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Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms Academy of Management is collaborating with JSTOR to digitize, preserve and extend access to The Academy of Management Journal This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms © Academy of Management Journal 2013, Vol. 56, No. 4, 972-1001. http://dx.doi.org/10.5465/amj.2011.0405 INSIDE THE HYBRID ORGANIZATION: SELECTIVE COUPLING AS A RESPONSE TO COMPETING INSTITUTIONAL LOGICS ANNE-CLAIRE PACHE ESSEC Business School FILIPE SANTOS INSEAD This article explores how hybrid organizations, which incorporate competing institu- tional 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 strat- egy allowed them to project legitimacy to external stakeholders without having to engage in costly deceptions or negotiations. We further identify a specific hybridiza- tion 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. The biggest problem with hybrid companies is that they are inherently confused organizations, buffeted by all sorts of contradictory pressures. This means that their internal operations can be hard to under- stand and their behavior may be hard to predict. -Economist, 2009 Hybrid organizations are gaining prevalence in modern societies (Kraatz & Block, 2008; Econo- mist , 2009yf ' H I L Q H G D V R U J D Q L ] D W L R Q V W K D W L Q F R U S R - We are especially indebted to Associate Editor Tima Bansal for her guidance throughout the reviewing pro- cess, as well as to three anonymous reviewers for their very valuable comments on our manuscript. We also wish to acknowledge the insightful feedback and sugges- tions received on earlier versions of this work from Phil Anderson, Thomas D'Aunno, Giuseppe Delmestri, Kathy Eisenhardt, Morten Hansen, and the discussants of the 2010 EGOS conference subtheme "Microfoundations of Institutions." Finally, we are deeply grateful to our infor- mants and interviewees for sharing their time and expe- rience. This article was improved while the second au- thor was on sabbatical during 2011 at the Nova School of Business and Economics in Lisbon. rate elements from different institutional logics (Battilana & Dorado, 2010yf K \ E U L G V D U H E \ Q D W X U e arenas of contradiction. Social enterprises, for in- stance, whose goal is to achieve a social mission through commercial activities, are caught between the competing demands of the market logic and the social welfare logic that they combine: should they incorporate as for-profit or as not-for-profit enti- ties? Should they distribute profit to their owners or reinvest it in their social mission? Should they mobilize paid professionals prioritizing efficiency concerns or volunteers favoring a deep commit- ment to the mission? Just as social enterprises need to address these dilemmas to operate, all hybrids need to find ways to deal with the multiple de- mands to which they are exposed. The purpose of this article is to explore how they may do so. Hybrids are not limited to organizations blending market and social logics. They can take different forms, including public-private partnerships incor- porating elements from state, market, and civil so- ciety logics (Jay, 2013yf E L R W H F K Q R O R J \ F R P S D Q L H s incorporating science and market logics (Powell & Copyright of the Academy of Management, all rights reserved. Contents may not be copied, emailed, posted to a listserv, or otherwise transmitted without the copyright holder's express written permission. Users may print, download, or email articles for individual use only. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 973 Sandholtz, 2012yf D Q G P H G L F D O V F K R R O V L Q F R U S R U D W - ing health care and academic logics (Dunn & Jones, 2010yf 7 K L V J U R Z L Q J S H U Y D V L Y H Q H V V R I K \ E U L G V F D n be explained by the increasing prevalence of plu- ralistic institutional environments (Greenwood, Raynard, Kodeih, Micelotta, & Lounsbury, 2011; Pache & Santos, 2010; Seo & Creed, 2002yf , Q W K H V e complex environments, organizations are exposed over lengthy periods of time to multiple institu- tional logics that prescribe what constitutes legiti- mate behavior and provide taken-for-granted con- ceptions of what goals are appropriate and what means are legitimate to achieve these goals (Lounsbury, 2007b; Thornton & Ocasio, 2008yf + \ - brid organizations are likely to emerge and do well in these complex environments because they incor- porate elements prescribed by various logics and are therefore likely to project at least partial appro- priateness to a wider set of institutional referents (Greenwood et al., 2011; Kraatz & Block, 2008yf . The existence and functioning of hybrid organi- zations poses interesting conceptual questions for institutional theory because hybrids challenge the conceptualization of organizations as entities re- producing a single coherent institutional template in order to gain legitimacy and secure support from external institutional referents (DiMaggio & Powell, 1983yf $ F H Q W U D O I H D W X U H R I K \ E U L G V L V W K D W W K H L Q V W L - tutional logics that they embody are not always compatible (Greenwood et al., 2011yf $ V W K H G H J U H e of incompatibility between logics increases, hybrid organizations face heightened challenges (Besharov & Smith, 2012yf 7 K H \ P D \ K D Y H W R L Q F R U S R U D W H D Q - tagonistic practices that may not easily work to- gether (Tracey, Phillips, & Jarvis, 2011yf , Q D G G L - tion, because adopting elements prescribed by a given logic often requires defying demands of the other logics, hybrid organizations may potentially jeopardize their legitimacy vis-à-vis important in- stitutional referents (D'Aunno, Sutton, & Price, 1991yf ) L Q D O O \ K \ E U L G V L Q F R U S R U D W L Q J L Q F R P S D W L E O e logics often see coalitions representing these logics emerge inside themselves (Pache & Santos, 2010yf . These coalitions are likely to fight against each other to make the template they favor prevail, thus bringing the institutional conflict inside (Glynn, 2000; Zilber, 2002yf 7 K H V H F K D O O H Q J H V D U H S D U W L F X - larly acute for hybrid organizations that are ex- posed to long-term institutional pluralism, which requires them to incorporate competing logics over the long run, rather than in a temporary fashion. Research suggests that hybrid organizations try to address these challenges either by keeping logics separate or by attempting to reconcile them inter- nally (Besharov & Smith, 2012; Greenwood et al., 2011; Murray, 2010; Simsek, 2009yf 7 K L V O L W H U D W X U e provides a useful framework for starting, to explore the functioning of hybrids organizations. Yet, by providing mainly an organization-level perspec- tive, it reveals little about how the incorporation of logics is actually achieved inside organizations (Greenwood et al., 2011; McPherson & Sauder, 2013yf 6 S H F L I L F D O O \ Z K D W L V P L V V L Q J L V D F O H D U H r picture of which elements of the logics organiza- tional actors enact as they try to navigate competing demands as well as what factors drive these behav- iors. This gap is important to address in order to account for the microfoundations of hybrid organ- izational forms (Powell & Colyvas, 2008yf . We address this gap by exploring how hybrid organizations internally incorporate elements of the competing logics that they embody. To do so, we use a comparative case study of four French work integration social enterprises (WISEsyf 7 K H V e organizations aim at reintegrating long unem- ployed people into the workforce by hiring them to produce goods and services that are sold on the market. By virtue of their reliance on market-based principles to serve a social mission, these organi- zations are hybrids that incorporate competing so- cial welfare and commercial logics. In the context of this study, we explore how these four organiza- tions incorporated these two logics as they scaled their operations nationally. Our study makes two important contributions. First, it highlights that hybrid organizations com- bine competing logics in a systemic fashion by selectively coupling, at the organizational level, in- tact elements drawn from each logic. Selective cou- pling allows hybrids to manage the incompatibility between logics and thus reduce the risks and costs of alternative practice-level strategies, such as de- coupling or compromising. Second, our findings suggest that the origins of a hybrid organization determine how it implements selective coupling. Through a pattern that we name "Trojan horse," organizations that entered the field with low legit- imacy due to their embeddedness in a contested logic strategically incorporated a majority of ele- ments from the predominant logic to gain legiti- macy and acceptance. As a consequence, WISEs with a commercial origin drew more from the so- cial welfare logic than WISEs with a social origin, which contradicts predictions from the imprinting literature (Stinchcombe, 1965yf 7 K H V H I L Q G L Q J V V X J - gest that, when lacking legitimacy in a given field, This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 974 Academy of Management Journal August hybrids may manipulate the templates provided by the multiple logics in which they are embedded in an attempt to gain acceptance. Overall, our work contributes to an emergent theory of hybrid organ- izations. We clarify how hybrid organizations op- erate and explain when and how they are capable of taking advantage of the wide repertoire of orga- nizing elements available to them in pluralistic environments. THEORETICAL BACKGROUND What is known about the way hybrid organiza- tions incorporate competing institutional logics? To deepen our understanding of hybridization strategies and assess the degree to which they may entail the separation or the reconciliation of com- peting logics, we reviewed research on organiza- tional responses to competing institutional logics. While early institutional research pointed to de- coupling (Meyer & Rowan, 1977yf D Q G F R P S U R P L V - ing (Oliver, 1991yf P R U H U H F H Q W Z R U N K L Q W V D W V W U D W - egies involving logics combination (Greenwood et al., 2011; Lounsbury & Crumley, 2007; Tracey et al., 2011yf : H U H Y L H Z W K H V H V W U D W H J L H V L Q P R U H G H W D L l below, by exploring their microfoundations and probing their applicability to the specific context of hybrid organizations. Decoupling Decoupling studies have a long tradition in insti- tutional theory (Boxenbaum & Jonsson, 2008; Brom- ley & Powell, 2012; Crilly, Zollo, & Hansen, 2012; Fiss & Zajac, 2006; Meyer & Rowan, 1977; Westphal & Zajac, 1994, 1998, 2001yf 7 K H V H V W X G L H V S U H G L F t that, under conditions of competing institutional logics, organizations symbolically endorse prac- tices prescribed by one logic while actually imple- menting practices promoted by another logic, often one that is more aligned with organizational goals. Decoupling has traditionally referred to the process through which organizations separate their norma- tive or prescriptive structures from their opera- tional structures (Bromley & Powell, 2012; Meyer & Rowan, 1977yf , Q R W K H U W H U P V L W U H I H U V W R L Q V W D Q F H s in which "organizations conform closely to the meanings and categories ritually defined by the environment, but do not attempt seriously to im- plement them at the operational level" (Scott, 2003: 279yf 2 U J D Q L ] D W L R Q V W K X V F U H D W H D Q G P D L Q W D L Q J D S s between symbolically adopted policies and actual organizational behavior (Tilcsik, 2010yf . Decoupling is particularly adapted to situations in which a policy prescribed by external institu- tional referents conflicts with an institutionalized practice promoted internally by an organization's members (Boxenbaum & Jonsson, 2008; Greenwood & Hinings, 1996; Tilcsik, 2010yf , Q W K D W F D V H R U J D Q - izations symbolically adopt the externally pro- moted policy while actually implementing the practice that is coherent with their internal institu- tional influences. Such a strategy increases an or- ganization's chance of survival, as it prevents con- flicts from escalating between internal and external institutional referents. It thus becomes a safeguard- ing mechanism to minimize legitimacy threats (Boxenbaum & Jonsson, 2008; Brunsson, 2002yf 2 U - ganizations have been shown to decouple during transition periods when facing conflicting prescrip- tions regarding a wide variety of policies, including quality management (Kostova & Roth, 2002; West- phal, Gulati, & Shortell, 1997yf D X G L W U H S R U W L Q g (Basu, Dirsmith, & Gupta, 1999yf & ( 2 F R P S H Q V D - tion (Westphal & Zajac, 1994, 1998; Zajac & West- phal, 1995yf V W R F N U H S X U F K D V L Q J : H V W S K D O = D M D F , 2001yf D Q G I X Q G D O O R F D W L R Q E H W Z H H Q V X E V L G L D U L H s (Tilcsik, 2010yf . Importantly, a major assumption of decoupling studies is that all organization members adhere to the same logic and are willing to protect it. A re- lated assumption is that organizations are able to avoid the scrutiny of external referents, who are not aware of the misalignment between organizational policies and practices. These assumptions are likely to be challenged in contexts where institu- tional logics compete over long periods of time. In such environments, organizational coalitions rep- resenting the competing logics are likely to emerge (Pache & Santos, 2010yf W K X V P D N L Q J L W K D U G W R E X L O d a consensus regarding which institutionalized practices should be protected. In addition, organi- zations may find it difficult to avoid the scrutiny of institutional referents over a long period of time. This suggests that decoupling may be hard to sus- tain in contexts where institutional logics conflict over extended periods of time. Compromising Research has also pointed to compromise as a viable strategy for organizations facing competing logics (Kraatz & Block, 2008; Oliver, 1991yf D Q d attempting to reconcile the associated competing demands. A less documented strategy than decou- pling, compromise involves the attempt by organi- This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 975 zations to enact institutional prescriptions in a slightly altered form, crafting an acceptable balance between the conflicting expectations of external constituents (Oliver, 1991yf 7 K L V P