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Constituents and Characteristics of Hybrid Businesses: A Qualitative, Empirical Framework

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Despite mounting research on hybrid businesses that deliver value beyond financial goals, little is known about their nature. We assess what characterizes hybrid businesses and drives their founders by means of an abductive analysis of 18 ventures. Findings are discussed for the outcome of business models, organization of business model, and underlying aims of hybrid entrepreneurs building an empirical framework of constituents and characteristics. Results show participatory patterns of organization and emphasis on knowledge sharing about sustainability. The general profit and growth orientation is often a means to the end of achieving sustainability goals. Entrepreneurs are driven by nonmaterial motives.
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Accepted for publication in Journal of Small Business Management, DOI:
10.1111/jsbm.12295
1
Constituents and Characteristics of Hybrid Businesses: A Qualitative,
Empirical Framework
Rüdiger Hahn
(ruediger.hahn@uni-hohenheim.de)
&
Inan Ince
This is a non-final version of the manuscript published in “Journal of Small Business
Management 54(S1), 33-52, DOI: 10.1111/jsbm.12295”; Please refer to the published version
of the article!
Abstract
Despite mounting research on hybrid businesses that deliver value beyond financial goals, little is
known about their nature. We assess what characterizes hybrid businesses and drives their
founders by means of an abductive analysis of 18 ventures. Findings are discussed for the
outcome of business models, organization of business model, and underlying aims of hybrid
entrepreneurs building an empirical framework of constituents and characteristics. Results show
participatory patterns of organization and emphasis on knowledge sharing about sustainability.
The general profit and growth orientation is often a means to the end of achieving sustainability
goals. Entrepreneurs are driven by nonmaterial motives.
Accepted for publication in Journal of Small Business Management, DOI:
10.1111/jsbm.12295
2
Introduction
Numerous cases illustrate that a narrow view of business shaped mainly by a financial
perspective is not (or is no longer) adequate. New business models often pursue social or
ecological goals in addition to or even before economic goals (e.g., Zahra, Gedajlovic, Neubaum,
and Shulman 2009). Such ventures are increasingly subsumed under the heading of “hybrid
organizations” in high-profile scholarly literature (Battilana and Lee 2014; Doherty, Haugh, and
Lyon 2014; Pache and Santos 2013).1 Battilana and Lee (2014) identify social enterprises as ideal
forms of hybrid organizations that “pursue a social mission while engaging in commercial
activities that sustain their operations” (p. 399). Unlike purely commercial business models that
might incorporate some sustainability aspects ex post, hybrids proactively engage sustainability
as part of their business models, while unlike organizations from the nonprofit sector, also
building upon commercially-oriented business models (cf. Doherty et al. 2014).
There seems to be a general consensus that these ventures fall under a new type of business
that substantially deviates from conventional businesses in terms of characteristics and
constituencies (Austin, Stevenson, and Wei-Skillern 2006). However, despite initial efforts to
understand hybrid organizations, to the best of our knowledge there has been no deeper empirical
insight into the question of what actually characterizes such ventures nor any uniform
understanding of what constitutes them (Choi and Majumdar 2014). Although the topic in general
is of significant practical, political, and academic interest, the hybrid business still demands the
academic community gain a better understanding of “the distinctive nature of [its] mission,
processes, and resources leveraged” (Dacin, Dacin, and Matear 2010: 53–53; cf. Wilson and Post
2013). In the present study, we will argue and show that, to fully understand hybrid
1 Other terms such as social entrepreneurship, social enterprises, social business, social ventures, and conscious
capitalism are currently in contemporary currency.
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entrepreneurship and deliver a profound basis for further research on such enterprises, the nature
of hybrid businesses must be further scrutinized through phenomenon-driven research.
Billis (2010), for example, comments that “there is no evidence that [hybrid businesses] have
distinctive and explicit principles of management and operation [that] set them apart from other
sectors” (p. 57; emphasis in original). Against this backdrop, we seek to contribute to the
understanding of these organizations by discussing the pertinent evidence at hand. We will
empirically establish a framework of hybrid-enterprise constituents and characteristics and,
thereby, help make sense of a field of study that otherwise remains elusive. While recent
literature discusses specific elements of hybrid businesses (Doherty et al. 2014), our hope is to
contribute to the literature through a holistic approach by culling this new type of venture’s
typically unifying characteristics and elements from available in-depth, empirical observations. In
other words, we will delve into what constitutes a hybrid venture on a level deeper than that of
general definitions and isolated treatments. In so doing, we hope to clear up misunderstandings
due to speculation and anecdotal inferences by offering a holistic view of our topic.
Our providing an understanding of the self-conceptions, constituting elements, and general
orientations of hybrid ventures should subsequently help pave the way for further empirical
research. We deem this necessary to enabling further examination of, for example, success
factors for hybrid businesses, their performances on different levels, the constraints thereon, etc.
By starting from a uniform understanding of the nature of hybrid ventures, then, future research
can avoid being criticized for building on ill-defined concepts from multiple, varying
conceptualizations. Furthermore, the envisioned framework of hybrid-enterprise constituents and
characteristics, it is hoped, will also spur greater practical and political interest in the topic, as it
is first necessary to understand hybrid businesses’ peculiarities before policies and strategies for
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promoting such ventures can be developed. To achieve these aims, we will abductively analyze
18 examples of hybrid businesses in depth, exploring their unifying constituents and
characteristics. The present paper is structured as follows: first, we will shed light on the nature
of hybrid businesses based on the extant literature; second, we will explain our method of
collecting and qualitatively analyzing our data; third, we will present our findings; fourth, we will
propose a new analytical framework for studying hybrid businesses; and fifth, we will conclude
the present paper by discussing the implications of our findings and suggesting avenues for
further research.
The Nature Of Hybrid Businesses And Hybrid Entrepreneurship
A heightened academic interest in businesses pursuing more than purely financial goals emerged
in the 1980s and 1990s (Bacq and Janssen 2011). One starting points for contemporary
investigations of social entrepreneurship and hybrid businesses is the work of Muhammad
Yunus, who, in 1976, proposed the notion of helping communities using business logics (cf.
Yunus, Moingeon, and Lehmann-Ortega 2010), defying the predominant risk-reward paradigm
for engaging in commercial activities (Pache and Santos 2013; Zeyen et al. 2013). Since then,
many scholars have attempted to define the term hybrid business and delineate social
entrepreneurship from other forms of for- and nonprofit endeavors (e.g., Austin, Stevenson, and
Wei-Skillern 2006; Doherty, Haugh, and Lyon 2014; Haigh and Hoffman 2012; Pache and
Santos 2013; Wilson and Post 2013; Yunus, Moingeon, and Lehmann-Ortega 2010; Zahra,
Gedajlovic, Neubaum, and Shulman 2009). In his seminal work “The roots of voluntary agencies:
A question of choice,” Billis (1991) touches on the root of what we know as hybrid businesses;
he would later refine his thoughts, creating one of the first, tentative theories of third-sector
organizations, by differentiating between and synthesizing core elements such as ownership,
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governance, operational priorities, human resources, and other resources in companies whose
structures combine aspects of public and private organizations (Billis 2010). However, what
constitutes a hybrid business on a deeper level in terms of an overarching definition has only
recently received some attention. Knowledge about organizational hybridity is still in a pre-
paradigmatic stage (Nicholls 2010) and, therefore, rather fragmented, often focusing on isolated
issues and anecdotal descriptions (Nicolopoulou 2014). The present paper will present these
descriptions and issues to build a preliminary groundwork for understanding the nature of hybrid
businesses.
The initial desire to found a hybrid business often comes from personal circumstances such
as family experiences or the recognition of the market’s failure to meet societal needs (Cohen and
Winn 2007; Hockerts and Wüstenhagen 2010). In this regard, Yitshaki and Kropp (2015)
recently identified push (societal failure) and pull (life events, social awareness, and personal
ideology) as motivating factors that lead entrepreneurs to found hybrid enterprises. With regards
to the overarching identity of hybrids, it follows that their shared goal is to address long-standing
basic needs but through an entrepreneurial approach (e.g., Austin, Stevenson, and Wei-Skillern
2006; Murphy and Coombes 2009). In a study examining this dual identity, Moss, Short, Payne,
and Lumpkin (2011) find that hybrid organizations generally do consider themselves businesses,
albeit businesses driven by more normative identities in which societal orientation is generally
stronger than financial orientation. This is corroborated by Wilson and Post (2013) who, in an
exploratory, multi-case study, scrutinized the process by which social businesses are designed
and showed that mission is integral to hybridsit is not, that is, tangential, as with traditional
for-profit companies, which often pursue a CSR strategy to legitimize their pursuing financial
goals.
