Logic Salience in Ideologically-torn Nonprofit Hybrids

Introduction

The idea of making the public sector more efficient, economical and effective (Lapsley 2008) by outsourcing its services to actors such as nonprofits makes a hybrid set-up (Battilana and Lee 2014) attractive for donors, policy-makers and practitioners (Lapsley 2009). Hybridity generally describes the combination of elements perceived as detached from each other, and has led to many debates around it covering various research topics (Schmitz and Glänzel 2016). These include debates on contracts and partnerships between markets and hierarchies (Ménard 2004); a combination of public and private elements (Emmert and Crow 1987); or a combination of economic and social features (Schmitz and Glänzel 2016). The latter hybrid defined as “nonprofit social service organizations that combine business enterprises with a social purpose mission” (Cooney 2006, 145), is of particular interest here.

Weisbrod (1998, 165) raised a dilemma that nonprofit organizations (NPOs) need to confront, namely how to balance their quest for social missions with financial constraints when additional resources are available from sources that would distort such missions. It is argued that the increasing pressure to contain costs and to generate revenue in competition with private enterprises could compromise nonprofits’ ability to pursue social missions (Weisbrod 1998) and hamper holistic tailoring of services to client needs (Almog-Bar 2018).

NPOs pursue a mission (Ebrahim, Battilana, and Mair 2014) and adopt market’s approaches and values to sustain themselves (Weisbrod 1998); more generally, this is how the social enterprises work (Eikenberry and Kluver 2004). Typically, social enterprises are organizational hybrids that experience conflicts between market and mission logics. The number of these hybrids are also increasing (Mair and Noboa 2003). While institutional scholars have attempted to understand organizational responses to mission-market conflicts (e. g. Sanders 2012; Ebrahim, Battilana, and Mair 2014; Skelcher and Smith 2015), how organizational members experience these conflicts and enact individual responses has received lesser attention (Pache and Santos 2012).

The institutional logics approach offers a theoretical basis for explaining hybridity, where the actor dimension is brought into the analysis (Skelcher and Smith 2015). An institutional logic is defined as “the socially constructed, historical patterns of material practices, assumptions, values, beliefs, and rules by which individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their social reality” (Thornton and Ocasio 1999, 804). Competing institutional demands force organizations and their actors “to devise responses that may deviate from plain compliance” (Greenwood et al. 2011; Pache and Santos 2010, 2012). This includes decisions on hiring staff, which is the focus of this paper.

Hybrid organizations operate under conditions of institutional complexity (Greenwood et al. 2011). Conflicting institutional demands may differ depending on the means or courses of action they prescribe or the ideological goals they deem legitimate (Pache and Santos 2010). Ideology is “any system of meaning that couples assertions and theories about the nature of social life with values and norms relevant to promoting or resisting change” (Oliver and Johnston 1999, 7). Ideologies are conceived as “shared, relatively coherently interrelated set of emotionally charged beliefs, values and norms that bind some people together and help them make sense of their worlds” (Trice and Beyer 1993).

Among the few studies dealing with actors’ inclination to a particular logic is Pache and Santos’ (2012) study where a model predicts individuals’ responses to competing logics as a function of their degree of adherence to each of the logics. However, it does not explicitly tackle individual logic inclination as a possible enabler of organizational responses – namely how the talk that is supposed to represent the collective is translated into action in the presence of multiple logics. To address this gap and focus more explicitly on the individual level of analysis and the role of agency, I investigate how organizational members make sense of conflicting logics and enact individual responses (Pache and Santos 2012). This paper proposes the concept of logic salience for examining how individuals respond to logics in a hybrid context. Logic salience refers here to the inclination of any individual or group of individuals towards a particular logic to which they are drawn ideologically. Inasmuch as individuals comprise organizations, the part they play is an important link in ascertaining the role of their logic salience in organizational responses. A case study of a century-old Swedish nonprofit is presented to answer the question: how does individual logic salience influence the responses of nonprofits to hybrid goals?

The findings suggest that individual logic salience can condition organizational responses, that either enable or constrain the achievement of the double mandate of market and mission logics. This gives nonprofit leaders a way to understand how their organizational constituents make sense of, and respond to, competing logics tied to whatever goals they seek to achieve. It also shows how the policy around funding allocations and outsourcing of public services affects nonprofits’ exposure to competing logics.

This paper is organized as follows: First, a conceptual framework is provided, including a review of institutional influences on hybridity, organizational challenges in managing multiple logics, and the relevance of logic salience to organizational responses and in finding coherence between what organizations do and who they are (how an organization ‘walks the talk’; Pager and Quillian 2005). Next, the research methods, findings and discussion of results are presented. The paper concludes by considering the policy relevance of the findings and a future research agenda.

