Social Entrepreneurship and Hybrid Organizations Quiz

Organization Size, Life Cycle, and Decline

• Companies strive for growth to compete globally, needing the size and resources.
• Growth drivers include global competition, investment in new technologies, controlling distribution channels, ensuring market access, economic stability, and attracting high-quality human resources.
• Large organizations have economies of scale, global reach, and stable markets but might be mechanistic and less flexible ("organization men" instead of entrepreneurs).
• Small organizations are responsive and flexible, able to adapt to regional niches, and favor entrepreneurship and niche finding.
• The paradox is that small companies' advantages can lead to growth, but then these same characteristics can inhibit further growth.
• Large companies are built for optimization, not for innovation.
• The solution is an ambidextrous approach (big-company/small-company hybrid).
• Organizational ambidexterity combines the ability to implement current methods (exploitation) with the ability to explore new ways of conducting business.

Three types of organizational ambidexterity

• Contextual: Combining exploration and exploitation within a single unit (e.g., 3M's 15% free time policy).
• Sequential: Exploitation followed by focused exploration (e.g., new product development).
• Structural: Creating new units/spin-offs that compete with the main company to explore new markets.

Three types of organizational ambidexterity (best suited for, challenges)

• Contextual: Strong, innovative culture; requires high employee autonomy and cultural alignment.
• Sequential: Project-based work; risk of losing momentum or market relevance during transitions.
• Structural: High-risk innovation; can create silos or competition if not managed carefully.

Contextual ambidexterity

• Managers foster the generation of ideas, projects, and new lines of business, potentially competing with existing core business.

Sequential ambidexterity

• An exploitation phase is followed by an exploration or focus phase (e.g., new product development).

Structural ambidexterity

• Creating new business units (e.g., spin-offs) or departments, even in competition with the company itself—often the most recommended for exploration.

Organizational Life Cycle

• A four-stage model:
• Entrepreneurial: Emphasizes creating a product/service and surviving in the marketplace.
• Collectivity: Organizations develop clear goals and direction.
• Formalization: Involves the installation and use of rules, procedures, and control systems.
• Elaboration: Focuses on collaboration and teamwork.

Organizational Life Cycle (additional details)

• Each stage has associated crises; organizations must deal with these to successfully move to the next stage, such as a need for leadership or revitalization.

Organizational Characteristics During the Life Cycle

• Entrepreneurial: Nonbureaucratic, informal, one-person show; emphasis on survival, individualistic top management style.
• Collectivity: Pre-bureaucratic, some procedures, personal and paternalistic; emphasis on personal contribution, entrepreneurial top management style.
• Formalization: Bureaucratic, formal procedures; impersonal, formalized systems; emphasis on growth, internal stability, delegating with control.
• Elaboration: Bureaucratic, multiple product lines; extensive, tailored to product and functional department, or departments, reputation, team approach; emphasis on delegation and control, team approach, corporate top management.

What is Bureaucracy?

• A system for organizing, often thought to be the most efficient and also a threat to personal liberties.
• Bureaucracies provide many advantages over systems based on favoritism, etc.
• However, increased size often increases impersonal, bureaucratic characteristics.

Weber's Dimensions of Bureaucracy

• Written communications/records.
• Rules and procedures.
• Specialization and division of labor.
• Separate position from position-holder.
• Technically qualified personnel.
• Hierarchy of authority.
• Clear chain of command.

Size and Structural Control

• Organization size significantly affects structural design.
• Larger organizations tend to have formalization, centralization, and higher personnel ratios (clerical and professional support staff)

Percentage of Personnel Allocated to Administrative and Support Activities

• As organizations grow larger, the percentage of administrative and support staff increases.

Bureaucracy in a Changing World

• Bureaucracy works best in stable industrial-age environments. Today, it often leads to inflexibility.
• Organisations are using temporary systems and innovative structural design solutions to overcome bureaucratic inefficiency in dynamic environments.

Other Approaches to Busting Bureaucracy

• Cut layers of the hierarchy, reduce headquarters staff.
• Give lower-level employees more decision-making freedom.
• Leverage employee professionalism (formal training and experience).
• Provide ongoing employee training.