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Battilana, Lee, Walker, and Dorsey (2012) list the challenges and conflicting institutional
demands that arise from the multiple goals of hybrid businesses. Doherty, Haugh, and Lyon
(2014) argue in their literature review that hybrid organizations seek legitimacy by conforming
themselves to the public, private, or nonprofit sector and, therefore, to particular stakeholder
groups. Thus, they embody various sources of potential organizational tension, including
inconsistent goals, norms, and values (Costanzo, Vurro, Foster, Servato, and Perrini 2014; Pache
and Santos 2013; Smith, Gonin, and Besharov 2013), and this can lead to multiple, incompatible
identities within such organizations. Such tensions stem from the hybrid nature of such ventures,
which inhabit a space somewhere between nonprofit and traditional enterprises (Battilana, Lee,
Walker, and Dorsey 2012). Thus, when a hybrid organization fails to form a coherent identity it
risks having to cater to a broad, often conflicting, set of stakeholders (Battilana and Dorado
2010). However, this is neither entirely avoidable, nor undesirable, as hybrids regularly depend
on conflicting interest groups simultaneously. For instance, Doherty, Haugh, and Lyon (2014)
describe how being equally beholden to financially and socially oriented stakeholders has helped
some organizations successfully secure their operations. Furthermore, multiple identities offer the
potential of resolving intractability and sustaining intergroup harmony, which can lead to greater
acceptance of integrative goals (Costanzo et al. 2014). This relationship between social and
financial goals, however, is understandably rather delicate, as conflicts arise when there is
pressure to capitalize on a market segment (Haigh and Hoffman 2012) or to simply secure
operations by involving potential financiers (Doherty et al. 2014; Smith et al. 2013). In this
regard, Stevens, Moray, and Bruneel (2014) show an inversely proportional relationship exists
between the social and commercial missions of such organizations and this can ultimately pose
considerable challenges to their strategies (Moizer and Tracey 2010; Pache and Santos 2013) and
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their abilities to adjust to and interpret contextual factors (Battilana and Lee 2014; Katre and
Salipante 2012). It therefore makes sense that revenue is mostly treated as a means of ensuring
the financial sustainability and independence such organizations need to fulfill their social
missions, as proposed by further conceptual studies (Bacq and Janssen 2011; Dart 2004; Haigh
and Hoffman 2012; Murphy and Coombes 2009; Nicolopoulou 2014; Zahra, Gedajlovic,
Neubaum, and Shulman 2009).
Moreover, in addition to experiencing the conflicts endemic to balancing the interests of
financial and nonfinancial stakeholders, hybrid organizations often experience conflicts due to
disagreements within and among nonfinancial-stakeholder groups. While expectations from
financial stakeholders are much more predictable, expectations from the other stakeholders
hybrids must satisfy can vary greatly (Doherty et al. 2014; Moizer and Tracey 2010; Smith et al.
2013).
Meanwhile, another interesting aspect of hybrid organizations concerns their missions and
general attitudes. Zahra, Gedajlovic, Neubaum, and Shulman (2009), as well as Haigh and
Hoffman (2012), conclude that hybrids actively seek market entrants and invite them to further
extend the value chain or even to directly copy their own business models. While this might seem
irresponsible from a business standpoint, hybrids tend to have a different interpretation of
“competition,” which seems to be treated much more as “competitive cooperation” (Yunus,
Moingeon, and Lehmann-Ortega 2010; Zeyen et al. 2013), as the primary goal of hybrid
enterprises is to achieve their goals throughout society (Santos 2012). Access to a network is
therefore a powerful tool and seen as a general enrichment whereby every participant can (and, in
many cases, must) benefit from its fellow members (Katre and Salipante 2012) through, for
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example, access to resources (Doherty et al. 2014). Thus, such organizations tend to develop
further opportunities together (Bacq and Janssen 2011; Corner and Ho 2010).
Finally, growth can be pursued, in the case of every business, to increase profits or to ensure
survival alone. Hybrid businesses, however, consider growth mainly as a means of extending
their societal impacts (Haigh and Hoffman 2012; Hynes 2009; Smith, Gonin, and Besharov
2013). Corner and Ho (2010) assert that respective businesses primarily resort to organic growth
strategies to achieve such impacts. This seems to be marked by slower, more independent
approaches that are responsive to stakeholder expectations for three main reasons: (1) it is
difficult to quantify social profits (Yunus et al. 2010), (2) organic growth takes time to implement
and develop (Smith et al. 2013), and (3) hybrid strategies are more focused on sustainable
solutions, which again, take time to implement and shape through validation and revision (Santos
2012).
As mentioned above, then, several attempts to describe and explain hybrid businesses
have already been made based on these organizations’ key aspects such as mission, growth,
profit, conflicts, human resources, networks, and legitimacy. However, this research has mostly
centered on isolated issues and is only tenuously connected to an overall view of the matter.
When it comes to actually depicting hybrids—to describing what their nature is and how they
work—the existing definitions remain largely conceptual and are supported by few empirical
findings.
Methods
In the present study, we employed an abductive methodology based on interview material
gathered from 18 hybrid businesses. We ensured replicability of this approach by maintaining
detailed documentation, as described below:
Accepted for publication in Journal of Small Business Management, DOI:
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Sample and data collection
We selected the businesses examined using purposeful sampling, which allowed us to identify
information-rich typical cases (Palinkas et al. 2013; Patton 2015). This was appropriate for our
research goal of deriving an empirical characterization of hybrid business. We sought to identify
companies that fit the broad description above of organizations that “pursue a social mission
while engaging in commercial activities that sustain their operations” (Battilana and Lee 2014:
399), so as to elaborate on and examine this construct (Palinkas et al. 2013; Patton 2015).
Meanwhile, to identify manifestations of hybrid businesses, we conducted an extensive Internet
search for potential ventures during which we read though news clips, blogs, and social-network
posts focused on keywords such as “hybrid business,” “social business,” and “social
entrepreneurship.” Upon identifying a potential company we continued collecting information on
its mission and business model. Aside from the information available from our initial sources, we
also examined each potential subject’s website, as these were readily available. A company was
deemed suitable if it voiced a distinctive social mission that seemed to hold greater weight than
or was equally important to its financial concerns. Examples of such social missions included, for
instance, integrating disabled people into the workforce and promoting sustainable consumption
(see Table 2 for an overview of the selected organizations’ business ideas and social focuses).
Crucial as well was that the selected organizations expatiated social missions were pursued
using business logic; that is, each company had to have a working business model that entailed
the purveyance of goods or services to customers such that the business was not dependent on
donations or similar sources of nonbusiness income. It was not relevant whether the company
called itself a “hybrid business” or a “social business.” Instead, both researchers involved in the
Accepted for publication in Journal of Small Business Management, DOI:
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present project had to agree that a given company met these initially stated criteria before contact
was initiated.
To enhance reliability, we purposely selected the founders or cofounders of the selected
businesses as our key informants, because these were typically the best sources for in-depth
information on and insights into the underlying motives and goals that shaped their respective
hybrid organizations. All interviews were conducted face-to-face.
Data collection took place in two stages. In the first stage, the interview consisted of 14
questions regarding the organizations’ general conceptions of their business models (e.g., “Can
you describe your business model?” and “How would you characterize and categorize your
business model?”), the nature of value creation (e.g., “How are profits distributed and to whom?”
and “Do you generate value beyond profits? If so, what is this?”), the current stage of
development (e.g., “When did you start developing your business?” and “What must be done in
the future?”), etc. We also attempted to record the founder’s or co-founder’s perception(s) of
value creation aside from financial motivations and where each saw her venture within the larger
overall market context, with regards to, for instance, its relationships with its suppliers,
customers, and other stakeholders. Initially, we conducted seven interviews, and these were
transcribed, then returned to the interviewees for validation; subsequently, we coded these as
described below to further increase their reliability.