Research Methods

Skyddsvärnet is a century-old nonprofit organization built on idealism with a vision to prevent crimes and social exclusion, promote advocacy and develop social work, while aiming to support individuals to increase their ability to use own resources to become functioning citizens. From Skyddsvärnet’s start in 1910, the structure and processes in care, surveillance and personal investigation of offenders were developed over a period of 30 years. This program was taken over by the Swedish state in 1942 and marked the start of the state-owned probation system. Skyddsvärnet used to be financed through public funding that ceased in the 1990s, hence the organization had to embrace the market to survive and operate in an increasingly commercial environment. Instead of government funding, Skyddsvärnet chose to sell its services for vulnerable target groups by contracting with various government institutions, competing with other nonprofit and private organizations. Although a nonprofit built on idealism, Skyddsvärnet considers itself as a self-financing ‘business’. Its services include work integration through social enterprise, accommodation for individuals with psychosocial issues, and services for former substance users, unaccompanied minor refugees, and those who are under protection program (interviews; homepage).

To stabilize its financial standing Skyddsvärnet has resorted to an aggressive commercial expansion resulting in internal changes that have included increasing professionalization in order to retain and strengthen its market position, and to which a high degree of staff turnover can be attributed. The latter paved the way for recruiting new staff with greater competencies outside the nonprofit area, namely those with business (and also public sector) backgrounds (see the section on Expansion and Staff Hiring, and Table 1). During the fieldwork for this paper, Skyddsvärnet had eighty regular employees and thirty hourly-paid employees. It was in the midst of expansion to include the Scania region in its set of service provision agreements with over a hundred municipalities in Sweden (Annual Report 2015). This expansion gathered real momentum a few years before 2015 and the intention was to continue to increase and develop its operations (Skyddsvärnet’s blog 2012). “In 2016, we will start up new activities such as Youth Housing and SAFE Botkyrka, as well as expanding family care geographically” (Director, Skyddsvärnets Annual Report 2015).

Skyddsvärnet was selected as a case of study (Eisenhardt 1989) based on the anticipated opportunity to learn (Stake 1995) how hybrid logics play out in a nonprofit context, especially when there is a pronounced acknowledgement of the logics’ comparable importance for the organization.

Findings

Figure 1 highlights and summarizes the perceptions the respondents hold when confronting market-mission logics. This gives us an idea how the logic saliences differ from each other, although there is a general acknowledgement of the importance of both logics. The data indicate that the perceived environmental threats (i. e. the public funding cessation) necessitated internal responses (i. e. professionalizing their work and adapting to the demands of the market through the expansion and recruitment decisions) resulting in some dilemmas and tensions.

Figure 1:

A selection of empirical excerpts that synthesize the different categories of individuals logic salience, along the same market-mission logics spectrum.

Discussion

Skyddsvärnet used to be financed by the state but now has to strengthen its market position through selling services to the institutions of the same government that terminated the organization’s funding. The stability of the ideographic organizational identity usually associated with mature hybrids (Battilana and Dorado 2010) is not apparent, as suggested by the ongoing tension and the tipping towards a more market-oriented identity. This trend clearly indicates Skyddsvärnet’s challenges in combining hybrid logics under one roof (Jay 2013).

Through the aggressive commercial expansion and hiring of new staff who are more business-oriented, undertaken to ensure the survival of the organization (showing logic salience A), the tension between the competing logics (see Battilana and Dorado 2010; Myers and Sacks 2003) was diminished. Instead of selective coupling of intact demands or elements from each logic as in the study of Pache and Santos (2013), this case reminds us of Battilana and Dorado’s (2010) study of microfinance organizations in Bolivia in the sense that (the preempted) tension is downplayed in one of the studied organizations through hiring personnel free from attachments to either logic. However, the current findings indicate that although the market and mission logics can be captured conceptually as yin and yang, each with equivalent importance, the essence of this metaphor is not reflected in the organizational responses. The stronger logic salience, driven by a concern to satisfy institutional pressures to ensure survival (DiMaggio and Powell 1983), takes precedence over social acceptance, status and identity related concerns.

The logics of market and mission, of idealism and money, were placed against each other creating incompatibilities (see e. g. Cornforth 2014; Sanders 2012). Generating profits and strengthening market position gained a stronger foothold causing uncertainty among the respondents as to who they are (Corley and Gioia 2004): are they ‘economists’ or ‘humanists’? Although it has been argued that the challenges of hybrids increase as the incompatibility between logics increases (Besharov and Smith 2012), the findings from Skyddsvärnet indicate that another type of challenge – of maintaining the hybrid logics – may occur when the incompatibility is acted upon based on salience to a particular logic.