Bureaucracy and Other Forms of Control

• William Ouchi suggested three control strategies:
• Bureaucratic: Rational-legal, traditional, charismatic authority.
• Market: Prices, competition, and exchange relationships.
• Clan: Tradition, shared values, and beliefs; trust.
• All three types may exist simultaneously in an organization.

Organizational Decline

• Every organization experiences periods of temporary decline.
• Decline is a substantial, sustained decrease in an organization's resources, caused by atrophy, vulnerability, or environmental decline/competition.

A Model of Decline Stages

• A five-stage model of organizational decline leading to dissolution:
• Blinded stage.
• Inaction stage.
• Faulty action stage (downsizing).
• Crisis stage.
• Dissolution stage.

Dual-purpose (hybrid) Organizations

• Hybrid organizations pursue both profit and social missions within a single organization.
• Facing the risk of mission drift, socially responsible organizations are creating both social and financial value as part of their core business.

Organizational Approaches for Societal Benefit

• Benefit corporation: A for-profit entity with a charter legally responsible for positive social/environmental goals, in addition to profit-seeking.
• B Corporation: A private certification based on accountability and transparency in social environmental performance.
• L3C: A legal structure in some U.S. states that allows for investments in socially responsible enterprises (for-profit).
• Shared Value Approach: Business practices that increase competitiveness while contributing to positive economic/social impact in the community.
• Bottom of the pyramid (BOP) ventures: Corporate approaches to serve populations with lower purchasing power.
• Conscious capitalism: A concern for the social and environmental impact of products/services.
• Social entrepreneurship: Focus on founding a profit-seeking business to tackle societal issues.
• Social enterprise: An established business with goals of mitigating societal issues and making a profit.

Facing the Challenge

• Logics, or personal beliefs, values, and preferences, of employees are important.
• Within hybrid organizations, commercial and social welfare logics often play a role.

Combining Culture and Performance

• Quadrant A: High performance, low cultural values.
• Quadrant B: High performance, high cultural values.
• Quadrant C: Low performance, low cultural values.
• Quadrant D: Low performance, high cultural values.

The Cultural Focus of Control Systems

• Managers consider control of the overall organization and of specific departments, teams, and individuals.
• Many organizations are moving toward decentralized control rather than hierarchical control.

Hierarchical and Decentralized Control

• Hierarchical: Assumes people are incapable and need close control; uses detailed rules and procedures; often emphasizes extrinsic rewards.
• Decentralized: Assumes people are capable and committed to the organization; values shared values; relies on self-control, and socialization; emphasizes intrinsic rewards.

Ethics & Ethical Values

• Ethical standards often concern what actions and behaviors are right or wrong (but not always illegal).
• Many factors, like organizational environment, shape personal ethical standards.

Sources of Individual Ethical Principles and Actions

• History
• Religion/philosophy.
• Geographic environment/nationality/culture
• Local environment, including organizations, demographics, and family/clan structures.

Relationship Between the Rule of Law and Ethical Standards

• Legal standards and ethical standards often share overlapping areas but can diverge.
• Ethical decisions sometimes represent dilemmas that exceed legal or organizational precedent or guidelines.

Organizational Ethics

• Guiding principles for managing behaviors considered right or wrong.
• Differ from legal standards as they apply to practices that are not necessarily illegal.

Source of Ethical Values in Organizations

• Personal ethics.
• Organizational culture.
• Organizational systems (e.g., formal codes).
• External stakeholder expectations (e.g., regulators, community interests).

Formal Structure and Systems for Building an Ethical Organization

• Formal structures (e.g., ethics committee, chief ethics officer).
• Disclosure mechanisms (e.g., ethics hotline).
• Codes of ethics.
• Training programs.

Corporate Culture and Ethics in a Global Environment

• The global environment creates unique ethical challenges because of cultural diversity.
• Essential to establish a shared sense of community and a global culture rather than relying on national values.
• Managers need to consider broader ethical perspectives.
• Social audits help track and report ethical, social, and environmental impacts.

Innovation and Change

• Today's organizations must innovate and change to survive as the environment becomes more complex and competitive.
• Major forces driving change include: technology; global market integration; maturation of domestic markets; globalization.