Two additional interviews were not transcribed but, instead, removed from the sample. These
two companies initially seemed suitable, yet on closer inspection, they failed to fit the definition
of a hybrid business based on our criteria. In these cases, the information gathered from publicly
available sources proved to be misleading when examining the true nature of these businesses,
and this became clear during the interview stage.
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The coding of the remaining seven interviews only led to partial theoretical saturation,
resulting in several new insights, codes, and impressions. Thus, we decided to identify additional
hybrid ventures to allow for a deeper analysis. Another 11 interviews were conducted by
repeating the previously mentioned search procedure several months after completing the first
seven interviews. The interviews were again transcribed, validated, and coded. From the analysis,
we concluded that the number of example companies in our sample was sufficient to provide a
meaningful picture of hybrid ventures.
We then conducted a second series of interviews with the same organizations to ensure we
had recorded every nuance relevant to our study. All told, we interviewed 16 of our original 18
ventures a second time. (The remaining two could not accommodate second interviews.) In this
second stage, the organizations’ contacts were presented with a 14-question survey. These
questionnaires inquired into the initial inspiration for each business’s founding (e.g., “What
brought about your business concept?” and “How did you identify the opportunity your business
takes advantage of?”), then moved on to asking about prerequisites, processes, and resources (e.g.
“What knowledge did you and your cofounders bring to your venture?”; “How would you
describe the market environment in which you operate?”; and “What would you consider your
most important processes or inputs?”), and general strengths and challenges (e.g., “What are the
your company’s strengths?” and “How does your business react to changes and challenges?”).
Following our second stage, we had completed our data collection stage, having reached
theoretical saturation; that is, we had reached a point in which we were confronted with
phenomena repetition, making the addition of further coding sets unnecessary, as it was unlikely
that we had missed the majority of phenomena and further data would only marginally affect our
conclusions (Glaser and Strauss 1967). Overall, the data collected from the 18 companies
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interviewed comprised roughly 140,000 words, or nearly 20 hours, of interview material. The
validated primary data were then triangulated using information from the businesses’ websites,
news clips, and blogs. These sources complemented the data collected, helping us to construct an
approximate “true story” for each business (Pentland 1999). Moreover, each constructed narrative
was repeatedly checked against the available source data to enhance its internal validity. Table 1
presents a preliminary overview of the interviewed companies.
--- INSERT TABLE 1 ABOUT HERE ---
Data analysis
In analyzing the data collected in the previously described stages, we took an abductive,
interpretative approach, shuttling continually from our data, to our emerging conceptualizations,
to the existing literature (e.g., Maanen, Sorensen, and Mitchell 2007; Reichertz 2010;
Timmermans and Tavory 2012). Timmermans and Tavory (2012) describe abduction as a “form
of reasoning through which we perceive phenomena as relating to other observations, either in
the sense that there is a cause and effect hidden from view, in the sense that phenomena are seen
as similar to other observations already experienced and explained in other situations, or in the
sense of creating new general descriptions” (p. 171). This approach conformed well to our
research aims. Furthermore, Maanen, Sorensen, and Mitchell (2007) have suggested that the data
in abductive reasoning “should be sufficiently detailed, rich, and complex” (p. 1,149), which was
a given in the case of our empirical material. Our coding, then, was guided by the material at
hand instead of following a set of predefined theoretical concepts; still, our coding procedure was
theoretically sensitive, given our prior knowledge of the topic, and was further refined during the
research process and subsequent literature review.
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Additionally, we coded the transcripts individually to enhance the validity and reliability of
their combined analysis and limit subjectivity to an acceptable level, which is important when
attempting to identify deeper meanings in texts (Duriau, Reger, and Pfarrer 2007). Timmermans
and Tavory (2012) suggest following a grounded theory’s methodological steps as heuristics in
abductive data analyses. Our coding process thus consisted of three partially iterative coding
methods: (1) open (conceptual), (2) axial (structural), and (3) selective (dimensional) (Strauss and
Corbin 1990). This entailed testing, comparing, discussing, and retesting over several different
stages to ensure the creation of coding guidelines that provided an optimal balance between
reliability and validity.
During the open-coding stage, our main goal was to identify general attributes within the
observed phenomena. Our interpretations of particular elements were largely independently from
those for the rest of the data material and any possible connections between them. The primary
goal was to identify as many attributes as possible to shape our first several categories (Strauss
and Corbin 1990), and this initially led to incoherent, unstructured results.
Hence, our open coding of each interview and the secondary data we had collected on each
business led to an abundance of phenomena and concepts. Actual order and coherence was
shaped during the axial-coding stage, in which the identified attributes were refined and
connected along a logical axis. This allowed us to gradually arrive at a greater level of abstraction
by forming categories and subcategories. Moreover, our open and axial coding was constantly
shaped throughout our investigation as ongoing analyses, resulting in even greater validity
(Kempster and Parry 2011) by allowing us to identify nodes in passages that had been openly
coded previously and connecting them to attributes in other code sets. Differences in judgment
also arose between us, especially during our first few coding phases. These differences were
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assessed case by case in a discursive way, which helped us gradually reconcile the discrepancies
in our mental schemas (Seuring and Gold 2012). Our aim was to arrive at a series of categories
that served as a pattern by which additional data could be organized.
Utilizing this interplay, our selective coding sought to close any extant gaps within the
identified concepts to deliver core conceptualizations (as per Bryant and Charmaz 2010). In the
next stage, then, our investigation was oriented toward identifying properties and attributes that
further defined the subjects in our samples. Figure 1 shows an excerpt of our iterative, three-stage
process, while tables 3, 4, and 5 in the following section provide a holistic illustration of our core
conceptualizations and their preceding subcategories, phenomena, and illustrative quotations.
Locke (2001) describes this as “discriminate sampling” because it is highly focused on closing
explanatory gaps and pinpointing explanatory patterns that fit every case in a given sample.
--- INSERT FIGURE 1 ABOUT HERE ---
Findings2
Table 2 provides insights into the 18 sampled companies’ business concepts. In this section, we
will examine the peculiarities of each subcategory and explain how they emerged from the
gathered data.
--- INSERT TABLE 2 ABOUT HERE ---
Outcomes of our business-model queries
The first two sub-categories concentrated on the sampled organizations’ business models. Table 3
provides an overview of the main elements of these categories, along with illustrative quotations
from our interviews.
--- INSERT TABLE 3 ABOUT HERE ---
2 All quotations presented in this section were translated by the authors.
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All companies generate revenue and are, therefore, in some way profit-oriented. This in itself
is not surprising considering a general business mindset is necessarily part of the definition of
what constitutes a hybrid business, as explained above, and we purposely based our sampling
criteria on this characterization. And yet, the underlying phenomena endemic to this subcategory
are far more interesting than one might imagine from such a basic interpretation. Naturally,
hybrid businesses offer goods and services just as any “ordinary” company would but with the
primary goal of recovering costs and, sometimes, the added benefit of generating profits. A closer
examination, however, reveals two general attitudes toward profit orientation, which might point,
early on, to differences in how hybrids weigh their economic and noneconomic goals. Some
companies seem to be rather defensive about their for-profit motives. For example, the founder of
munavis, a company that acts as intermediary between sheltered workshops, designers, and other
actors to help people with disabilities engage in normal work, underscored this point: “We are not
economically oriented, but still, we do want to earn money with it.” Similarly, the founder of
bettervest, an IT-focused company offering a crowdfunding platform for energy-efficient
projects, said, “Sustainability always comes before profit orientation.”
Others, meanwhile, take a more proactive, profit-oriented position. Several interviewees
even emphasized that they are indeed “real” businesses clearly focused on generating revenue
and that this distinguished them from nonprofit organizations. The founder of Auticon vividly
voiced this point: “We consider ourselves a regular IT-consulting company. … After all, we are a
regular economic enterprise.”