D \ K D S S H n through conforming to the minimum standards of what is expected, through crafting a new behavior that brings together elements of the conflicting de- mands, or through bargaining with institutional ref- erents so that they alter their demands. Compro- mising strategies may allow hybrid organizations to partially attend to the conflicting demands exerted by institutional referents, thus avoiding the risk of losing the endorsement of actors whose prescrip- tions would be otherwise ignored. For example, Scott (1983yf V K R Z H G W K D W K H D O W h care organizations exposed to contradictions be- tween the medical care logic and the economic efficiency logic imposed by government authorities conformed to the minimum standards of both med- ical care and fiscal controls to secure both profes- sional and political support. Other compelling ex- amples of compromise strategies can be found in the context of microfinance. Caught between the banking logic demand to set interest rates at a level that maximizes profit and the development logic demand to reduce interest rates to relieve financial pressure on poor clients, microfinance organiza- tions often choose to compromise between the two demands by setting interest rates at an intermediate level, lower than what market constituents might expect, but higher than what development stake- holders may demand. This pricing strategy demon- strates good faith to both constituents by displaying partial compliance to their demands (Meyer & Rowan, 1977yf 7 K R V H R U J D Q L ] D W L R Q V W K D W G H F L G H d not to do so, for example by enacting mainly a banking logic, not only lost the endorsement of respected individuals in the development field but also had their legitimacy seriously questioned (Car- rick-Cagna & Santos, 2009yf . An important limitation of compromise as a strat- egy for hybrids is that it may not allow organiza- tions to fully secure support from important insti- tutional referents, particularly over the long term. The compromise struck between competing expec- tations may ultimately not satisfy the referents' en- during expectations. It may also lead to internal dissent from groups demanding strict adherence to their espoused logic. Further, compromise may not always be an available strategy for organizations embedded in competing institutional logics, as it may be difficult to reach when the logics promote competing goals (Pache & Santos, 2010yf R U Z K H n the practices promoted by the logics are fully in- compatible or difficult to modify. Combining Competing Logics Focusing more specifically on responses to com- peting logics, a recent stream of research recognizes that the availability of multiple institutional mod- els of action creates opportunities for hybrid organ- izations to draw from the broader repertoire of be- haviors prescribed by competing logics (Battilana & Dorado, 2010; Binder, 2007; Greenwood, Diaz, Li, & Lorente, 2010; Greenwood et al., 2011; Lounsbury, 2007a; Reay & Hinings, 2009yf 7 K H V H V W X G L H V V X J - gest that hybrid organizations may reconcile com- peting logics by enacting a combination of activi- ties drawn from each logic in an attempt to secure endorsement from a wide range of field-level actors (Greenwood et al., 2011yf 7 U D F H \ H W D O \f, for example, showed how two social entrepreneurs created Aspire, a hybrid organization that com- bined the logics of charity and commercial retail, to more effectively address the societal problem of homelessness. Battilana and Dorado's (2010yf V W X G y on commercial microfinance organizations in Bo- livia highlight how these organizations combined development and banking logics to fight poverty. Yet these examples also illustrate the internal challenges associated with the combination of com- peting logics. Despite its early success, Aspire (Tracey et al., 2011yf F R O O D S V H G D I H Z \ H D U V D I W H U L t scaled its operations nationally. Accounts of this failure suggest that the entrepreneurs did not man- age to simultaneously satisfy the competing de- mands from important external constituents, such as clients and homeless beneficiaries. The chosen combination of charitable and commercial logics did not allow the organization to secure the re- quired external support to survive. Likewise, Batti- lana and Dorado (2010yf K L J K O L J K W H G W K D W R Q H R I W K e two microfinance organizations that they studied was unable to grow because of internal rifts created by an adherence to competing norms and values. Interestingly, their study also reveals that the other organization was able to downplay these rifts by hiring personnel free from attachments to either logic, by fostering members' commitment to oper- ational excellence, and by developing a strong identity that reduced the perceived competition between logics. Overall, these studies emphasize the challenges associated with logic combination, but also identify some of the factors that may allow hybrid organi- This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 976 Academy of Management Journal August zations to address the continued and competing pressures from institutional referents. However, they reveal little about the way in which the com- bination of logics is actually achieved at the intraor- ganizational level (Greenwood et al., 2011yf 8 Q G H U - standing this process in detail is important for unpacking the internal functioning of hybrids and for understanding how they may survive and thrive in the midst of pluralistic environments. Unpacking the Internal Functioning of Hybrids Overall, the existing body of research on organi- zational responses to competing institutional logics leaves unanswered questions when it comes to ex- plaining the functioning of hybrids (McPherson & Sauder, 2013yf , Q S D U W L F X O D U L W T X H V W L R Q V W K H X V H - fulness of decoupling and compromising as viable hybridization strategies. It further fails to explain how logic combination can be achieved at the intraor- ganizational level. To understand more clearly how hybrid organizations deal with persistently com- peting logics, it is important to understand which elements of the logics they enact, because these are the key linkages between institutional logics and intraorganizational processes (Smets, Morris, & Greenwood, 2012; Thornton, Ocasio, & Lounsbury, 2012byf 2 X U S X U S R V H L Q W K L V V W X G \ Z D V W R H [ S O R U e these issues empirically by addressing the follow- ing research question: Research Question 1. How do hybrid organiza- tions that incorporate competing institutional logics deal with these logics at the intraorganizational level? This question is followed by another related to the determinants of the hybridization patterns de- ployed by organizations. Previous research in insti- tutional theory has emphasized the important role played by various organizational factors in shaping organizational responses to institutional processes. The structural position of an organization - whether it is at the center or periphery of a field - has been shown to influence the way it is impacted by competing institutional logics and, in turn, how likely it is to manage the associated conflicting demands (Greenwood et al., 2011; Leblebici, Salan- cik, Copay, & King, 1991yf 7 K H S U R I L O H R I R U J D Q L ] D - tion members and the degree to which they repre- sent the competing logics in which their organization is embedded has been further shown to potentially impact the way the organization col- lectively experiences, interprets, and deals with competing logics (Almandoz, 2012; Powell & Sand- holtz, 2012; Souitaris, Zerbinati, & Liu, 2012yf 7 K e presence of internal coalitions promoting a given logic, or more broadly, the internal balance of power between internal coalitions, has also been shown to shape how organizations have incorpo- rated competing logics (Glynn, 2000yf < H W E H F D X V e these factors have been identified in contexts of transitory competition between logics, it is unclear whether and how they matter in the context of hybrid organizations embedded in enduring com- peting logics. We therefore asked a second research question: Research Question 2. What determines the strategies through which hybrid organizations incorporate competing institutional logics? METHODS To explore these research questions, we devel- oped an inductive multiple case study in the set- ting of work integration social enterprises (WISEsyf in France. The first author, who was professionally involved with the social sector in France for five years before the beginning of her academic career, had experienced extensive prior interac- tions in this field and expected WISEs to be persis- tently embedded in competing social welfare and commercial logics. This setting was thus perceived as pertinent to our research questions. In the next section, we briefly present the field of WISEs and its history and explain how data were collected and analyzed. Research Setting: The Field of Work Integration Social Enterprises (WISEsyf L Q ) U D Q F e WISEs are private organizations that aim to pro- vide long-unemployed people with job opportuni- ties by training or retraining them in the practices and behaviors of working as an employee. WISEs achieve their goal by hiring, for a set period of two years, jobless people to produce products and services (in sectors such as construction, catering, gardening, recycling, or temp workyf W K D W W K H \ W K H n sell to the market. With close mentoring and adapted training programs, as well as individual social counseling, WISEs help these people read- just to the world of work and regain individual pride and confidence. WISEs receive the authorization to operate from a commission chaired by a local representative of the This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 977 French state. The commission is composed of local stakeholders (regional and local elected officials, trade and employer unionists, and work integration expertsyf 7 K L V D F F U H G L W D W L R Q H Q W L W O H V : , 6 ( V W R U H - ceive state subsidies intended to compensate for the lower productivity of the people that they em- ploy, under the condition that they demonstrate a clear focus on their social mission. This focus is monitored through the obligation that they hire their beneficiaries from a pool of long-unemployed people listed by the Pole Emploi (National Agency for Employmentyf D V G H V H U Y L Q J Z R U N L Q W H J U D W L R Q " The idea behind this requirement is to ensure that WISEs do not receive public subsidies for hiring individuals who are already normally productive. Subsidies amount, on average, to 20 percent of the WISEs' revenues. The remaining 80 percent comes from sales. In 2007, 1,098a WISEs operated across France, employing 25,000 formerly jobless persons and generating close to one billion euros in yearly revenues. WISEs developed in the late 1970s under the leadership of a few social workers who saw them as a way to address the needs of long-unemployed people who could not be helped through tradi- tional administrative, health, or housing counsel- ing sessions. These WISEs were progressively rec- ognized by various laws (in 1979, 1985, 1991, 1998, and 2006yf J U D Q W L Q J W K H P W K H U L J K W D Q G G X W \ W R R S - erate as economic entities, as well as entitlement to public financial support, under the condition that they would focus primarily on their social mission. The field became structured around the creation of a national WISE federation in 1988. With the eco- nomic crisis of the 1990s, WISEs consolidated their positions as economic actors providing an impor- tant social service. The state nevertheless kept an important role as gatekeeper in the field, granting new WISEs the right to operate and access subsi- dies through a formal accreditation process, closely monitoring WISEs' social performance through the rate of "positive graduation,"2 and expelling from the field WISEs shown by annual audits to have deviated from their social mission. The brief history of the field that we present in the Appendix shows that, despite changes in the 1 Source: Ministry of Work 2007 data (http://travail- emploi.gouv.fr/etudes-recherches-statistiques-de.76/yf . Assessed by the percentage of beneficiaries complet- ing their terms in a given year who found regular jobs (with contracts lasting longer than six monthsyf . relative strengths of social and commercial influ- ences over time, WISEs are persistently and intrin- sically embedded in two distinct institutional spheres. On the one hand, they need to display appropriateness toward a web of referents embed- ded in a belief system that we qualify here as the social welfare logic . They interact with public so- cial services (state representatives, local employ- ment agencies, cities, and regional governmentsyf W o receive the right to operate, recruit beneficiaries, and mobilize additional financial resources to fund their social mission. They rely on local nonprofit partners to provide their employees with health, housing, and administrative support. They also de- pend upon a web of individuals (local leaders, vol- unteers, and board membersyf Z K R J L Y H W L P H D G Y L F H , and sometimes donations, because of their adhesion to the social mission of these organizations. On the other hand, given their reliance on sales for 80 percent of their revenues on average, WISEs need to display appropriateness with clients, as well as industrial partners, who are embedded in a commercial logic . Importantly, these clients and partners, although sometimes sympathetic with the WISEs* mission, first turn to WISEs for their ability to provide quality goods and services (Hugues & Gasse, 2004yf 7 K H H Q G R U V H P H Q W R I F O L H Q W V Z K R F D n easily choose other service providers if dissatisfied with their experience, is important to secure finan- cial sustainability. Industrial and commercial part- ners that provide WISEs with key resources (such as access to valuable raw materials, production or distribution facilities, or commercial networksyf D U e also essential constituencies to satisfy. Despite the important role played by the state in controlling field access, the WISE field remains fragmented and only moderately centralized (Pache & Santos, 2010yf E H F D X V H D Z L G H U D Q J H R I F R Q V W L W X - ents adhering to competing social welfare and com- mercial logics impose conflicting demands