Three Types of Change and Innovation

• Incremental: Continual progressions that maintain the organization's equilibrium, typically focusing on one part of the organization.
• Disruptive: Fundamental change that transforms the entire organization; typically involves creating new structures and new processes.

Stages of Disruptive Innovation

• Stage 1: A new technology or product emerges on a small scale, posing a threat to established companies.
• Stage 2: Established companies often either fail to recognize or ignore the threat.
• Stage 3: The new threat gains critical mass, disrupting the old business model.

Incremental versus Radical Change

• Incremental change: Continual progressions that maintain general equilibrium.
• Radical change: A fundamental transformation of the entire organization, requiring new structures and processes.

Strategic Types of Innovation

• Technology: Changes in the production process.
• Product/service: Introduction of new product lines or adaptations.
• Strategy/structure: Changes in structure, strategy, reward systems, labor relations, coordination devices.
• Cultural: Changes in the values, attitudes, beliefs, abilities, and behaviors of employees.

Elements for Successful Change

1. Ideas.
2. Need.
3. Adoption.
4. Implementation.
5. Resources.

The Bottom-Up Approach

• Companies can encourage innovation by implementing bottom-up idea flow systems and encouraging ideas from those with daily contact with the customers.

Techniques for Encouraging Technology Change

• Switching structures to be more organic as needed for ideas.
• Creative departments, including incubators, to generate changes for other departments.
• Developing venture teams (e.g., skunkworks).
• Corporate intrapreneurship that implements internal entrepreneurial spirit.

New Products & Services

• High failure rates for new products & services.
• Innovating firms need to better understand customers and use technology effectively.
• Horizontal coordination is essential to support cross-departmental collaboration in innovation initiatives.

Horizontal Coordination Model for New Product Innovations

• A model that facilitates cross-departmental collaboration on product innovation.
• Coordination is critical to success.

Open Innovation & Crowdsourcing

• Open innovation extends the search for and commercialization of new products beyond the traditional boundaries of the organization and its industry.
• Crowdsourcing involves soliciting ideas, services, and information from online volunteers rather than depending on internal employees only.

Achieving Competitive Advantage: The Need for Speed

• Speed in new product/service development is a key competitive advantage.
• A key point of innovation is having people collaborate simultaneously on projects rather than in sequence.
• Global teams are often used so new product/service development fulfills diverse market needs.

Strategy & Structure Change

• The dual-core approach has two key parts:
• Administrative/management changes related to the organization's strategy and structure.
• Technical changes related to the organization's offerings and how they are delivered.

Dual-Core Approach to Organization Innovation

• Innovating requires a dual approach, using both top-down (strategic) and bottom-up (technical) changes.

Organization Design for Implementing Management (Administrative) Innovation

• Mechanistic structures, increased size, bureaucracy, formalized procedures, and centralization are often common in organizations that successfully adopted many administrative changes.

Culture Innovation

• Changing organizational culture often involves changes to how the organization operates.
• Employee commitment and empowerment, and stronger bonds between the company and customers, are important.

Organization Development

• OD is a method of quickly bringing about culture change. It emphasizes human development.
• Techniques of OD include large-group interventions, team building, and interdepartmental activities.

Leadership for Change

• Transformational leadership is essential for successfully implementing changes.
• Preparing employees for change by managing resistance, fostering acceptance, and maintaining commitment are critical to effective leadership.

The Change Curve

• A model depicting the expected ups and downs individuals go through while adapting to significant organizational change.

Barriers to Change

• Excessive focus on costs.
• Failure to perceive benefits.
• Lack of coordination/cooperation.
• Uncertainty avoidance.
• Fear of loss.

Leadership for Change: Techniques for Implementation and Resistance

Techniques for implementing change: establishing urgency, developing a coalition, creating a vision, developing strategies and action plans. Techniques for overcoming resistance: top management support, user involvement and participation, alignment of change with user needs, communications, and generating psychological safety.

Test your knowledge on the intersection of profit and social missions in hybrid organizations. This quiz covers key concepts like Benefit Corporations, the Shared Value Approach, corporate social responsibility, and various Sustainable Development Goals. Challenge yourself and deepen your understanding of social impact and business practices.