In general, despite their community orientations, hybrids look to their financial bottom lines
and acknowledge they must achieve certain financial goals to remain in business. Still, not all
ventures are successful in this. Some are self-sufficient and profitable, whereas others continue to
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incur losses and must develop their revenue streams further, scale their business up, etc. While
this is not surprising, given the early stages some of the sampled ventures found themselves in at
the time of our interviews, it remains to be seen whether the latter group will succeed in
becoming financially sustainable.
Directly connected to this last issue is the subcategory of strategically sustainable growth.
Interestingly, many interviewees directly asserted that they regarded growth as a means of
achieving sustainable societal benefits from their business models. This, it seems, adds to their
drive to expand, in pursuit of sustainable growth strategies, as their influence is magnified as they
progressively reach more customers.3 Thus, we identified a preference for moderate growth with
transparent, simplistic, reliable, independent, long-term, and customer-oriented business
approaches, operations, and communications. Furthermore, some organizations seemed
especially concerned with serving their regional economies by strengthening and making use of
regional or local structures.
Organization of the business model
Our second set of subcategories deals with how hybrid businesses are organized. Table 4 offers
abstract summaries with illustrative quotations.
--- INSERT TABLE 4 ABOUT HERE ---
The intensive inclusion of various stakeholders in the core of the sampled organizations’
business models seems a dominant characteristic of hybrid businesses in general.
Quartiermeister, or “Quartermaster,” for example, includes its neighborhood in matters of profit
distribution and has built a close connection between its brewing business and strictly selling its
3 One entrepreneur, however, also mentioned that growth is not an option due to limited personal time and other
entrepreneurial endeavors. In this case, the hybrid business in question is stagnating, and the founders hope to
continue without growing and without putting forth any further major efforts.
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beer locally; thus, not only is the company’s community its scope of distribution, but a majority
of its profits go to a local charity: “The new thing is that the profit does not flow to a single
person or company but to the community where the company’s products are consumed. …Two-
thirds of our profits go to social projects in the community and one-third to Quartiermeister,
which we use to cover our expenses. … In short, we sell social beer and want to promote the
regional economy and neighborhood. We want to manage our quarter.” Similar patterns evincing
the close inclusion of local stakeholders can be found, for example, in the cases of Regionalwert,
or “Regional Value,” and meine ernte, or “My Harvest.” The latter company is also an example
of how hybrids often build on the active involvement of customers in certain steps of the value-
creation chain; its customers actually create value, literally taking part in the production process
by cultivating and harvesting their own crops.
In summary, the existence of dense networks (comprising customers, suppliers, etc.) seems
directly connected to hybrids’ value creation, and this is a distinctive characteristic of their
business models. It is also obvious that, in many cases, the provision of a platform that enables
sharing, buying, selling, and communicating (about sustainability) helps hybrids facilitate direct
interactions. And this aspect is directly linked to the next subcategory.
All 18 sampled organizations heavily emphasized communication and exhibited a strong
desire to exchange information with customers, partners, and suppliers, allowing them to stay
abreast of trends and developments in the areas of sustainability and, furthermore, to facilitate
information flows around the topics of sustainable goods and services. meine ernte, for example,
works closely with farmers to offer seasonal organic-vegetable gardens for rent in urban areas.
One of its cofounders stated, “For us, topics such as rationality and seasonality are very
important. People should learn again which vegetables grow where and when. … Sustainability is
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a central theme for us because we are trying to strengthen local agriculture and enable regional
and seasonal nutrition for the people.” Inherent to this is a great degree of knowledge
dissemination that is not simply a byproduct of the aforementioned processes but a purposeful
tool for raising awareness of current issues and societal problems, on which topics such
organizations also offer customers and stakeholders educational opportunities. Lebenskleidung,
or “Life Clothing,” serves as a lively example, as its founder’s remarks show: “Our business
model definitely generates awareness of sustainable clothing and has an educational character. It
generates networks. Our business activities bring people together, which leads to new projects.
Partnerships and connections develop; interest groups, I dare say, that are organized around more
than simply profits.”
Underlying aims of hybrid entrepreneurs
The final two subcategories pertain to the underlying aims of entrepreneurs in founding hybrid
businesses (e.g., those reported by our sampled organizations, as listed in Table 5).
--- INSERT TABLE 5 ABOUT HERE ---
Most of the discovered phenomena seem to paint hybrids as idealistic and, therefore, show
they contribute less tangible than intangible value (e.g., sustainable development, community
welfare, and education) to their markets. This is indicated especially by the various founders’
taking personal interest in topics like sustainability and how their individual (sometimes
negative) prior experiences in certain sectors led them to found their own (sustainable) hybrid
businesses. The founder of Lebenskleidung is illustrative of this: “I lived in India for two years.
My first thoughts when developing our business model were on the confrontation and the
unequal business relationships between industrialized and developing countries, with all their
negative consequences for local ecologies, economies, and social structures. My goal was to
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build a different kind of relationship by providing intercultural aspects and facilitating economic
interactions on a level playing field, so to speak.”
All the investigated organizations not only sought to achieve financial goals, then, but added
value in terms of their triple bottom lines by pursuing social and ecological goals that supported
shifts toward a more sustainable society. This was done by passively or actively promoting
sustainable consumption for products such as energy, textiles, and food. However, the
interviewed hybrid entrepreneurs often went beyond the mere production and sale of (more)
sustainable products by, for example, promoting recycling and reuse or by simply supporting
community solidarity. Thus, our findings suggest hybrids are oriented toward societal
transformation much more deeply than other organizations, as they seem intent on conveying
their philosophies by proving that business processes need not necessarily focus mainly (or even
exclusively) on financial interests.
Discussion
As a final analysis of the data from our interviews, we have condensed all the aforementioned
sub-dimensions into the formal hybrid-business framework presented in Figure 2. This
framework should help future research characterize hybrid businesses more preciselyan
essential step in advancing research in this vein. Below, then, we will further elaborate on our
framework’s various dimensions by placing them in the context of existing knowledge on hybrid
businesses and social entrepreneurship. We will close the present discussion with a recapitulation
and appraisal of our conclusions and their implications, as well as suggestions for further
research.
--- INSERT FIGURE 2 ABOUT HERE ---
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Traditional theories of entrepreneurship state that companies in free-market economies are
generally founded on opportunity- and advantage-seeking behavior (Alvarez and Busenitz 2001;
Audretsch, Lehmann, and Plummer 2009; De Carolis and Saparito 2006; Ketchen, Ireland, and
Snow 2007). To date, little is known about how opportunities, especially for hybrid
entrepreneurship, originate (Mair and Marti 2009). Entrepreneurs in our sample predominantly
reported acting from their realizations or perceptions that deficiencies existed in the market and
that there were opportunities to solve certain societal problems with them (cf. Bacq and Janssen
2011). Thus, while classic for-profit entrepreneurs search for opportunities based largely on
material motivations and only sometimes take social welfare into consideration as afterthoughts
(Newbert 2003), hybrid businesses are founded mainly on immaterial motivations that help them
recognize and attempt to mitigate societal ills. As mentioned above, Yitshaki and Kropp (2015)
recently showed, in a life-story analysis of 30 Israeli hybrid entrepreneurs, that the inspiration for
founding hybrid ventures comes primarily from push (societal failure) and pull (life events, social
awareness, and personal ideologies). Expanding upon these findings, our data reveals that the
founders of hybrid businesses often hope to change how society thinks and this leads them
toward strong transformation orientations. In this sense, hybrid businesses can challenge larger,
more established businesses to shift at least incrementally toward sustainability (Hockerts
and Wüstenhagen 2010) by offering social value. All of conforms to Santos’s (2012) theory-
based argument that “the phenomenon of social entrepreneurship challenges our assumptions
about human behavior and economic action” (p. 349-350).
Hybrid organizations have business mindsets just like for-profit organizations. However,
hybrids use this mindset to address societal and ecological issues born from their societies’
unfulfilled needs by, for instance, appealing to their communities to change their ways of
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thinking with regards to doing business. This might go as far as an organization’s sharing its
ideas with and inviting new market entrants to replicate their successful business models and
further benefit society (Doherty et al. 2014; Haigh and Hoffman 2012). The hybrid venture
Gewürzkampagne, or “Spice Campaign,” for example, built its own venture on the successful
idea of a predecessor in another product category: “We were aware that such a model already
exists, so we didn’t need to reinvent the wheel. … That’s why the three of us [the founders of
Gewürzkampagne] decided to band together with the former four founders [of Teekampagne, or
“Tee Campaign”] this year to found Gewürzkampagne.”