on the organizations. WISEs' long-term dependence on these two webs of support for access to important resources makes these demands particularly salient and hard to defy. This in turn makes this field a rich setting for exploring organizational responses to persistently competing logics. Research Design and Sampling The study used a comparative case study design (Eisenhardt, 1989yf D O O R Z L Q J I R U D U H S O L F D W L R Q O R J L c (Yin, 2003yf L Q Z K L F K F D V H V D U H W U H D W H G D V D V H U L H V R f independent experiments that confirm emerging This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 978 Academy of Management Journal August theoretical insights. It was part of a broader re- search project for which data were collected on eight WISEs. For this study, we decided to focus on the four WISEs that had reached national scale. The scaling-up process, through which an organization expands its activities from an initial site to addi- tional distant sites, requires making strategic deci- sions at a time when securing social and material support is critical. In particular, organizations need to make decisions related to design, control, and coordination of new sites that are shaped by insti- tutional logics. While making these decisions, or- ganizations need to secure critical support from institutional referents in the form of social support (acceptance of settling in a new territory, endorse- ments, partnerships, etc.yf D V Z H O O D V P D W H U L D O V X S - port (sales, subsidies, space, etc.yf % \ I R U F L Q J R U J D Q - izations to make strategic decisions at a time when they cannot afford to alienate institutional refer- ents, scaling-up intensifies the experience of com- peting institutional logics as well as the risks in- curred when defying them. It therefore provides an ideal context for an exploration of organizational responses to competing logics. In terms of sampling strategy, we selected four WISEs from two separate industries to generate a richer and more generalizable theory. Organiza- tions were further selected on the basis of their origin (founded by a social organization vs. founded by a commercial organizationyf W R H [ S O R U e the degree to which institutional influences at founding shape organizational behavior. The four cases thus constituted two matched pairs. One pair operated in the recycling industry (SOCYCLE and BUSITECHyf D Q G W K H R W K H U R S H U D W H G L Q W K H W H P p work industry (TEMPORG and WORK&COyf , n each pair, one organization (SOCYCLE and TEMPORG respectivelyyf K D G E H H Q I R X Q G H G E \ a prominent social sector organization, and the other (BUSITECH and WORK&CO respectivelyyf H P D - nated from a large multinational corporation. The sampling strategy thus involves (1yf F R Q W U D V W Z L W K L n matched pairs that vary on a dimension of theoret- ical interest (founding originsyf D Q G \f replication across pairs from different industries to improve the generalizability of the inducted theory. Table 1 describes the four cases, highlighting their domains of activity, scale of operations, and revenues. Data Collection We conducted three distinct data collection phases. During an exploratory stage (2005yf Z H L Q - terviewed organization members at SOCYCLE and BUSITECH to understand how WISEs functioned, whether and how they experienced conflict related to their social and economic activities, and what explained their social and economic performance. We conducted a total of ten interviews with mem- bers of the two WISEs. The interviews lasted be- tween 30 minutes and three hours and were all taped and transcribed. These data allowed us to confirm that the WISEs were embedded in an en- vironment imposing conflicting institutional demands. During a second stage (2006-07yf Z H F R O O H F W H G a combination of archival and interview data to get a deep understanding of the field, as well as the TABLE 1 Description of Cases Cases SOCYCLE TEMPORG BUSITECH WORK&CO Number of interviews 17 12 12 7 Industry Recycling Temp work Recycling Temp work Activity Recycle used appliances Offer temp work services to Recycle used Offer temp work services to private companies computers private companies Number of sites® 48 23 5 5 Founding year 1985 1991 1995 1994 Scaling-up year 1988 1993 1995 1994 Founding origins Social sector Social sector Business sector Business sector Total staff (FTEyf E 0 Number of beneficiaries 800 700 30 170 Total revenues 28 M € 21 M € 1,6 M € 5M€ Sales/total revenues 70yb \b 80yb \b a 2007 data for number of sites, total staff, and revenues. b Although in 2007 the WISEs with social sector origins were much larger than those with business sector origins, their size was much more similar at the analysis point of this study, which is the scaling-up year. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 979 logics in which it was embedded. We started by gathering available archival data about the field of work integration in France, its history as well as its legal environment. Data collected during this phase included books (2yf U H V H D U F K D U W L F O H V \f, magazine and journal articles (30yf O D Z W H [ W V \f, and profes- sional documents (10yf S U R G X F H G E \ W K H Q D W L R Q D l federation of WISEs. We also conducted 14 inter- views with field experts to understand their views on the evolution of the field and the competing institutional logics that permeate it. We partici- pated in numerous field-level events, including conferences (fouryf D Q G R S H Q K R X V H V I L Y H \f, which allowed us to gain a better understanding of the culture and debates in the field. Once this data collection phase was conducted, we proceeded with a round of data analysis, to identify and de- scribe the two logics competing at the field level. During a third stage (2007-08yf E X L O G L Q J X S R n the initial analyses described above, we collected additional data on the two organizations whose members we already interviewed (SOCYLE and BUSITECHyf Z K L F K E H F D P H R X U I L U V W P D W F K H G S D L U , as well as data on an additional pair (TEMPWORK and WORK&COyf ) R U H D F K R I W K H I R X U F D V H V Z e gathered and read available annual reports and press articles. For some cases, we accessed more specific material, such as a book published for the WISE's anniversary or an evaluation report pro- duced for a partner. We also conducted semistruc- tured interviews with internal and external infor- mants in each organization (7-17 interviews, depending on the size of the organizationyf , Q W H U Q D l informants included board members, executive di- rectors, technical supervisors, and social workers. We also interviewed external informants such as funders, partners, and clients. We met with the informants in their respective organizations, in each of which we spent between two and five days. This physical presence allowed us to get a sense of the culture and norms in each organization. During this third stage, we conducted 38 addi- tional semistructured interviews, lasting between 30 minutes and three hours each. All interviews were taped and transcribed. Informants were asked to explain how their organization was founded, how it grew and how it was organized, how it operated in 2007, and why it was organized and operated in such a way. We used an interview guide organized around the following broad areas: founding and growth, organizational structure and governance, human resources, commercial strat- egy, financial strategy, performance, environment, and stakeholders. The goal of these interviews was to get a rich understanding of the day-to-day func- tioning of WISEs. In 2009 we collected additional data through phone conversations and e-mails, to confirm or complement some of our findings. To summarize, for this study we collected more than 2,000 pages of archival data and conducted a total of 48 case interviews plus 14 field expert inter- views. This wealth of data allowed us to gain in- depth understanding of both our cases and the field of work integration in France. Data Analysis Stage 1: Identification of the field-level com- peting logics . During the first stage of analysis, we attempted to validate the assumption that the WISE field was embedded in persistently competing log- ics. We further attempted to characterize these log- ics. As a first step in identifying the main discus- sion themes, we read and coded selected archival material (the two books and the magazines pro- duced by the federation of WISEsyf H [ S H U W L Q W H U - views, and a conference program. As we clustered these themes, we observed a recurrence of discus- sions about the duality of the world in which WISE actors operate and its associated tensions (see, e.g., Hugues & Gasse, 2004yf , Q D V H F R Q G V W H S R I D Q D O \ V L V , we coded each mention of this duality to identify the opposing views at the source of the debate. Four main themes emerged: What is the appropriate goal for an organization? What is the appropriate organ- izational form to achieve that goal? How is control legitimately exerted in an organization? What are the sources of professional legitimacy in an organ- ization? To confirm that the four identified themes were accurately characterizing the logics, we triangu- lated this analysis with research material describ- ing the institutional contexts of the social sector (Austin, Stevenson, & Wei-Skillern, 2006; DiMag- gio & Anheier, 1990; Frumkin, 2002; Hansmann, 1980yf D Q G W K H P D U N H W V H F W R U ' $ X Q Q R 6 X F F L & Alexander, 2000; Fligstein, 1996; Friedland & Al- ford, 1991yf ) L Q D O O \ W R F U R V V Y D O L G D W H W K L V D Q D O \ V L V , we asked two field experts to confirm the descrip- tion of the logics that we identified. Table 2 sum- marizes the belief systems that characterize these two competing logics and how they play out in the field of WISEs. The social welfare logic is structured around a predominant goal: making products and services available to address local social needs. Economic This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 980 Academy of Management Journal August resources, including surplus, are a means for these organizations to achieve their goal. These social needs are perceived to be best addressed in the context of an association , which is France's pre- vailing nonprofit form. The nonredistribution con- straint, which is imposed by law on all associa- tions , is viewed as the best approach to guarantee a focus on the social mission. Although it is not only accepted but even recommended for an association to generate a surplus, profit is viewed as a means to achieve the organization's end goal and is thus to be reinvested in the organization's social mission. The social welfare logic further prescribes demo- cratic control as the appropriate way to monitor strategy and operations. Importantly, associations are built, under French law, around democratic principles: members who demonstrate their com- mitment to the mission democratically elect, among themselves, a volunteer board of directors that is in charge of the association's leadership. The democratic governance structure is per- ceived as the best way to allow for representation and participation of local stakeholders in the proj- ect. Social needs are localized. They concern peo- ple and depend upon a variety of local factors, including, among others, the composition of the population, the state of the local economy and local job market, and the offer of local social support services. Under the social welfare logic, responses to social needs are thus perceived to be best con- ceived at a local level, where they can take into account the demands of local constituencies and strengths and weaknesses of the local context (Di Maggio & Anheier, 1990yf 7 K H V H U H V S R Q V H V D U H E H V t conceived and implemented by people who are committed to the mission, including both profes- sional social workers and volunteers. Professional legitimacy is thus driven by contribution to the social mission. Embedded in a larger societal market logic (Friedland & Alford, 1991yf W K H F R P P H U F L D O O R J L F L s structured around a clear goal: selling products and services on the market to produce an economic surplus that can ultimately be legitimately appro- priated by owners. While it is widely recognized that commercial organizations also serve social needs, the provision of these services is conceived as a means to achieve the profit appropriation goal. The commercial logic rewards efficiency and con- trol (D'Aunno et al., 2000yf Z K L F K L V E H V W D F K L H Y H d through for-profit entities that grant shareholders control over the organizational goals and opera- tions, and channel human resources and capital to areas of high economic return. Pressures for efficiency presuppose that there are optimal ways to get organized to rationalize costs and maximize profits. Hierarchical control is rec- ognized as an appropriate governance mechanism because of the legitimacy of the proprietary claims of stakeholders. It is further viewed as a legitimate means to sustain consistency, as well as an efficient allocation of resources (Fligstein, 1996yf : L W K F R P - petition as a salient feature of the commercial logic (DiMaggio & Anheier, 1990; Hansmann, 1980yf W K e survival of players in the market depends on their ability to differentiate themselves from competitors and to sustain some sort of competitive advantage. Predictability in the quality of a service or product is a key determinant of purchase: consistency and uniformity in production are a source of sustain- TABLE 2 Competing Belief Systems of the Social Welfare and Commercial Logics Characteristics Social Welfare Logic Commercial Logic Goal Make products and/or services available to address local Sell goods and/or services on the market to generate social needs. economic surplus that can be legitimately appropriated by owners. Organizational The nonprofit form ( association yf L V O H J L W L P D W H E H F D X V H R I 7 K H I R U S U R I L W I R U P L V O H J L W L P D W H E H F D X V H L W V R Z Q H U V K L p form its ownership structure giving power to people who structure allows it to channel human resources and adhere to a social mission. The nonredistribution capital to areas of higher economic return, constraint ensures a real focus on the social goal. Governance Democratic control, which is, by law, constitutive of the Hierarchical control is the appropriate way to monitor mechanism association status, is the appropriate way to monitor strategy and operations in a way that ensures strategy and operations, allowing organizations to take consistency of products and services and efficient into account local social needs. allocation of resources. Professional Professional legitimacy is driven by contribution to the Professional legitimacy is driven by technical and legitimacy social mission. managerial expertise. