation, but in the end, the worker-owners took advantage of a business opportunity, which allowed them to diversify their activity. Even if the activity is already highly concentrated, thanks to this diversification, the organization remains active nowadays. However, bridging SC does not always compensate for dependency risk. In case C, the town hall was the main supplier of services, and dependency on this institution was very high. Currently, this external dependency causes cash problems that are compensated by the founders’ high level of bonding SC, in that they personally cover any funding gaps. In the long term, however, this situation will not be sustainable. New partners (bridging) will be required to diversify the income sources. Creating an ecosystem that systemically shares the hybrid purposes of SMOs and cares for them seems to be a condition to preserve their hybrid nature. In this sense, we agree with Schneider (2009) who argues for strategies to develop more holistic social services systems that must consciously develop SC across “organizations offering complementary services” (Schneider, 2009, p.656).

However, for these recommendations to be effective, they cannot be adopted isolated; they need to be embodied in a systemic and holistic strategy, in other words, a shared value strategy (Florin and Schmidt, 2011). Shared value strategy aims to integrate the generation of economic and social value creating positive impacts for all stakeholders (Porter & Krammer, 2011). This goal requires to consider and align the interests of the stakeholders (Mühlbacher & Böbel, 2019) involved in the social services industry, such as the public administration. In this sense, and considering a broad perspective of shared value strategy, the claim for a sustainable entrepreneurial ecosystem, understood as “an interconnected group of actors in a local geographic community committed to sustainable development through the support and facilitation of new sustainable ventures” (Cohen 2006, p. 3) is raised in the social services context. This concept relies in the collective-impact approach, which involves all the actors in their ecosystem, generating a shared value’s ecosystem (Kramer & Pfitzer, 2016).

This paper offers several practical implications, particularly for SMOs, as we enrich the work of Battilana et al. (2015), showing how hybridity can be sustained even when it is challenged by the context of Small and Medium-sized Hybrid Organizations. Regarding the role of leaders of SMOs, we warn about the risks of lock-in in strong bonding SC, and also the risk of dependency in bridging SC. For both cases, we provide some suggestions to avoid or overcome these risks. Concerning the role of public administration, we warn about the relevant impact that a changing context can have on the sustainability of hybridity in scarcely formalized organizations. The effectiveness of relationships among actors outside the organization will help optimize resources, decrease redundancies, and strengthen the unity among the regional agents (Theodoraki, Messeghem, & Rice, 2018) and create greater social impact (Austin 2010). In this sense, experiences of reaching the collective impact coming from other industries, such as food industry (Alberti & Belfanti, 2019), can be adapted to the social services industry.

Additional empirical research is needed to confirm these preliminary conclusions. From the research side, given the relevance of external support for SMOs, it could be insightful to explore the role of intermediaries in producing innovative solutions to deal with the external tensions (Iturrioz-Landart, Aragón-Amonarriz, & Narvaiza-Cantin, 2015). Observing how altruism, a key psychological characteristic of social entrepreneurs (Bargsted et al., 2013), may be shared by the organization through informal ways in modeling processes, and the encouragement displayed in SMOs, can provide useful hints to SMO leaders in order to avoid their dependency on the founders’ original objectives. Also, expanding the case study to a wider variety of SMOs would allow fellow researchers to study new ways of sustaining hybridity in challenging contexts, and would extend our work. Finally, analyzing other organizations that started out with a social background and logic but that have grown and succeeded could be a way to gain a deeper understanding of the factors underlying this success.

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[1]      Universidad de Deusto, España.

       Dirección de correo electrónico: lorea.narvaiza@deusto.es.

[2]      Universidad de Deusto, España.

       Dirección de correo electrónico: felix.arrieta@deusto.es.

[3]      Universidad de Deusto, España.

       Dirección de correo electrónico: cguinot@deusto.es.

[4]      Universidad de Deusto, España.

       Dirección de correo electrónico: cristina.aragon@deusto.es.