The quest for change and mission of pursuing nonfinancial goals can be directly connected to
these organizations’ shared goal of using sustainable growth as means of achieving societally
beneficial ends (as conceptually proposed by Dees, Battle Anderson, and Wei-Skillern 2004, or
Haigh and Hoffman 2012). As described above, in the case of hybrid businesses, growth does not
necessarily entail value creation and vice versa. In other words, societal- and ecological-value
creation is at the core of hybrid businesses’ goals, and one can view their pursuits of sustainable
growth as merely the logical consequence of their seeking to spread their missions further.
That said, some scholars have warned that undifferentiated quests for growth might detract
from hybrids’ original missions (e.g., Austin et al. 2006; Smith et al. 2013) and, thus, threaten
their legitimacy. On a smaller scale, the above-mentioned quest for change entails the direct
involvement of multiple stakeholders and connects to our initial conception of hybrids as
“educational” businesses. Various stakeholders, especially the customers of the hybrid businesses
in our sample, rely on these businesses’ products, input, and information to facilitate more
sustainable lifestyles. This also speaks to the strong networking initiatives hybrids undertake. In
contrast, while non-contractual relationships are not uncommon in for-profit ventures (Wincent
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2008), our findings show that they are practically the dominant form of network for hybrid
businesses. “Entrepreneurial behavior is a result of the interplay of environments (i.e., social
networks) and certain cognitive biases in entrepreneurs” (De Carolis and Saparito 2006: 41).
In light of our findings, then, we can argue that (1) this cognitive bias is the main driver for
hybrid entrepreneurs’ general alignment, which is to serve society and the environment, and (2)
that hybrid businesses are therefore heavily embedded in, and mutually dependent on, their
contexts. This network orientation thus has two facets: on one hand, it directly enables hybrids to
promote their social and environmental missions; on the other, it helps them secure additional
resources (cf. Corner and Ho 2010; Doherty et al. 2014). While stakeholders are, of course, also
important to ordinary for-profit organizations, they contribute considerably to the success of
hybrid businesses, due to their direct integration into the value chains of such organizations’
business models (cf. Di Domenico, Haugh, and Tracey 2010). Every organization interviewed in
our sample had unique requirements with regards to its use and integration of the various actors
in its network. For example, work-placement agencies (e.g., munavis arranges work placement
for the disabled, and Alte Liebe does so for the elderly), suppliers (e.g., meine ernte seeks
guidance from farmers), alternative financers (e.g., frents buys and lends, and Fairmondo
provides a cooperative for trading organic goods), and community-based businesses (e.g.,
Regionalwert strengthens its regional economy, and Quartiermeister gives two-thirds of its profits
to its community) have developed specific ways of interacting with their stakeholders. Di
Domenico, Tracey, and Haugh (2009) argue that collaborations between for-profit firms and
social enterprises can potentially align community welfare with wealth creation. As an extension
of this argument, we posit that the partnerships between hybrids and their stakeholders go even
further: forming the aforementioned networks seems one way hybrid businesses strengthen
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reconciliations between their for-profit and nonprofit goals, and it seems the existence of such
networks is, consequently, one defining characteristic of hybrid businesses.
Traditionally, knowledge has remained a highly important resource in every business
because, among other things, it can be hard to imitate if kept confidential (Alvarez and Busenitz
2001; Kang, Morris, and Snell 2007); thus, a vital part of maximizing profits in for-profit
endeavors is protecting proprietary knowledge, as “rents will only accrue to the entrepreneur until
knowledge has disseminated in the market and competitors have had the opportunity to react”
(Cohen and Winn 2007: 37). We argue this to be true for hybrid businesses as well but that, as
Bacq and Janssen (2011) argue, social entrepreneurs rely on collective wisdom and experience
instead of personal competencies and knowledge. Indeed, based on our findings, we posit that the
most value is generated for hybrid businesses when their knowledge is actually circulated among
their stakeholders and not strictly withheld. Take, for example, meine ernte: information the
company gathers on crop cultivation becomes explicit (Alvarez and Busenitz 2001); it is not hard
for others to obtain and, therefore, the company’s business model is easy to emulate. What turns
this into a strength, however, is the fact that disseminating knowledge and communicating with
stakeholders becomes a key process that leads to social and financial gains; it raises public
awareness of the company’s brand and widens its consumer base as it enhances public awareness
of environmental issues, thereby also helping to further the company’s mission of improving
urban food supplies in an environment-friendly way.
Finally, turning to the outcomes one might expect for hybrid businesses, all the interviewed
companies were striving for financial independence to help them solve the societal and ecological
issues they hoped to address. This is not surprising given how hybrid businesses must generate
revenue to sustain their operations and, thus, pursue their nonfinancial missions (e.g., Doherty et
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al. 2014; Zahra et al. 2009). However, while many have asserted that profit is the primary driver
for every entrepreneur, interestingly, several of the entrepreneurs we interviewed became
defensive when discussing this aspect of their business models (Table 3). This might be an
expression of the previously mentioned tensions (e.g., Smith et al. 2013) that arise in hybrid
organizations when their nonprofit and for-profit goals clash. Previous research suggests the
danger of mission drift (Battilana and Lee 2014; Zahra et al. 2009); that is, favoring the interests
of a particular group of stakeholders can lead to the displacement of some of an organization’s
original goals. Building on resource dependency and institutional theory, Battilana and Lee
(2014) argue that hybrid businesses are prone to favoring their customers’ interests over their
beneficiaries’ and their societal goals because the former provides key resources for economic
survival. Based on this, Smith, Gonin, and Besharov (2013) propose that the duality of hybrids’
missions can threaten their organizational legitimacy (cf. Battilana and Lee 2014) and that this
poses a considerable challenge to hybrid organizations (Ruebottom 2013). Indeed, as previously
stated, by the founder of Regionalwert, hybrids face a dilemma when, for instance, trying to
communicate to potential and existing investors what actual value they create: “It is imprinted so
deeply in the minds of the people that ‘gains’ and ‘losses’ always translate into money. …
Changing this is our greatest challenge.”
While probably not every founder of a hybrid business is explicitly aware of these
circumstances, we think hybrid entrepreneurs should anticipate these potential tensions and act so
as to explicitly present how their financial goals serve their missions of creating social and
ecological value. In doing so, they can show their strong orientations toward nonfinancial
stakeholders and more effectively justify their profit generation. Some of our interviewees’
defensive stances toward profits might even be an expression of what Dey and Teasdale (2015)
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term tactical mimicry, which can be directly attributed to the interviewees’ quests for legitimacy
with stakeholders concerned with creating nonfinancial value (cf. Moizer and Tracey 2010;
Renko 2013). Ruebottom (2013) demonstrates how, to secure this legitimacy, hybrids often resort
to rhetorical strategies that enable them to “problematize the current situation, legitimize
alternatives, neutralize or polarize opinions, and motivate others to participate” (p. 100). As for
this, we were able to identify several attempts to frame certain decisions and actions with the
possible intention of, for example, entering into valuable cooperative ventures with potential
partners or catering to both financial and social goals. Take, for example, ECF: “You can earn
money with it, which is indispensable, because otherwise a company cannot function—and there
is nothing condemnable about it.” Here, ECF’s founder explicitly stresses how the company’s
financial goals are vital to its social goals.
Nevertheless, we also found further support from our interviews for the argument that hybrid
organizations still consider themselves businesses, albeit always with strong drives toward
socially beneficial missions. Specifically, some hybrid entrepreneurs vigorously maintained that
they were indeed “real” businesses, and this was in line with the views of scholars who have
proposed that hybrids “tend to go to great lengths to present themselves as not being distinct from
businesses” (Low 2006).
In summary, the existence of both positions (defensive stances toward for-profit
characteristics and proactively embracing them) points not only to the heterogeneity that exists
among hybrid businesses but also to how their quests to truly integrate for-profit and nonprofit
elements (e.g., Battilana and Dorado 2010; Jay 2013; Wilson and Post 2013) are still ongoing.