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 981 able revenues. Such quality is best achieved by competent organizational members. According to the commercial logic, professional legitimacy is driven by managerial and technical expertise. On the basis of previous research, one would have expected that, over the years, one of the two competing logics would gain dominance over the other and progressively replace it (Rao, Monin, & Durand, 2003; Thornton, 2002; Thornton, Jones, & Kury, 2005yf R U W K D W D Q H Z O R J L F Z R X O G H P H U J H D V a synthesis of the two (Chen & O'Mahony, 2006; Glynn & Lounsbury, 2005; Thornton et al., 2005yf ultimately providing field actors with undisputed institutional prescriptions. However, by highlight- ing the persistence of conflicting belief systems 30 years after the field's creation, our field-level data emphasize the persistence of competing logics at the field level. This enduring logics competition is illustrated by the recurrence of field-level gover- nance crises (the major ones occurred in 1991 and in 2006yf Z K H Q F R D O L W L R Q V R I : , 6 ( V O H D G H U V F K D P - pioning the business approach fought against champions of the social approach to lead the na- tional federation of WISEs. It is further illustrated by the field-level balance of legal statuses, wherein 44 percent of WISEs operate under nonprofit status and 56 percent operate under for-profit status.3 These observations reflect a persisting dual influence of so- cial welfare and commercial prescriptions. What explains the persistence of these tensions is that WISEs are highly dependent on both social welfare and commercial institutional spheres for operation and survival. This dependence makes the demands of each sphere not only pressing but in- escapable, exposing WISEs to competing logics for a lengthy period of time. A review of the explor- atory case interviews allowed us to identify a prev- alence of the four identified themes characterizing the logics in the informants' discussions of what was considered appropriate behavior. This analysis allowed us to confirm that the social welfare and commercial logics were influential and meaningful for our research subjects. Stage 2: Identification of the demands pre- scribed by the logics . Building upon the prior anal- ysis, we proceeded to identify the specific demands prescribed by each logic. To do so, we relied on our extensive case data. We built a case report for each case, describing in detail the history of the organi- 3 Source: National WISE federation 2007 data (http://www.cnei.orgyf . zation, as well as its design and functioning, fol- lowing the areas outlined in the interview guide. We used the four themes identified during the pre- vious phase (goal, organizational form, control, professional legitimacyyf D V O H Q V H V W K U R X J K Z K L F K W o analyze our case data. As we built our case reports, we paid specific attention to mentions in the inter- views of organizational tensions and conflicts, in order to identify conflicting institutional prescrip- tions imposed upon the organizations. We also looked for instances of informants mentioning a given choice in a context of alternative expecta- tions. We reported the justification of these choices, as shared by the informants, to identify the degree to which institutional demands influenced these decisions. We then conducted a cross-case analysis (Eisenhardt, 1989yf W R L G H Q W L I \ G L I I H U H Q F H V , similarities, and common patterns. This data analysis phase revealed two important insights: the existence of a very strong field-level consensus about the appropriate goal of WISEs, and the existence of clear conflicting prescriptions about how they should organize to achieve this goal at a national scale. In terms of goal, all of our informants, including WISEs' members and field experts, stated that the appropriate goal of WISEs was to serve a clear social need: reintegrating long- unemployed people into the job market. We real- ized that the conflict relating to what goal WISEs should pursue was resolved at the field level by the state, through its gate-keeping role. By granting WISEs the right to operate, by monitoring the ac- complishment of their social mission, and by ex- pelling contravening organizations from the field, the state sends a clear signal about the appropriate goal for WISEs and punishes deviant behavior. Fur- ther, the constraint of recruiting beneficiaries from a pool of people with low skills and low produc- tivity ("deserving work integration" according to the National Employment Agencyyf P D N H V W K H S U R V - pect of profit generation unlikely for WISEs, poten- tially deterring motivations for WISEs to endorse a profit-making goal. However, while the state closely monitors WISEs to ensure that they sustain their social goal, it is agnostic about the way they set up their operations to achieve this goal. The state is indifferent to whether WISEs operate as nonprofit or for-profit entities, whether they rely on democratic or hierar- chical control to govern their operations, and to the profile of the human resources that they mobilize. Overall, this analysis confirms that the WISE field is fragmented and only moderately centralized. In This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 982 Academy of Management Journal August the absence of clear organizing prescriptions im- posed by the state, WISEs are caught between con- flicting demands of how best to organize opera- tions, imposed by institutional referents adhering to competing social welfare and commercial logics. Notably, the data validate that these conflicting demands were particularly salient when it came to setting up operations at the national scale. As the WISEs in our sample expanded their activities from an initial site to additional distant sites, they made decisions related to structure, governance, and co- ordination of new sites. As we analyzed and com- pared the scaling-up strategies that they developed, we observed that the informants recurrently re- ferred to ten discrete elements, including a combi- nation of structural choices and recurrent practices: what legal status to adopt, what ownership struc- ture to set up, what profit destination to favor, what form to choose, what governance to set up, what procedures to localize or standardize, what brand to develop, what monitoring to implement at the central level, what professional affiliation to opt for, and whether or not mobilization of volunteers is appropriate. Our analysis further revealed that WISE leaders decided what to do regarding each of these ten elements on the basis of a few competing alterna- tives, as illustrated by the following quote from the chair of one of WORK&CO sites: We thought about incorporating this site as a non- profit, but it became obvious that we should incor- porate as a for-profit. Why? Because our clients are for-profits. We made that choice because we wanted to have the same status as our clients. We really wanted our economic activity to make sense. So we thought, if we incorporate as a nonprofit, the eco- nomic aspect of our company will be less present. As we identified these ten organizational ele- ments, we mapped them back to the four character- istics of the logics, as defined by the field-level data, to validate the presumed relationship be- tween the two constructs. Finally, we went back to the literature on logics to corroborate our findings. We indeed found confirmation that logics exert important influences on what structures (Green- wood & Suddaby, 2006; Rao, Morrill, & Zald, 2000; Tracey et al., 2011yf D Q G S U D F W L F H V 7 K R U Q W R Q 2 F D - sio, & Lounsbury, 2012ayf R U J D Q L ] D W L R Q V V K R X O d adopt. Figure 1 presents this overall data structure. Finally, we performed a systematic analysis of the explanations and justifications of the WISE leaders pertaining to the ten elements composing their scale-up strategy. This allowed us to identify the conflicting demands imposed by the social wel- fare and commercial logics on these ten strategic elements. The data revealed that, regarding the le- gal status of new sites, WISE leaders felt compelled to choose between the nonprofit form, as pre- scribed by the social welfare logic, and for-profit forms, as prescribed by the commercial logic. They were required to make decisions related to owner- ship of sites, in the context of two competing de- mands: a view of ownership based on adhesion to social mission, as promoted by the social welfare logic, and a view of ownership tied to the posses- sion of capital, as promoted by the commercial logic. Any use of profits generated by site activities was further constrained by competing conceptions, with the social welfare logic requesting reinvest- ment in the mission and the commercial logic fa- voring its appropriation by private interests. Our informants' accounts further highlighted conflicting conceptions regarding control of sites. Their accounts suggested that the social welfare logic demanded from them the development of sites as autonomous entities, allowing local mem- bers to take ownership of the sites. This contrasts with the commercial logic conception of sites being incorporated as branches or wholly owned entities, allowing for control and oversight from owners. In a similar spirit, the governance of sites was, accord- ing to the social welfare logic, conceived as requir- ing the mobilization of local actors as experts of local needs and owners of the mission. That mobi- lization of local actors was perceived as less impor- tant in the commercial logic, which favored a more centralized approach. WISE leaders further debated the best approach to setting up operational procedures at the local level. When it came to designing site-level policies regarding production, marketing, or human re- sources, WISE leaders had two potential options: locally adapted procedures that were closely con- nected to local needs, as promoted by the social welfare logic, or standard operating procedures, al- lowing for consistency and efficiency gains, as pro- moted by the commercial logic. Decisions pertain- ing to the name and identity of the sites, reflecting the site brand, were also taken in a context of com- peting conceptions, with the social welfare logic promoting a strong local identity and a localized brand, in contrast to the commercial logic's pre- scription of a unified brand, projecting consistency in identity and quality across sites. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 983 FIGUREI Data Structure The two logics further prescribed competing views related to the legitimate level of site moni- toring. While the social welfare logic promoted control of sites by local actors and thus resisted centralization of monitoring, the commercial logic promoted centralized monitoring, allowing for the validation of centrally designed standard operating procedures. Our informants' accounts also reflect an embed- dedness in competing conceptions of professional legitimacy, with the social welfare logic promoting affiliation with professional organizations focusing on work integration and the commercial logic pro- moting affiliation with industry federations. Fi- nally, we identified competing demands related to the legitimacy attributed to volunteers. According to the social welfare logic, volunteers are not only a cheap resource, but also a highly legitimate one: they embody the values of selfless commitment to a social mission. For the commercial logic, volun- teers are not commonly used resources and are perceived as amateurs, in contrast to professional, paid staff. We summarize in Table 3 the ten elements on which logics impose conflicting demands, detail- ing their content, describing how we measured them, and providing supportive quotes. Stage 3: Identification of the response patterns. To address our research questions, we conducted a subsequent round of analysis to learn how each organization responded to the conflicting demands identified in stage 2. Specifically, we identified the behaviors enacted at two distinct points: at the time when the organizations engaged in the scaling-up process (when they were one to four years oldyf D Q d in 2007 (the last year of our data collectionyf ) R r each organization and each element, we analyzed the behavior enacted and compared it with the demand prescribed by each logic. This analysis allowed us to find out whether a given organiza- tion, for a given element, fully complied with a demand and, if so, which one, or whether it altered the prescribed behaviors. We further assessed whether and how demands were enacted differently between the early scal- ing-up years and 2007. Given the very limited vari- Organizational Elements on Which Logics Prescribe Logic Characteristics Conflicting Demands i ; i « ! GOAL i . 1 yf O H Y H O E \ W K H V W D W H \f ample room for conflicts on means. j ^ ļ What is the appropriate . 