Furthermore, it leads one to wonder whether hybrid businesses’ social and financial missions
exist on a continuum, between purely profit-driven and purely socially driven orientations, or in a
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hierarchical relationship, with one goal eventually prevailing over the other. Based on our
interview data, we were able to gather differing views from the founders in our sample with
regards to the balance between their social and financial missions. All seemed to share the basic
belief that social and financial gain, at least hypothetically, exist on a continuum. Of course, some
put more emphasis on the commercial aspects of their business models, as they want to be taken
seriously by the markets. Others, meanwhile, were more focused on serving specific stakeholders
or societal goals and more actively sought social, rather than financial, success. And yet, the
conflicts between profits and social and ecological agendas mentioned by our interviewees might
also be due to the different “roles” these spokespeople play in their organizations and whom they
are addressing.
There is therefore an evident need for further research that accounts for these rhetorical and
sense-making aspects in hybrid businesses. Likewise, future research should also investigate the
conditions and situations under which hybrid entrepreneurs are prepared to favor one dimension
over another and why they might, at any given moment, position their organizations at certain
points on the continuum between social and financial goals.
Conclusion
Research on hybrid business is a fast-growing area of academic and practical interest.
Nevertheless, scholarly efforts are still fragmented, as their focus is only slowly moving from a
definitional phase toward more phenomena-driven examinations. The latter is highly relevant
presently because only through knowing what actually constitutes a hybrid business can we lay
the groundwork for making recommendations to practitioners, discern research implications for
academics, and further clarify the currently cluttered landscape. Against this backdrop, the
present study has investigated the nature of hybrid businesses and empirically established a
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framework of their constituents and characteristics, based on an abductive, in-depth analysis of
18 hybrid businesses. It was discovered that, while recent literature already discusses some of the
specific elements of hybrid businesses (see Doherty, Haugh, and Lyon 2014, for an extensive
literature review), it does not provide the holistic, empirically grounded picture this paper
presents. Our analysis illustrates, for example, that hybrid businesses often say their profit- and
company growth-driven orientations are merely means to the ends of achieving their societal and
ecological goals. Clearly, this picture needs to be more deeply scrutinized in the future to
determine the relationships between hybrid organizations’ various, often conflicting goals.
Our framework also enriches the current understanding of how hybrid businesses utilize
highly participatory, communicative organizational patterns and emphasize sustainability by
sharing information on sustainable practices and operation models with other stakeholders.
Furthermore, our findings indicate that every entrepreneur interviewed was driven by
nonmaterialistic motives and an orientation toward sustainability. Building on this, future
research can now begin taking a more grounded approach to studying these businesses with a
greater knowledge of what makes hybrid organizations “tick.”
As illustrated by the sampled companies, hybrid businesses come in different flavors but
follow the same basic tenets: all of the constituents and characteristics identified in the present
paper are common to hybrid enterprises that strive for environmentally and socially focused value
creation. Our framework illustrates that underpinning the aims, hybrid entrepreneurs report
motives contrary to those classically supposed by the lion’s share of business literature and are
instead nonmaterialistic (and sometimes anti-materialistic); sometimes, too, such entrepreneurs’
motivations include a shared desire to transform society (or, at the very least, to raise awareness
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of societal and environmental issues). Meanwhile, communication and participation (as two
related sub-dimensions) remain at the core of creating such societal and environmental value.
Turning, then, to the outcomes predicted for such business models, we find them to be valid
and, indeed, financially viable. By definition, a business, no matter its mission, must generate
income to survive. However, for hybrid businesses profit generation is a means of achieving
strategically sustainable growth and more equitable value distribution, with participation in this
process coming from such companies’ stakeholders. Still, albeit profit is necessary, the pursuit of
it is sometimes characterized as anything but by hybrid business owners.
Overall, the present study might be limited due to the small number of cases sampled and
their regional peculiarities. Cultural aspects, for example, might have had a major impact on our
data, as our sample consisted solely of German hybrid entrepreneurs and their organizations.
Therefore, while each hybrid business in our sample seemed to have its own unique culture so
that national culture might be of secondary importance, it would still be interesting for future
research to address this issue.
Additionally, quantitative analyses could help improve the generalizability of the present
findings, as small, but perhaps significant, peculiarities might depend on variables like
organization type, size, and sector. It also remains to be seen whether our framework applies in
other settings and contributes to, for instance, the emerging theory of bricolage with regards to
the “recent calls for more studies to understand mechanisms and processes for reducing poverty,
as well as for situating the activities of organizations within their social, cultural, and political
environments” (Mair and Marti 2009: 420). Other such frameworks could be devised by
examining companies that, unlike the companies in our sample, began as hybrid businesses and
transitioned to purely for- or nonprofit models and vice versa.
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Furthermore, some of the companies in our sample are still in their startup phases and have
not yet reached profitability. They might therefore lack this essential dimension of financial
sustainability. Still, even these companies aim to achieve sustainability in the near future. Given
the general limitations of our qualitative research design, then, we view the present study as an
important first step in exploring the constituents and characteristics of hybrid businesses and
refining the academic community’s understanding of hybrids. For instance, conventional wisdom
would caution against a company’s extensively sharing information or even describing the
particulars of its business model because this, traditional reasoning states, can result in the loss of
valuable intangible assets. Our findings, however, show that such sharing is an essential part of
hybrid organizations’ business models. In this way, our paper helps pave the way for more
phenomena-driven research that advances academic and practical conceptions of hybrid
businesses by empirically scrutinizing them.
Moreover, with the understanding of hybrid ventures presented herein, future research can
now begin helping these organizations. For example, on the most basic aggregate level, values
are the principle drivers of hybrid entrepreneurs; however, these values occasionally lead to
conflicts, and though a certain amount of profit orientation is generally seen as an acceptable,
vital part of every business model, many hybrid entrepreneurs widely treat this aspect of their
businesses with aversion. Future research could therefore investigate these discrepancies to
discover why some hybrid entrepreneurs voice such aversion and others do not. Furthermore, as
hybrids are generally seen as existing between social and financial value creation, longitudinal
studies might be able to discern whether hybrid enterprises are generally no more than nodes that
fill temporary social gaps or whether they can be robust, competitive companies.
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Finally, on a more radical note, one might even question the idea that businesses, even in the
form of socially-oriented hybrids, be seen as means of dealing with significant societal issues and
critically ask who is responsible for the issues facing humanity, for which finding market-based
solutions is difficult. A promising starting point for such an endeavor could be to further examine
hybrids’ strong emphases on participation and knowledge sharing and scrutinize whether this
helps to change our understanding of entrepreneurial organizations and ecosystems.
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Accepted for publication in Journal of Small Business Management, DOI:
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38
Tables And Figures
Table 1.
Overview of Case Interviews (in Alphabetical Order)
Company Name
[Translation of name, if
applicable]
Location
Website
Duration
of First
Interview
Duration
of Second
Interview
Alte Liebe [translates to
“Old Love”]
Kassel
www.alte-liebe.com
18 min.
57 min.
Autarcon
Kassel
www.autarcon.com
38 min.
54 min.
Auticon
Berlin
www.auticon.de
42 min.
38 min.
bettervest
Frankfurt
www.bettervest.de
31 min.
-
Biodeals
Augs-
burg
www.greenest-green.de
28 min.
13 min.
bleed clothing
Helm-
brechts
www.bleed-
clothing.com
28 min.
16 min.
Chidos Mushrooms
Berlin
www.chidos.org
28 min.
26 min.
ECF Efficient City
Farming
Berlin
www.ecf-
farmsystems.com
21 min.
15 min.
Fairmondo
Berlin
www.fairmondo.de
27 min.
41 min.
frents
Berlin
www.frents.com
57 min.
-
Gewürzkampagne
[translates to “Spice
Campaign”]
Berlin
www.gewuerzkampagn
e.de
34 min.
59 min.
Lebenskleidung
[translates to “Life
Clothing”]
Berlin
www.lebenskleidung.co
m
43 min.
37 min.
Meine Ernte [translates
to “My Harvest”]
Bonn
www.meine-ernte.de
37 min.
27 min.
munavis
Kiel
www.munavis.de
42 min.