1 ! goal for an organization endorsement of a j '* ! i to pursue? social mission on all ¡ ! ! ORGANIZATIONAL I O™*** I I SOCIAL WELFARE - ^ i organizational form to ; ļ AND i achieve that goal? Site Form j COMMERCIAL - > i ! , LOGICS ! j legitimately exerted in -ú ^ j an organization? ^ ¡ i • Monitoring ! - ^ ļ PROFESSIONAL ! ' ļ LEGITIMACY i ļ , ! jatu r 4 - ! ! jatu What are the sources of r ' ! > j professional legitimacy ¡ i j in an organization? ^ ! i i This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 984 Academy of Management Journal August TABLE 3 Conflicting Demands Imposed by the Social Welfare and Commercial Logics Elements Source of Conflict Demands from Social Welfare Logic Demands from Commercial Logic Measure Legal status What is the Nonprofit form For-profit form legitimate legal Sites should be formed as nonprofits Sites should be formed as for-profits status of operating because that legal status is the best because that status is more sites? safeguard against mission drift. effective for producing goods and " The nonprofit status obliges us to services. keep our focus on work integration. "We chose a for-profit status If we would change statuses, even because we operate in a with our current board, some competitive space and we needed T A , i» n i /v. ,,, . j.rf x r Incorporation T status A , would i» say n let s go make i profits. /v. ,,, an image . different x from r a non- ^ (SOCYCLE site board memberyf S U R I L W $ Q R Q S U R I L W F D Q E H U H D O O y professional but in people's minds, a nonprofit is not for profit, it is not professional, it is not strong financially. So we wanted to enter this competitive space with a business image." (BUSITECH founderyf Ownership Who are the Mission guardians Capital holders legitimate owners The legitimate owners of sites are The legitimate owners of sites are of the sites? those who adhere to and are those who have invested capital in willing to protect the organization's the sites. social mission. "At the end, it always comes down \b Q U Q Q D Q t "Ultimately, it is important that those to what shareholders want. They , . - . who make the key decisions for the are the owners ." ( BUSITECH owners íp o si es organization are those who care founderyf about the mission, not those who might care about their dividends ." ( TEMPORG executive directoryf Profit What is the Reinvestment in social mission Appropriation by private interests destination legitimate use of The legitimate use of profits is its The legitimate use of profits is the profits? reinvestment in the mission of the distribution of dividends to organization. shareholders in proportion to the "What we want is to generate surplus capital invested. to create jobs or to train those who "MULTIWORK (WORK&CO mother c , distribution . , .A/ r- , . « , . j Surplus c , distribution . work , with us. .. . If r- we generate , organizationyf m L V Q R Z P D Q D J H G M . surplus, which we do, we create from Zurich and Chicago and new jobs, we create a new company these guys know nothing about or hire - as we did recently - a work integration in France. So at social worker or training expert ." some point, they will ask for a (SOCYCLE site manageryf U H W X U Q R Q L Q Y H V W P H Q W " (WORK&CO national coordinatoryf Site form What is the Autonomous entities Branches or wholly owned entities legitimate form of Sites should be structured as Sites should be structured as entities sites? autonomous entities that allow for that allow for control and local members to take ownership of oversight from the owners, the site. "What was atypical for "We could have chosen to develop as MULTIWORK was to create aļ structure of a group with subsidiaries, but we autonomous legal entities, because wouldn't have had access to at MULTIWORK, they create volunteers in local boards who clones or secondary have close ties with local funders establishments." ( WORK&CO and were able to mobilize local national coordinatoryf support." (SOCYCLE national board memberyf Continued This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 985 TABLE 3 (Continuedyf Elements Source of Conflict Demands from Social Welfare Logic Demands from Commercial Logic Measure Site What is the Mobilization of local actors in site No mobilization of local actors governance legitimate level of governance required for site governance involvement of Local actors, as legitimate experts of Experts, mobilized at the national local actors in site local needs, should be involved in level, are legitimate to address or- governance? the leadership of local sites. ganizational and strategic " There is one thing that I really challenges. shouldn't do: recreate the "It is a great comfort to know that „ multinational company that I everything ° is controlled in . , , r i , A r nn „ ,i , j ° T at i ^ involvement . , , of r worked i , at A for r 30 nn years. So „ the ,i headquarters. , j T We at have i experts ^ on , , . * . _ » . . p . » . , . . , , . local , , actors in site idea . * is . that _ » . if . p there . » are local . , various . issues, . such , as legal , . entrepreneurs willing to launch a affairs, accounting, management governance BUSITECH site, we are willing to and social work. If we are in help them, to share our know-how trouble, we know exactly whom to and to have them join our contact." ( TEMPORG site network. We are ready to help, but manageryf the locals have to take the lead." (BUSITECH founderyf Procedures What is the Locally adapted procedures Standard operating procedures localization legitimate level of Procedures should be adapted at the Procedures should be standardized localization of local level to adapt to the specific because this is a source of operating needs and resources of the local consistency and efficiency gains, procedures? environment. " One of the issues with our site Existence and "Locally, there is a nonprofit which managers is that they are not enforcement of is in charge, responsible and systematic and regular with sales SOP: in HR, which is close to the field and initiatives. So we hired a national accounting, IT, thus knows what can be done and sales director who will define a training, sales, what cannot be done. It is not an real planned national sales pricing entity in Paris that should tell this strategy, and who should do site , 'this is what you should do what." ( TEMPORG executive [SOCYCLE national board directoryf memberyf Brand (name, What is the Localized Unified identityyf O H J L W L P D W H V F R S H 7 K H E U D Q G V K R X O G E H G H I L Q H G D W W K H 7 K H E U D Q G V K R X O G E H X Q L I L H G D F U R V s for brand identity? local level, as a way for local all sites to project consistency in actors to express their knowledge identity and quality. R , . and identity. "When I talk about our network .f . "What our partners buy is our deep made of different brands to large i i j xxl X • xl i i X common name, knowledge i i j of xxl the community, X our companies, • xl they look i i at X me, . , ? ixi t«l • • » ? , j , . , ... common visual . , local ? ixi networks. This t«l • is • what » puzzled, , j asking, , . , what ... is that . , . matters most to them. The brand, thing?'" [WORK&CO deputy i en i y the looks and all that does not coordinatoryf matter to them that much." ( Field expertyf Monitoring What is the Local monitoring of sites Central monitoring of sites legitimate level of No central resources are needed to Centrally designed standard site monitoring? monitor sites because practices procedures should be monitored designed at the local level should centrally, thus requiring the also be controlled at the local mobilization of resources at the „ , . . , , leVeL central level. sUes'Io Cd "We would rather use a participative "If you want quality, there is no way centraļ approach where we share ideas, out of monitoring sites and . where we don't force things. Mark helping them to learn from each . . and myself, we are social, so we other." ( TEMPORG executive organiza ion decided we would not impose directoryf things. There is a whole ideology behind that posture." ( WORK&CO deputy coordinatoryf Continued This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 986 Academy of Management Journal August TABLE 3 (Continuedyf Elements Source of Conflict Demands from Social Welfare Logic Demands from Commercial Logic Measure Professional What is the Work integration federation Industry federation affiliation legitimate The work integration federation is The recycling or temp work industry affiliation with the place where the interests of federations are the places where professional work integration professionals are the interests of recycling and temp organizations? best represented and promoted. work are best represented and Systematic site "It is important that there is a promoted membership with structure that helps us as work " The affiliation with PRISME (temp professional integration enterprises, that work professional associationyf L V R U J D Q L ] D W L R n represents us, that does lobbying indispensable in terms of image. It when necessary. So I chose to means that we are serious ." remain affiliated with them." ( WORK&CO site manageryf [BUSITECH founderyf Mobilization of What is the Mobilization of volunteers No mobilization of volunteers volunteers legitimate use of (including those in operational Volunteers are not used as resources volunteers as a positionsyf D Q G R I W H Q F R Q V L G H U H G D V D P D W H X U s human resource? Volunteers are not only valuable but in the commercial sector, where desired resources because they paid professionals are the only Existence of embody a selfless commitment to legitimate human resources. volunteers in the social mission. " One cannot create a real company operational "Why is a nonprofit better? Because with members who are totally positions other ... it allows for the mobilization volunteers. That is good for than board of volunteers. What I like about it charitable organizations, for the is that there is no self interest. So Red Cross or other places like people's sole motivation is what that." ( BUSITECH founderyf we do." (Field informantyf ations in responses over the two periods, we de- cided to report, in tables 5 and 6, the behaviors enacted in 2007. In these tables we report the re- sponse that the organizations enacted for each ele- ment, and categorize this response as the enactment of a demand imposed by one of the two competing logics, or as the enactment of an alternative behavior. In particular, we identified and tracked two types of alternative behaviors: decoupling or compromise, as described in the theory section. In a final step of analysis, we attempted to un- cover the determinants of the observed response patterns. To do so, we compared the response tables and identified differences and similarities across response patterns. The data revealed that SOCYCLE and TEMPORG exhibited a similar re- sponse pattern, different from the one mobilized by BUSITECH and WORK&CO. In particular we found that industry differences (temp work versus recy- clingyf G L G Q R W V K D S H W K H U H V S R Q V H S D W W H U Q V E X W W K D t organizational origins did have meaningful impli- cations for the phenomenon under study. Finally, we shifted our focus to a dialogue between theory and data (Ragin & Zaret, 1983yf W R P D N H V H Q V H R f these findings. This process led to the insights pre- sented next. FINDINGS Organizational Responses: Selective Coupling rather than Decoupling or Compromising Previous research suggests that, under conditions of competing institutional demands, organizations are likely to resort to decoupling as a response strategy (Elsbach & Sutton, 1992; Fiss & Zajac, 2006; Meyer & Rowan, 1977; Westphal & Zajac, 2001yf R U D W W H P S W W R F R P S U R P L V H 2 O L Y H U ; Rowan, 1982yf < H W R X U G D W D V X J J H V W W K D W R U J D Q L ] D - tions rarely decoupled their formal structure from their operational structure. Furthermore, they rarely engaged in compromise by only partially satisfying the demands from their institutional ref- erents. In contrast, we find evidence of an alterna- tive strategy that involved the selective coupling of intact demands drawn from each logic. SOCYCLE provides a compelling illustration of this pattern. Only two demands were enacted in an This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 987 incomplete way to at least partially satisfy both logics, including one altered through decoupling and one altered through compromise. Specifically, in terms of legal status of sites, SOCYCLE enacted a combination of for-profit and nonprofit forms for its new sites, sending the signal of adhesion to both logics. In terms of standardization, SOCYCLE ad- opted a decoupling approach: it officially adopted rigorous standard operating procedures across sites but, looking more closely, it was clear that these procedures were not implemented by the local sites, which exhibited a high degree of local auton- omy and variance in their procedures. Yet SOCYCLE's response strategy was very dif- ferent for the other scale-up elements. SOCYCLE respected the substance of social prescriptions re- garding how to structure the network of sites: on five structure-related elements it enacted the de- mands from the social welfare logic "by the book." It developed its sites as autonomous entities, all of which were owned by strong advocates of the mis- sion of the organization. All for-profit sites, in par- ticular, were owned by a local SOCYCLE nonprofit to "ensure that control be exercised by people who are not directly involved as shareholders or man- agers" (SOCYCLE executive directoryf 7 K L V R Z Q H U - ship structure implied adherence to the profit des- tination model prescribed by the social welfare logic: profits generated in the for-profit sites were distributed to the nonprofit owner, which, just as with nonprofit sites, used these resources to further the organization's mission. The governance model designed by SOCYCLE was based on local embed- dedness, as promoted by the social welfare logic. Control over sites was exercised by local volunteer boards of directors, who mobilized key local actors (local public officials, social partners, business partners and expertsyf $ 6 2 & < & / ( H [ H F X W L Y H H [ - plained: "Local sites were built on strong local roots, with strong political support. SOCYCLE suc- ceeded because the social project was strong and because the individuals promoting it were strong too." Finally, SOCYCLE required all sites to affili- ate with the local work integration professional union as a way to demonstrate their connection with the social sector. Despite the close adhesion to these five social welfare demands, SOCYCLE also enacted four in- tact commercial demands. It invested in a strong national brand, a practice promoted by the com- mercial logic. Not only did all sites bear the same name (with the name of the city next to ityf E X W D O V o they all shared a similar visual identity and a na- tional website. In addition, to ensure standardiza- tion of operations at the national level, SOCYCLE developed a national organization very early on, which was in charge of development, monitoring, and control. A cofounder explained, "SOCYCLE started out as a very tight and controlled group. This tight structure was very important early on, because it allowed us to develop the model and to make sure it would not be perverted." Moreover, important resources were mobilized and