26 min.
Polarstern [translates to
“Polestar”]
Munich
www.polarstern-
energie.de
23 min.
43 min.
Quartiermeister
[translates to
“Quartermaster”]
Munich
www.quartiermeister.or
g/de/muenchen
30 min.
16 min.
Regionalwert [translates
to “Regional Value”]
Freiburg
www.regionalwert-
ag.de
28 min.
33 min.
WeGreen
Berlin
www.wegreen.de
45 min.
37 min.
Accepted for publication in Journal of Small Business Management, DOI:
10.1111/jsbm.12295
39
Table 2.
Overview of Hybrid Business Models
Company Name
Description Of Business Idea
Alte Liebe [Old
Love”]
Marketing of beanies/woolly hats crocheted by the elderly for modern
consumers and youngsters while promoting intergenerational contact
and positively engaging the elderly.
Autarcon
Decentralized processing of drinking water at places with insufficient
infrastructure for renewable energy.
Auticon
IT consultancy that employs people with Asperger syndrome (autism)
as IT consultants, thus providing specialized services to its business
customers while offering new meaning to the lives of their employees.
bettervest
Crowdfunding platform specializing in energy efficiency projects;
helps finance respective projects and thus improve energy efficiency
while realizing above-market interest rates for investors.
Biodeals
Online platform presenting sustainable companies and their products.
In raising the publicity and attractiveness of these companies, Biodeals
tries to push the sustainable change of the economy.
bleed clothing
Production and distribution of “organic clothing”; street- and
sportswear brand with a modern lifestyle attitude.
Chidos
Mushrooms
Production of high-quality mushrooms in urban cellars by using coffee
grounds as nutrient medium, thus recycling otherwise wasted material
and creating a resource-efficient and local production.
ECF Efficient City
Farming
Design and sales of aquaponic farms for the resource-efficient urban
production of vegetables and fish.
Fairmondo
Online marketplace designed as a co-operative for trading organic and
fair-trade goods.
frents
Online platform for borrowing and buying used products from people
in the neighborhood. The aim is to enlarge the service life of products.
Gewürzkampagne
[“Spice
Campaign”]
Inexpensive supply of spices from controlled, organic farming without
intermediaries, thus enhancing the income of producers.
Lebenskleidung [
“Life Clothing”]
Textile agency distributing organic and fair-trade fabrics and clothes.
In offering collective orders, Lebenskleidung tries to enable young
designers to procure small amounts of these fabrics.
Meine Ernte [“My
Harvest”]
Seasonal gardens for rent in urban areas. The idea is to make urban
households more self-sufficient in the provision of food by providing
them with prepared gardens and specialist advice from regional
farmers.
munavis
Cooperative bringing companies, designers, and sheltered workshops
together to include disabled persons in the normal world of
employment.
Polarstern [“Pole
Star”]
Provision of 100% green energy to private households. Additionally,
with each new customer, Polarstern provides clean energy for one
family in a developing country. The idea is to inspire people
Accepted for publication in Journal of Small Business Management, DOI:
10.1111/jsbm.12295
40
concerning global energy turnaround and facilitate the switch to
renewable energies.
Quartiermeister
[“Quartermaster”]
Sale of social beer and sharing the “social profit” with the
neighborhood. The idea is to strengthen the local economy by selling
simple consumer products.
Regionalwert
[“Regional Value”]
A citizen shareholder corporation supporting sustainable agriculture
throughout the whole value chain. The idea is to create sustainable
regional structures through citizen participation.
WeGreen
Marketplace with special incentive systems for the placement of
sustainable products. Education of consumers through a self-developed
and easily comprehensible “sustainability signal-
light” that informs
customers.
Accepted for publication in Journal of Small Business Management, DOI:
10.1111/jsbm.12295
41
Table 3.
Subcategories, Phenomena, and Illustrative Quotes on Outcome Categories
General Profit
Orientation
- Financially self-sufficient or
- Aiming for financial independence
- Providing goods and/or services
“(…) that is why, as a non-charitable social enterprise, our very existence depends on making
revenues. These revenues should ideally be higher than the costs incurred.” (Auticon, founder)
“It should be clear that you still somehow have to follow the basic principles of business, i.e.,
to generate profits.” (Gewürzkampagne, founder)
“we try to at least recover the costs.” (munavis, founder)
“Nevertheless, we are a business and want to earn money with it.” (bettervest, founder)
“(…) the credo that it has to be self-sufficient. I am not a fan of donations and these
things because this soon reaches its limits.” (WeGreen, founder)
Strategic
Sustainable
Growth
- Growth as a means to an end
- Long-term business relationship
- Transparent and simple business processes
“(…) when somebody offers a sustainable product, the business should grow because of that
and even make a few profits. […] a good idea has to grow so that it reaches as many people as
possible.” (Biodeals, founder)
“(…) we want to design our commercial relationships without putting pressure on prices (…)
in order to build long-lasting commercial relationships.” (Lebenskleidung, founder)
“We have set clear rules in our statutes regarding profit distribution that prevent anyone from
skimming high profits. (…) They are distributed—but among many.” (Fairmondo, founder)
“We want to pursue fair economic activities and remain fair inside and outside.” (Fairmondo,
founder)
“It’s not as it is with listed companies, where making money is the aim; rather, solving the
problem is the aim. And money is a means to reach that end and the more the better.”
(WeGreen, founder)
Accepted for publication in Journal of Small Business Management, DOI:
10.1111/jsbm.12295
42
Table 4.
Subcategories, Phenomena, and Illustrative Quotes on Organization Categories
Participatory
- Active inclusion of various stakeholders
- Cooperation as marketing instrument
- Networks as organizational form
“(…) it is generating networks (…) [T]hrough our activities, people get together, and this
results in new partnerships (…) that are organized beyond pure profit.” (Lebenskleidung,
founder)
“It is more like a community project than ‘everyone for themselves.” (Fairmondo, founder)
“I see every customer or service provider as a partner. It is not just a relationship on paper—
I’m appointing you as person.” (Chidos, founder)
“(…) we are basically connecting the customers of all sustainable companies.” (Biodeals,
founder)
“[We have] over 700 partners, with whom we work together. And then 300 bloggers and
journalists, 600–700 online shops, and, of course, all of the major unions and, funnily,
companies that are not yet sustainable, enterprises that we partially help in improving one or
another criteria.” (Biodeals, founder)
Communicative;
Knowledge-
Imparting
- Promotion of exchange, sharing of contacts
- Offering information and consultation
- Learning through information exchange
“The topic of marketing/corporate social responsibility is becoming more important for
companies, which is why we see ourselves as a communicative device to make the
sustainability management public.” (Bettervest, founder)
“Of course, we mutually exchange knowledge.” (Munavis, founder)
“We promote sustainable products, especially communication, which is of very important
value: communication about sustainable products.” (Biodeals, founder)
“And another important thing is that we do not allow sponsored ads but to provide information
for responsible consumption (…).” (Fairmondo, founder)
“There is this ‘open innovation’ approach, which means we collect knowledge, but we also
impart knowledge. Everyone can visit our farms, examine, and copy them. (ECF, founder)
“Our goal is to inform and to give orientation. The value we create is to help sustainable
consumption being for the masses because it is not so cumbersome anymore.” (WeGreen,
founder)
Accepted for publication in Journal of Small Business Management, DOI:
10.1111/jsbm.12295
43
Table 5.
Subcategories, Phenomena, and Illustrative Quotes on Underlying Aims
Immaterial
Motives
- Founders’ personal interest for sustainability
- Negative experiences and acknowledgment of the need for action
- Orientation toward the common good instead of self-interest
“That’s when we said, ‘Ok, if utility companies do not want to act, we will do it ourselves.’ And
from that, the idea of the company Polarstern emerged.” (Polarstern, founder)
“Especially in major cities, it [used coffee grounds] is often accumulated, which is why we
thought to ourselves, ‘If nobody else is doing it, we’ll do it. Let’s just found and get started.’”
(Chidos, founder)
“The ECF was sustainable from the beginning. (…) Ever since we started, we were
super-positively surprised that we could start a company with which we can not only
earn money but also generate social value for society.” (ECF, founder)
“Before, I was head of marketing at [a competing company] (….) since this was
everything else but sustainable, sometimes even damaging the partner, I quit.”