allocated to ensure monitoring and control at the national level. Fourteen staff members were mobilized at the national level. Sixty percent of their costs were covered by the local sites, which contributed 3 per- cent of their turnover to the national organization. Finally, SOCYCLE required all of its sites to affili- ate with a waste management professional organi- zation. Overall, SOCYCLE managed its embedded- ness in competing logics not so much by decoupling competing demands or altering them, but rather by selectively combining intact demands drawn from both logics. We observed very similar patterns in the other three cases. TEMPORG, for instance, did not de- couple in any area and altered only two demands through compromise: it developed a hybrid owner- ship structure, combining mission holders (not-for- profit shareholders, for 59 percentyf D Q G F D S L W D l holders (private for-profit investors, for 41 percentyf ; in terms of procedures, TEMPORG standardized a wide range (HR, accounting, IT, and trainingyf \ H t gave its sites full autonomy over pricing and sales. In contrast, TEMPORG enacted intact demands in the other eight elements. Complying with the com- mercial logic, it chose a for-profit legal status, de- veloped its sites as branches of a national organi- zation, developed a common brand identity, mobilized substantial resources to monitor and control operations at the national level, required all sites to affiliate with the temp work professional organization, and ignored volunteers as a potential resource. In compliance with the social welfare logic, it chose not to redistribute any dividends to shareholders, developed local ownership by mobi- lizing local advisory boards composed of local stakeholders, and required all of its sites to also affiliate with the work integration professional or- ganization. Table 4 details these response configurations. Similar patterns applied to BUSITECH and WORK&CO. Both organizations decoupled only one demand and altered two through compromise strategies. They enacted intact demands drawn This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 988 Academy of Management Journal August from either logic in the other seven elements. Ta- ble 5 details these response configurations. Table 6 summarizes the response pattern for all four organizations. It is clear that, in contrast to what is suggested in the literature, the organiza- tions in our sample did not predominantly balance conflicting expectations through decoupling or compromise strategies at the practice level. Most of the behaviors enacted involved the adoption of in- tact demands from either logic. Notably, these configurations appear to be very stable over time: across the four organizations, 86 percent of the demands enacted in the early scale-up years were still enacted in 2007. This sug- gests that the pattern identified is neither tempo- rary nor unstable. Rather, the configurations en- acted appear as lasting commitments to a way of doing things. Data also suggest that such configu- rations are hard to change. In 2007, the leaders of two organizations expressed the desire to change some elements of their organization's structure. SOCYCLE's executive director, for instance, ex- plained that when the leadership team introduced the idea to change the ownership of their WISE by inviting private investors as shareholders of the for-profit sites, internal reactions were intense: This idea generated an internal revolution that was not easy to deal with. There was real resistance to change. The old timers, the early activists in our network, thought that we were deviating from our social mission, from our work integration mission, that we embraced a business goal, whereas for us, it was just a means to achieve our social goal. Similarly, the national coordinator of WORK&CO explained the difficulties in convincing managers of the local sites to adopt a unified brand to reflect their affiliation with their multinational mother or- ganization: "The work integration enterprise is [the site managers'] toy; they don't want their mother organization to appropriate it." Overall, this analysis indicates that organiza- tional leaders do, on a lasting basis, attempt to balance the conflicting expectations of institutional referents, yet they do so predominantly at the or- ganization level rather than at the practice level. And while we found instances of decoupling at the practice level, as suggested by the wealth of decou- pling studies in institutional theory, these were atypical rather than common choices. Signifi- cantly, the data suggest that the response patterns crafted by these four organizations allowed them to avoid major legitimacy threats and to sustain their activities over the long run: the four organizations not only survived for more than 11 years after founding (and up to 22 years for SOCYCLEyf E X W D O l of them achieved performance levels (in terms of turnover, number of social employees hired, as well as annual growth rates in the last three yearsyf superior to the average in the field (see Table 1 for detailed numbersyf . The cross-case analysis reveals that, although all organizations in the sample adopted a similar strat- egy of selective coupling, they enacted different combination patterns. This led us to investigate the factors that determine these different patterns. Organizational Origins as a Determinant of Selective Coupling Patterns Organizational behavior is often guided by the norms and values embedded in specific activities. Occupational groups and professions, in particular, have been identified as powerful carriers of insti- tutional logics (Hirsch, 1986; Thornton et al., 2005yf . Building upon this view, one would expect that professionals socialized into a given institutional logic would carry this logic over to other fields. In the context of our study, one would expect organ- izations originating from the commercial sphere to enact primarily commercial demands, given the embeddedness of their professional members in the commercial logic, and organizations emanating from the social sector to adopt primarily social welfare behaviors, under the influence of social sector professionals. Surprisingly, our data suggest a different dy- namic. A striking pattern in our sample is that organizations that come from the commercial sec- tor (i.e., organizations that were founded by or in close partnership with a business companyyf H Q - acted predominantly social welfare demands, more so than organizations coming from the social sector (i.e., organizations that were founded by or in close partnership with a social sector organizationyf , n contrast, organizations originating from the social sector enacted a balanced combination of intact social welfare and commercial demands, but still adopted more commercial behaviors than organiza- tions originating from the commercial sector. The TEMPORG/WORK&CO pair illustrates this dynamic. TEMPORG was rooted in the social sec- tor. Founded by two social workers who were pio- neers in the work integration sector, it was launched in the early 1990s as a subsidiary of France's most prominent work integration group. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 989 TABLE 4 SOCYCLE's and TEMPORG's Responses to Conflicting Social Welfare and Commercial Demands in 2007 SOCYCLE TEMPORG Enactment of a Enactment of an Enactment of a Enactment of a Enactment of an Enactment of a Demand Alternative Demand Demand Alternative Demand Prescribed by the Behavior Prescribed by Prescribed by the Behavior Prescribed by Social Welfare (Decoupling/ the Commercial Social Welfare (Decoupling/ the Commercial Elements Logic Compromiseyf / R J L F / R J L F & R P S U R P L V H \f Logic Legal status A combination All sites of nonprofit operated and for-profit under for- sites profit status Ownership All sites Combination of (including for- capitalist and profit onesyf D U H Q R Q S U R I L t owned by a shareholders local nonprofit (with a slight majority to nonprofit shareholdersyf Profit No profit No profit destination appropriation appropriation (moral agreement between shareholdersyf Site form Sites are Sites are autonomous branches of a legal entities national organization Site Governance by Mobilization of governance local boards local advisory composed of boards with local actors local actors for all local sites Procedures Decoupled Common localization standardization procedures on (formal some activities procedures and autonomy written yet on others not always appliedyf Brand Common name Common name + common + common brand identity brand identity + common communication tools Monitoring Sites pay 3 Sites pay 4.5 percent of percent of their turnover their turnover to HQ to HQ Professional All sites affiliate All sites All sites affiliate All sites affiliation with work affiliate with with work affiliate with integration industry integration industry federation federation federation federation Mobilization No volunteers No of in operational volunteers functions other than board members This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 990 Academy of Management Journal August TABLE 5 BUSITECH's and WORK&CO's Responses to Conflicting Social Welfare and Commercial Demands in 2007 BUSITECH WORK&CO Enactment of a Enactment of an Enactment of a Enactment of a Enactment of an Enactment of a Demand Alternative Demand Demand Alternative Demand Prescribed by Behavior Prescribed by the Prescribed by the Behavior Prescribed by the Social (Decoupling/ Commercial Social Welfare (Decoupling/ the Commercial Elements Welfare Logic Compromiseyf / R J L F / R J L F & R P S U R P L V H \f Logic Legal status All sites operated All sites under for-profit operated status under for- profit status Ownership Each for-profit Combination of site is owned capitalist and by a nonprofit nonprofit shareholders (with a slight majority to nonprofit organizationyf Profit Occasional Decoupled destination profit redistribution: redistribution Announces no redistribution yet occasionally redistributes Site form Sites are Sites are autonomous autonomous legal entities legal entities Site Governance by Local ownership governance local boards by local composed of shareholders local actors only Procedures No common No standard localization procedures operating procedures Brand Decoupled No common branding: brand: No Common common name name but no + no identity common identity and communication tools Monitoring No resources No resources allocated to allocated to monitoring monitoring Professional Some sites All sites affiliate All sites affiliation affiliate with with work affiliate with industry and integration industry work federation federation integration federations Mobilization of Most site Each site managed volunteers operations run by a volunteer by volunteers manager (5 (20 volunteers volunteers in in totalyf W R W D O \f This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms § s cu « « s s O. il H «g CA s I en 3 1 I 'S. 1 s s N g S o S ° çj S 0 -2 a ž á i 'i lilii. - i § *ôj i yb * i 3 2 I g S S S S S S g 3 C0 a S ® C0 S 0 «O ^ I «O u 'S ^ ï I E laï »»1 Ī <° E laï <° 1 ! 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It was created as a wholly owned subsidiary of MULTIWORK (a leading multinational group in the temporary work industryyf E \ W Z R W U D L Q L Q J P D Q D J H U s who viewed work integration temporary work as a strategic development for their company and as an expression of their own values. Surprisingly, where one would have expected TEMPORG to enact predominantly social welfare demands, it in fact enacted predominantly com- mercial demands (six out of tenyf , W F K R V H D I R U - profit legal status and adopted a branching struc- ture to operate sites, as well as a strong uniform brand. In addition, it allocated resources to monitor and control standard procedures, affiliated with temporary work professional organizations, and de- cided not to mobilize volunteers. Only three out of the ten behaviors adopted by TEMPORG complied with the social welfare logic: the nonprofit appro- priation, the mobilization of local advisory boards, and the affiliation with work integration profes- sional organizations. Similarly, given its roots, WORK&CO could be expected to enact primarily commercial demands. It did exactly the opposite. It enacted six social welfare demands out of ten. Whereas its commer- cial mother organization was set up as a global web of tightly controlled branches with a very strong brand and standardized procedures, WORK&CO chose to operate its sites as autonomous legal enti- ties, with no common brand, no common proce- dures, and no monitoring or control over the sites. Sites were piloted by volunteer managers from the mother organization and were required to affiliate with the work integration professional organiza- tion. Only two out of ten commercial demands were fully respected: the for-profit legal status, as well as the compulsory site affiliation with the temp work professional organization. Overall, TEMPORG, the organization with social origins, behaved more like a commercial organiza- tion than like a social organization and, in any case, more commercially than did WORK&CO. In con- trast, WORK&CO, the organization with commer- cial origins, behaved more like a social organiza- tion than like a business and, in any case, more like a social organization than did TEMPORG. The SOCYCLE/BUSITECH pair exhibits a similar pattern. BUSITECH, which was founded by young retirees of the multinational IT firm COMPUTER under the impulse of its president for France, en- acted only one commercial demand: it chose to operate its sites as for-profit entities. On all other nine elements, BUSITECH chose to enact demands from the social welfare logic. In contrast, SOCYCLE, which was founded with close ties to COMMUNITY, a very prominent international so- cial organization, enacted five social welfare de- mands and four commercial demands. And whereas it combined both social welfare and com- mercial behaviors, it enacted more commercial be- haviors than did BUSITECH. Since the two organizations with social origins were founded five and nine years earlier than the two commercial organizations, one could argue that the patterns that we observe may be explained by differences in the logics imposed on these or- ganizations at the time of founding (Singh & Tucker, 1986; Stinchcombe, 1965yf < H W D O W K R X J h our analysis of the field dynamics indeed suggests that the influence of the social and commercial logics evolved over the years, it actually highlights that the influence of the social logic has been pro- gressively eroded by the influence of the commer- cial logic. Had the responses been shaped by the strength of each logic at the time of founding, the two organizations founded in 1994 and 1995 (i.e., the two organizations with commercial originsyf should have behaved more "commercially" than those founded in 1985 and 1991 (i.e., the organiza- tions with social originsyf < H W Z K D W Z H R E V H U Y H L s exactly the opposite. One could further argue that the patterns we observe can be attributed to organizational size, since the two smaller organizations, in terms of number of sites, staff and resources (WORK&CO and BUSITECHyf D Q G W K H W Z R O D U J H U R U J D Q L ] D W L R Q s (SOCYCLE and TEMPORGyf U H V S H F W L Y H O \ H [ K L E L W H d similar patterns. However, as mentioned in the methods section, we analyzed the behaviors en- acted by the organizations in our sample when the organizations entered the scaling-up process (in their first through fourth years of existence, de- pending on the organization, when they were still smallyf D V Z H O O D V L Q 7 K H S D W W H U Q V W K D W Z e report for 2007 are very similar to those enacted in the early scale-up years. This suggests that size does not explain the patterns that we uncovered. Organizational size may actually be an outcome of our findings rather than a cause. All organizations were of similarly small size when they started to scale and nevertheless enacted different response patterns that led to different patterns of growth. Our informants' accounts suggest an alternative explanation for this unexpected behavior. One of our informants with WORK&CO reflected upon the This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 993 reactions generated by the decision to enter the work integration field as the subsidiary of MULTIWORK, their multinational mother compa- ny: "[When we started to work on the creation of our first work integration enterprise in 1991], ev- erybody was angry at us, especially the social sec- tor actors. Because we came to eat off their plate. Because [MULTIWORK] was big, people were afraid of us. Why would we do this job? Necessar- ily, to make money. And this bothered them. This was not our playground. Social people did not want to have us on their playground." BUSITECH leaders shared similar perceptions: "People from the social world did not like us to enter their private preserve. They considered us as business executives with no experience in the so- cial sector. And because there was [COMPUTER, their mother organization] behind us, they said: They want their toy. These days, it is good for companies to get involved in social activities, so they do it too. They come to eat our bread.'" This resistance was further demonstrated by the reaction of the local representatives of the state, who were approached to obtain work integration accreditation. A WORK&CO informant recalled: "[The local representatives of the State] clearly told us: don't even bother filing your application. It will never get accepted." BUSITECH also received a first refusal from the accreditation commission for its site in Bordeaux, and had to mobilize the re- gional prefect to get the application accepted. These findings suggest that in a field where the social logic - by way of state imposition of the so- cial goal - remained dominant, organizations with a commercial imprint (BUSITECH and WORK&COyf suffered from an a priori lack of legitimacy that seriously jeopardized their very existence and, in turn, influenced their response strategy. WORK&CO leaders, for instance, initially consid- ered enacting the commercial demand of creating wholly owned work integration subsidiaries. Neg- ative reactions from the regional union of WISEs led them to devise an alternative strategy: "We decided to use a chameleon tactic. They think we are the bad guys? Then we are going to prove them, in practice that we are not. And we are going to learn that job that we don't know." WORK&CO leaders subsequently decided to sys- tematically partner with well-respected local social actors and to become minority shareholders in these autonomous organizations. By 1996, ten such organizations had been launched, borrowing heav- ily from the social welfare logic template. BUSITECH also decided to ally with a prominent social partner in its Paris site. The president of BUSITECH's partner organization explained: "Their image as former COMPUTER executives did not really fit with a social project. The partner- ship that they built with us convinced the accred- itation commission to grant BUSITECH the right to operate as a work integration enterprise." Alliances were thus used by both BUSITECH and WORK&CO to enhance their social legitimacy (Dacin, Oliver, & Roy, 2007yf < H W L Q D G G L W L R Q W R D O O L D Q F H V W U D W H J L H V , BUSITECH and WORK&CO overwhelmingly en- acted social welfare demands when scaling up their operations, despite these organizations' commer- cial origins. DISCUSSION: UNDERSTANDING HYBRID ORGANIZATIONS Our study seeks a better understanding of the functioning of hybrids, defined as organizations that incorporate competing institutional logics (Battilana & Dorado, 2010; Greenwood et al., 2011; Haveman & Rao, 2006yf , W I R F X V H V V S H F L I L F D O O \ R n the intraorganizational processes of hybrids, iden- tifying specific patterns of logic combinations, as well as their determinants, thereby providing clues about how hybrid models of organizing can be sus- tained. A thorough examination of organizations in the field of WISEs in France allowed us to discover that hybrids that are persistently embedded in com- peting institutional logics combined elements of the competing social welfare and commercial log- ics by selectively coupling intact demands imposed by each logic, instead of adopting traditional strat- egies of decoupling or compromising. Further, our data suggest that the origins of these organizations determined the patterns of logics combination in a way that contrasted with traditional institutional arguments, which emphasize founders' taken-for- granted adherence to particular logics (Hwang & Powell, 2009yf % H O R Z Z H H O D E R U D W H R Q H D F K R I W K H V e findings and discuss our contributions to institu- tional theory and to the emergent literature on hy- brid organizations. Inside the Hybrid Organization Our research suggests that hybrid organizations combine the competing logics in which they are embedded through selective coupling. In contrast to decoupling, which entails the ceremonial es- pousal of a prescribed practice with no actual en- This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 994 Academy of Management Journal August actment, selective coupling refers to the purposeful enactment of selected practices among a pool of competing alternatives. Selective coupling allows hybrids to satisfy symbolic concerns, just as decou- pling does. Accounts from our informants empha- size the symbolic power of some practices - the most visible ones - that were adopted with the pur- pose of projecting appropriateness, as illustrated by this quote by one of SOCYCLE's site directors, who explains his decision of developing a new entity with a for-profit legal status: "A nonprofit can be really professional, but, in people's mind, a non- profit is not-for-profit, it is not professional, it is not strong, financially. We wanted to enter this com- petitive space with a business image. ... So we chose a for-profit status." For hybrids, which are embedded in environments where the scrutiny of institutional referents is hard to avoid, selective coupling appears to be a safer and thus more viable strategy than decoupling, because it does not put them at risk of being caught faking compliance - a probable occurrence in instances of enduring insti- tutional conflict. Similarly, selective coupling also appears to be superior to practice-level hybridizing strategies, such as compromising (Oliver, 1991yf E H F D X V H L t keeps organizations from having to engage in mul- tiple negotiations with institutional referents or from having to craft new practices that are a com- promise between the practices promoted by each logic (Battilana & Dorado, 2010yf $ V V X F K V H O H F W L Y e coupling may be a less costly strategy than compro- mising because it does not require organizational members to come up with alternative ways of doing things. It may thus be more accessible to resource- constrained organizations. The pattern of selective coupling that we uncov- ered builds upon the conception of logics as "cul- tural toolkits" (Swidler, 1986; Tracey et al., 2011yf that actors can use in various configurations to solve different kinds of problems. A strength of hybrids is that they have access to a much broader repertoire of institutionalized templates that they can combine in unique ways. This places them at an advantage if they are able to craft a configuration of elements that fits well with the demands of their environment and helps them leverage a wider range of support. Our study thus suggests that hy- brids are characterized by a certain degree of reflex- ivity, spurred by the contradictions in which they are embedded (Seo & Creed, 2002yf : H S U R Y L G e evidence to the fact that, in the face of institutional logics that are competing over the long term, hy- brids do not blindly comply with institutional pre- scriptions (DiMaggio & Powell, 1983yf R U Z L W K W K e cognitive frames into which their members have been socialized (Hwang & Powell, 2009yf , Q W K e field of work integration, hybrids with social ori- gins were not trapped into mimicking social prac- tices, just as hybrids with commercial origins were not cognitively constrained to replicate com- mercial practices. In contrast, our data suggest that hybrids selectively complied with institutional log- ics, echoing the concept of "strategic isomorphism" proposed by Aurini (2006yf . Hybrid Strategies Another important contribution of our work is the identification of specific patterns of selective coupling. BUSITECH and WORK&CO, the two or- ganizations in our sample that were founded by prominent commercial actors, chose to enact a ma- jority of practices from the social welfare logic, despite their initial attachment to the competing commercial logic. We explain this pattern by a need to compensate for their lack of legitimacy, due to their affiliation with a commercial multina- tional, in a field dominated by a social welfare mission. We named this pattern "Trojan horse" be- cause, just as the large wooden horse reassured the inhabitants of Troy (the horse being the symbol of Troyyf D Q G D O O R Z H G 2 G \ V V H X V D Q G K L V V R O G L H U V W o enter the city under cover, the strategic adoption by illegitimate actors of behaviors prescribed by the dominant logic in a field may enable them to gain acceptance for entering the field. This strategy is both symbolic and substantive, as the enacted be- haviors are then maintained for the long term. The Trojan horse strategy contrasts in important ways with the strategy devised by TEMPORG and SOCYCLE, the two organizations that were founded by prominent social actors. These organi- zations benefited from a priori legitimacy in the field of WISEs, since no external referents feared, ex ante, that they would depart from their work integration mission. As a result, they were able to liberate themselves - at least partially - from insti- tutional influences and enact a combination of so- cial welfare and commercial elements. These find- ings echo Sherer and Lee's (2002yf V W X G \ Z K L F h showed that highly legitimate law firms had more freedom to depart from the dominant recruitment model in the field because their high level of legit- imacy protected them from the fear of losing insti- tutional support. Yet our study shows that this This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 995 pattern goes beyond the departure from a single prescribed behavior. In fact, legitimate actors in the field of work integration combined a set of behav- iors borrowed from both social welfare and com- mercial logics. Notably, these two organizations exhibited the highest performance level for WISEs in their re- spective industries. TEMPORG was able to recruit 700 full-time equivalent (FTEyf E H Q H I L F L D U L H V L n 2007, whereas the average temporary work com- pany hired 35 FTE. SOCYCLE mobilized 800 ben- eficiaries, whereas the average recycling enterprise mobilized 15 FTE. Although we cannot draw direct performance implications from a comparison with the general population of organizations, these data suggest that the response combinations that TEMPORG and SOCYCLE crafted allowed them to secure a broad range of social and political support, enabling them to scale up operations and maximize social impact by integrating more long-unem- ployed people into the workforce. Their initial le- gitimacy, combined with a minimal level of com- pliance with social welfare templates, was enough to please their social constituencies. As a result, they were able to gain local political support, mo- bilize public funds, secure the sourcing of social employees, and guarantee mentoring by partner so- cial organizations. Their ability to display compli- ance with the commercial logic in addition allowed them to gain credibility with their commercial con- stituencies. They were able to interact on a more equal footing with industrial partners, clients, and investors, and as a result they were able to negotiate more favorable conditions to sustain their commer- cial activity. Their hybrid configuration allowed them to develop an organizational form combining a high level of central control and coordination with a high level of local engagement. This organ- izational form may have enabled them to benefit from the best of both (institutionalyf Z R U O G V . Overall, these findings contribute to a better un- derstanding of hybrids by uncovering two different sides of hybrids' reflexivity. On the one hand, by crafting various logic combinations, hybrids show their ability to work around institutional con- straints and use them to their advantage, thus dem- onstrating a fair amount of agency. On the other hand, hybrids remain highly constrained by the need for legitimacy. This suggests that the