(Biodeals, founder)
“We all wanted to do something meaningful. We do it because of the social impact,
because it’s a cool thing.” (WeGreen, founder)
Transformation-
Oriented Value
Creation
- Strengthening local economy
- Creation of multiple values (social, ecological)
- Purposeful utilization of profits
“Profits are not to be used as ends in themselves but for the region and neighborhood.”
(Quartiermeister, founder)
“(…) we want to conduct business and at the same time realize an ecological and social
return besides the financial one.” (Stadler, Polarstern, founder)
“[We do this] in urban areas, which means that production takes place close to consumers,
which has ecological advantages (…) from now on and for the future so that we do not harm
the world but instead see that we work for future generations and regard the three pillars of the
economy, ecology, and social as equitable.” (ECF, founder)
“It has to fulfill both purposes. It has to foster both ecologic and social value, and it has to be
economically functional.” (bettervest, founder)
“[What drives me] is to draw young people to this topic. It therefore has a pedagogic effect,
more or less, but without a raised finger and, moreover, the lifestyle factor.” (Bleed, founder)
44
Figure 1.
Illustrative Exemplary Excerpt from the Coding Process
Figure 2.
Dimensions of Hybrid Business Entrepreneurship
Process:
Interviews coded with multitude of
attributes for statements; afterwards,
first grouping of similar attributes.
Result:
Phenomena such as …
-Strengthening local economy
-Creation of multiple values
(ecol., soc. …)
-Founders’ personal interest
for sustainability
-Purposeful utilization of profits
- Orientation toward common
good instead of self-interest
-Negative experiences and
acknowledgment of need for change
- …
Open Coding Axial Coding
Process:
Structuring and further
condensation; identification of
connections between phenomena
Result:
Condensed categories such as …
- Transformation-Oriented
Value Creation
-Immaterial Motives
- …
Selective Coding
Process:
Close gaps within identified
concepts; identify core categories
and relate them to each other
Result:
Core conceptualizations such as …
-Underlying aims of hybrid
business entrepreneurs
- …
ongoing analysis, iterative process
Research process
Final framework connecting core
conceptualizations
... Moreover, it is apparent that hybrid organizations are often confronted with experience disagreements among nonfinancial stakeholders who have interests that may be difficult to predict [32,40,41]. ...
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Conference Paper
En deux décennies, le développement durable (DD) s’est installé comme un domaine de recherche reconnu en sciences de gestion (Stubbs, 2017). Une majorité de grandes entreprises, en quête d’un nouvel avantage compétitif, affiche ouvertement poursuivre un « triple résultat » qui prendrait en compte les aspects sociaux, environnementaux et financiers de leurs investissements. Mais l’idée d’un développement « sage » pour répondre durablement aux grands défis exige plus qu’un simple changement organisationnel ou qu’un unique renouveau stratégique de la part des grandes entreprises. Le DD demande des solutions radicalement nouvelles basées sur l'innovation, l’initiative et l’esprit d’entreprendre de tous pour combiner succès économique et bien commun (Chappell, 1994). C’est dans cet esprit que le DD semble avoir trouvé un terrain fertile pour son expression à savoir l’entrepreneuriat. La présente communication concerne l’analyse de la recherche qui se trouve à l’intersection entre Entrepreneuriat et DD. Nous proposons d’élargir les assises de l’Entrepreneuriat Durable (ED) en nous appuyant sur les résultats de l’analyse de 58 recherches empiriques. Cette communication s’attache aussi à discuter des questions que soulèvent ces recherches empiriques.
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Entrepreneurship has been the engine propelling much of the growth of the business sector as well as a driving force behind the rapid expansion of the social sector. This article offers a comparative analysis of commercial and social entrepreneurship using a prevailing analytical model from commercial entrepreneurship. The analysis highlights key similarities and differences between these two forms of entrepreneurship and presents a framework on how to approach the social entrepreneurial process more systematically and effectively. We explore the implications of this analysis of social entrepreneurship for both practitioners and researchers.
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In a world filled with poverty, environmental degradation, and moral injustice, social enterprises offer a ray of hope. These organizations seek to achieve social missions through business ventures. Yet social missions and business ventures are associated with divergent goals, values, norms, and identities. Attending to them simultaneously creates tensions, competing demands, and ethical dilemmas. Effectively understanding social enterprises therefore depends on insight into the nature and management of these tensions. While existing research recognizes tensions between social missions and business ventures, we lack any systematic analysis. Our paper addresses this issue. We first categorize the types of tensions that arise between social missions and business ventures, emphasizing their prevalence and variety. We then explore how four different organizational theories offer insight into these tensions, and we develop an agenda for future research. We end by arguing that a focus on social-business tensions not only expands insight into social enterprises, but also provides an opportunity for research on social enterprises to inform traditional organizational theories. Taken together, our analysis of tensions in social enterprises integrates and seeks to energize research on this expanding phenomenon.
Book
'Tony Bryant and Kathy Charmaz are the perfect editors for this excellent and forward looking Handbook which is surely destined to be a classic' - David Silverman, Professor Emeritus, Goldsmiths College For anyone interested in grounded theory this is a must have book. No longer will students have to search the library or internet to find authoritative voices on a variety of topics. It's all right there at their fingertips - Juliet Corbin, San José State University Grounded Theory is by far the most widely used research method across a wide range of disciplines and subject areas, including social sciences, nursing and healthcare, medical sociology, information systems, psychology, and anthropology. This handbook gives a comprehensive overview of the theory and practice of Grounded Theory, taking into account the many attempts to revise and refine Glaser and Strauss' original formulation and the debates that have followed. Antony Bryant & Kathy Charmaz bring together leading researchers and practitioners of the method from the US, the UK, Australia and Europe to represent all the major standpoints within Grounded Theory, demonstrating the richness of the approach. The contributions cover a wide range of perspectives on the method, covering its features and ramifications, its intricacies in use, its demands on the skills and capabilities of the researcher and its position in the domain of research methods. The SAGE Handbook of Grounded Theory is an indispensable reference source for academics and researchers across many disciplines who want to develop their understanding of the Grounded Theory method.
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This article explores how hybrid organizations, which incorporate competing institutional logics, internally manage the logics that they embody. Relying on an inductive comparative case study of four work integration social enterprises embedded in competing social welfare and commercial logics, we show that, instead of adopting strategies of decoupling or compromising, as the literature typically suggests, these organizations selectively coupled intact elements prescribed by each logic. This strategy allowed them to project legitimacy to external stakeholders without having to engage in costly deceptions or negotiations. We further identify a specific hybridization pattern that we refer to as "Trojan horse," whereby organizations that entered the work integration field with low legitimacy because of their embeddedness in the commercial logic strategically incorporated elements from the social welfare logic in an attempt to gain legitimacy and acceptance. Surprisingly, they did so more than comparable organizations originating from the social welfare logic. These findings suggest that, when lacking legitimacy in a given field, hybrids may manipulate the templates provided by the multiple logics in which they are embedded in an attempt to gain acceptance. Overall, our findings contribute to a better understanding of how organizations can survive and thrive when embedded in pluralistic institutional environments.
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We examine the current state of the social entrepreneurship literature, asking what is unique about social entrepreneurship and what avenues create opportunities for the future of the field. After an evaluation of social entrepreneurship definitions and comparison of social entrepreneurship to other forms, we conclude that while it is not a distinct type of entrepreneurship, researchers stand to benefit most from further research on social entrepreneurship as a context in which established types of entrepreneurs operate. We demonstrate these opportunities by describing avenues for further inquiry that emerge when examining valuable assumptions and insights from existing theories inherent in conventional, cultural, and institutional entrepreneurship frameworks and integrating these insights in ways that address the unique phenomena that exist in the context of social entrepreneurship.
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This special issue contains six papers that address a variety of practical research process questions. The papers explore how theory and method inevitably interact in particular organization and management studies. Here we offer an overview of how theory and method have been treated to date by organization researchers and suggest that respecting both the primacy of theory and the primacy of evidence is no easy task but a necessary balancing practice that characterizes high-quality research.