institu- tional freedom that hybrids gain from their expo- sure to institutional contradictions can only be lev- eraged by those whose legitimacy is secure in the first place. Sustaining Hybrid Forms Finally, our findings provide insights into the way hybrid organizations overcome the challenges associated with their multifaceted nature. One such challenge is that hybrids have been shown to be arenas of internal conflict (Battilana & Dorado, 2010; D'Aunno et al., 1991; Pache, 2012; Pache & Santos, 2010; Zilber, 2002yf V L Q F H R U J D Q L ] D W L R n members channel field-level institutional conflicts inside their organizations. Such conflicts can be very harmful for organizations (Glynn, 2000yf E H - cause coalitions of members adhering to a given logic may resist the influence of alternative logics. Our findings suggest that hybrid organizations can lessen these harmful internal conflicts if they are not confronted with (or are able to avoidyf L Q V W L W X - tional conflicts on goals, and if they are able to manage institutional conflict on means by strategi- cally combining intact elements from either insti- tutional world. When institutional conflict on goal is unavoidable, organizations may be able to thrive by crafting a strong identity that focuses the atten- tion of their members on convergent means, while recruiting members free from any institutional at- tachments at the source of the goal conflict (Batti- lana & Dorado, 2010yf 7 D N H Q W R J H W K H U W K H V H L Q - sights suggest that hybrid organizations may need to mobilize different response strategies to cope with internal conflict, depending on whether they are exposed to conflicting demands related to goals or means (Pache & Santos, 2010yf . Even if hybrids are able to avoid these internal conflicts, they nevertheless face the challenge of securing support and resources from external insti- tutional referents who are championing competing logics. To signal their appropriateness and gain support, they need to comply, at least partially, with the conflicting prescriptions imposed by these institutional referents. We find that the selective coupling of intact elements can enable hybrids to please institutional referents and thus secure wide- spread support. Our findings also suggest that hy- brids may be able to strategically distinguish be- tween important signaling elements that will cue institutional referents to the organizations' goals and motivations (such as for-profit versus nonprofit statusyf D Q G W K R V H H O H P H Q W V W K D W F D Q E H P R U H I U H H O y adopted and combined with others, as they are less loaded with meaning (such as internal monitoring processesyf 7 D N H Q W R J H W K H U W K H V H L Q V L J K W V X Q F R Y H U a sustainable way in which hybrid organizations can This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 996 Academy of Management Journal August go about internally blending the multiple logics that they incorporate. Limitations and Future Research An important issue in case study research is the degree to which findings are generalizable to a broader population. Our work certainly contributes to a growing stream of practitioner literature on hybrids, more narrowly defined as organizations oriented toward both the market and the common good (Boyd, Henning, Wang, & Welch, 2010; Hoff- man, Gullo, & Haigh, 2012yf + R Z H Y H U Z H E H O L H Y e that our findings have applicability beyond combi- nations of commercial and social welfare logics, which we consider only a subset of the hybrid space. Our sample was selected on the basis of the existence of conflicting demands rather than the content of those demands. Further, our findings are not specific to the social welfare or commercial sector logics and may apply more broadly to any field subject to institutional competition, such as the clash between medical professionalism and business logics in hospitals (Reay & Hinings, 2009yf or the competition between the science and market logic in the biotechnology industry (Powell & Sand- holtz, 2012yf 7 K X V W K H V H O H F W L Y H F R X S O L Q J R I L Q W D F t demands enacted by organizations that possess, or are able to acquire, initial legitimacy may provide a blueprint for the development of sustainable hy- brids in organizational fields that face enduring conflicting institutional demands. In generalizing these results, it may be important to take into account the degree to which organiza- tions embedded in competing logics have sought this exposure to conflict (WISEs that have decided to address a social mission through commercial activities are examplesyf R U D U H I R U F H G W R H [ S H U L H Q F e it (as have organizations that face changes in regu- lationyf 7 K H I R U P H U R U J D Q L ] D W L R Q V P D \ L Q G H H G E e more willing (because of their motivation to com- bine both logicsyf D Q G P R U H D E O H E H F D X V H R I W K H L r awareness of both logicsyf W R V H O H F W L Y H O \ F R X S O H L Q - tact elements from both logics, whereas decoupling may prove more popular for organizations forced by regulation to adopt elements that their members do not believe in. Future research may further explore how hybrids configure bundles of elements at the organization level (Powell & Sandholtz, 2012yf % H K D Y L R U V D U H Q R t all equally visible to external audiences, nor do they have the same importance for all audiences. Different audiences may also have varying degrees of influence over hybrid organizations. These fea- tures are in turn likely to influence how organiza- tions choose to adopt, reject, or couple specific elements. Further research will thus need to ex- plore the types and determinants of these configurations. Furthermore, although we have begun to explore when and how hybrid organizations are able to combine competing institutional logics, future re- search needs to clarify the situations in which hy- brids may become a superior organizational form. As Kraatz and Block (2008yf V X J J H V W H G L Q W K H L U U H - view of organizational implications of institutional pluralism, organizations that are able to embody multiple logics in a sustainable way are likely to be ultimately more legitimate and thus likely to more efficiently garner the social and material support that they require to thrive. Such research would require an in-depth study of the survival and per- formance of organizations adopting a hybrid model, in comparison to peer institutions remain- ing faithful to a single logic or attempting to de- couple or compromise. It would also require ex- ploring the role played by organizational leaders in this process, to understand what explains their ability to combine competing institutional logics. Conclusion Institutional pluralism is becoming a permanent fixture of organizational life in an increasing num- ber of societal sectors. The traditional view of how organizational leaders deal with pluralism has been shaped by studies that point to the prevalence of decoupling and compromise strategies to deal with temporary pluralism. Our study brings a new view of sustainable hybrid forms that selectively couple elements drawn from different logics, within the constraint imposed by their need for legitimacy. This finding allows us to move from a view of leaders of hybrid organizations as actors compro- mising on their actions or pretending to adopt prac- tices while decoupling their organizational core, to organizational leaders as bricoleurs (Baker & Nel- son, 2005; Mair & Marti, 2009yf Z K R S H U I R U P L Q V W L - tutional work (Lawrence & Suddaby, 2006yf F R P - bining the templates and scripts afforded by a richer institutional environment while learning to navigate the minefields created by enduring insti- tutional conflicts. In doing so, we contribute to the development of the microfoundations of institu- tional theory called for by Powell and Colyvas and shed light on "why institutional practices and This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 997 structures take the form that they do" (2008: 295yf . In particular, our study advances understanding of hybrid organizations by showing how they may constitute a viable organizational form that can ex- hibit distinct advantages in contexts of institutional pluralism. While much remains to be explored about the functioning of hybrid organizations, we hope to have provided, with this study, a building block for a much-needed theory. REFERENCES Almandoz, J. 2012. Arriving at the starting line: The impact of community and financial logics on new banking ventures. Academy of Management Jour- nal , 55: 1381-1406. Aurini, J. 2006. 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APPENDIX History of the Field of Work Integration Social Enterprises in France The first work integration social enterprises (WISEsyf were created at the end of the 1970s by social workers who, in the context of the emerging economic crisis, were increasingly frustrated to see at-risk youth and people without professional qualification finding it difficult to enter the job market. Recognizing the limits of the social approaches sponsored by their organizations (targeting primarily health, housing, or poverty issuesyf L Q D G G U H V V - ing job-related issues, they decided to create commercial subsidiaries - initially called "intermediary compa- nies" - that were specifically designed to help unem- ployed people learn the skills of work. These organiza- tions offered their beneficiaries short-term contracts, focusing on activities that were simple enough for people without qualifications, and organized close and indul- gent supervision to help social employees go through the learning process. WISEs rapidly gained the notice of policy makers con- cerned with increasing unemployment rates, and they benefited from the lobbying efforts deployed by the pio- neers of the field. These experiments were progressively legitimized through various laws (in 1979, 1985, 1991, 1998, and 2006yf Z K L F K J U D Q W H G W K H P W K H U L J K W D Q G G X W y to operate as legal economic entities. These laws adapted French labor law to allow WISEs to resort systematically and repeatedly to fixed-term contracts for their benefi- ciaries.4 In turn, they required WISEs to pay beneficiaries at minimum wage and to comply with legal and fiscal requirements. National policy makers rapidly institu- tionalized public financial support, in compensation for the costs incurred by the extra supervision requirements and the below-average productivity of their beneficiaries. This national recognition, together with the support pro- vided by local governments, helped structure and de- velop the field. Over the years, WISEs grew more and more separate from the social institutions that founded them. While this initial affiliation had helped work integration entre- preneurs reach out to social policy makers, it also gener- ated tensions with traditional social actors, who viewed them as "joining forces with the bosses" or as "exploit- ers" (Pauly- Aboubadra, 2004: 9yf 7 K H V F D W W H U H G L Q L W L D W L Y H s that had flourished across France thus felt a growing need to join efforts and collaborate. The first regional union of WISEs, created in 1983, was soon followed by other regional unions. This led to the creation of the national federation of WISEs in 1988 and the formaliza- tion of the first WISE charter. In turn, the growing visi- bility of the field led to tensions with the commercial sector, which started to perceive these new enterprises as unfair competitors, because of the public subsidies that they received. In the 1990s, in the face of the aggravation of the economic crisis, WISEs consolidated their position as both social and economic actors. With unemployment rates growing (up to 14 percent between 1994 and 1998yf 4 Fixed-term contracts are, under the French labor law, officially reserved to specific circumstances (temporary or seasonal increase in activity, replacement of a sick employee, etc.yf . This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms 2013 Pache and Santos 1001 and the time required for jobless people to find jobs increasing (in 1995, 40 percent of unemployed people had been looking for work for more than one yearyf , WISEs became an important building block of local and national employment policies. During that period, they developed partnerships with local governments and of- ten obtained access to local public funds in addition to the regulated state subsidy. They developed relation- ships with the public national employment agency, in charge of identifying potential beneficiaries, as well as with social and public actors in charge of social and professional integration issues locally. Under pressure to sustain their economic activities, work integration entre- preneurs progressively adopted "business entrepreneur" practices (Hugues & Gasse, 2004yf ( Q W U H S U H Q H X U V Z L W h social backgrounds invested in management training, and entrepreneurs with new profiles - business school graduates as well as former business executives - started to join the field (Hugues & Gasse, 2004yf 7 K L V W U H Q G F R Q - solidated in 2000 as more and more organizations in the field voiced their identity as "real companies," joined employers unions, and partnered with capitalist busi- nesses to develop business opportunities. By the middle of 2000, WISEs were thus integrated into both the social and the economic spheres. Anne-Claire Pache ([email protected] L V D V V R F L D W H S U R - fessor of social entrepreneurship at ESSEC Business School and holder of the ESSEC Chair in Philanthropy. She received her doctorate in organizational behavior from INSEAD. Her research lies at the intersection of organizational theory and social entrepreneurship, with a particular emphasis on pluralistic environments, hybrid organizations, and scaling-up processes in organizations. Filipe Santos ([email protected] L V D V V R F L D W H S U R - fessor of entrepreneurship at INSEAD, academic director for social entrepreneurship, and director of the Rudolf and Valeria Maag INSEAD Centre for Entrepreneurship. He received his doctorate in organizations and entrepre- neurship from the Management Science and Engineering Department at Stanford University. His research interests are new ventures, market creation, and social entre- preneurship. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:38:33 UTC All use subject to https://about.jstor.org/terms