Skyddsvärnet’s decision to embrace a more business orientation can be traced to the salience of key individuals towards a market logic. This deviates from the common talk on market and mission logics’ comparable importance. This kind of internal response to external forces reminds us of Pache and Santos’ (2012) argument that individual responses to competing logics are driven by their degree of adherence to each of the competing logics, which in turn is likely to drive how they may respond to competing templates for action. Here the tension was used by proponents of both the market logic and the mission logic to defend their respective positions. Interestingly, the tension is attributed to those who are mission-ideology predisposed and the decision to expand and recruit more business-oriented staff becomes an evident action that counters what these ideologically-predisposed represent. Hence a lessening of the tension is an inevitable bi-product. The logic they enact (Thornton, Ocasio, and Lounsbury 2012) deviates from the common talk and shows a pull towards one particular logic (Kraatz and Block 2008; DiMaggio and Powell 1983) which can dissolve the organization’s hybrid state. This is an important insight and the empirical study has led us to ask why the decisions taken are more business-oriented in spite of the respondents’ explicit acknowledgement of the comparable importance of both logics?

The organizational response, manifested through expansion and hiring decisions, shows that it results from consideration of both internal (e. g. general goals and values) and external (e. g. market influences) forces (Brunsson 1990), as the two key organizational concepts in the minds of organizational members (Dutton, Dukerich, and Harquail 1994). This implies that individuals’ images of work organization shape the strength of their identification with the organization, and they appraise the appeal of these conceptions by how well they preserve the continuity of their self-concept (ibid.) that is, whether they identify more with being a ‘humanist’ (a mission logic) or an ‘economist’ (a market logic). As these identification conceptions are juxtaposed, individuals develop their logic salience to encompass a particular ideology, value or identity. How individuals align themselves with certain demands over other demands (internal or external) and how they embed these demands into decisions and strategies, reveals the ideology behind the logic with which they identify the most.

As organizations confront institutional complexity whenever they deal with conflicting prescriptions from institutional logics (Greenwood et al. 2011), logic salience reveals how individuals relate to these multiple logics, and how a particular salience can contribute to making one of the logics dominant. As Greenwood et al. (2011) suggest, “multiple institutional logics remain in play after a dominant logic is settled”. Here, Logic Salience A – manifested in a commercial expansion of Skyddsvärnet and concomitant hiring decisions, led to a market logic occupying a dominant position. Logic salience also helps us understand how logics are negotiated internally by organizational members and how the outcomes of such negotiations can possibly contribute to making one of the logics dominant (see Figure 2). Specifically, in the context of institutional complexity, individuals are shaped by and shape institutional logics (Pache and Santos 2012); logic salience is conditioned by a particular ideological preference that lies within these institutional influences.

Figure 2:

Logic Salience as enabler of responses.

Illustration shows the three logic salience categories as conditioned by ideological identification. Logic salience becomes an enabler of an organization’s responses that lead towards a lopsided hybridity – namely a more market or more mission orientation, or a reinforcement of its hybridity. Inspired by Thornton, Ocasio and Lounsbury (2012: 19).

At Skyddsvärnet, the exercise of identifying logic salience categories has allowed the interpretations of logics, that is, the “interpretations of subgroups being often shaped by a single logic” (Greenwood et al. 2011) and the degree of adherence to logics, that is, the “individuals’ degree of adherence to logics that drive their responses” (Pache and Santos 2012) to come together. Logic salience is found to encompass both the individuals’ interpretations of the logics they contend with, and the degree of their inclination to any or both logics that influence their responses. Individual logic salience as an emerging concept therefore not only informs and helps explain why certain organizational responses come about, but it also identifies the salience categories in the market-mission hybrid spectrum where individuals and groups are situated.

The expectation of hybrid organizations to maintain dual mandates (Battilana and Dorado 2010) complicates the kind of institutional complexity they experience (Greenwood et al. 2011). The influence of individuals in decision-making who favour one logic over another has both theoretical and practical implications. The enabling function of individual logic salience disables the walking of the talk, reinforcing what Waldorf, Reay, and Goodrick (2013) argue that logics can simultaneously constrain and enable action (see Figure 2 for an illustration). Thus the negotiated order in hybrid organizations results from a combination of means (output legitimacy) and the ends (normative legitimacy) (Nevile 2010).

Institutional logics are ‘represented’ and given voice (Pache and Santos 2010) through the logic salience enacted by actors (Zilber 2002) and manifested in various organizational actions such as hiring and expansion decisions, and the oppositions to these actions.

While certain power positions must be occupied by individuals in order for their logic salience to shape and enact organizational responses, this does not preclude remaining organizational members^[3] from making sense of the logics that they may contend and identify with. In practical terms, regardless of structural position, all organizational members try to make sense and respond to competing logics according to their own logic salience and ideological predisposition. This realization can help non-profit leaders to understand their own and their members’ responses to competing logics.

Concluding Remarks

This case study differs from related studies (e. g. Battilana and Dorado 2010; Pache and Santos 2013) in terms of how it treats the individual responses to hybrid logics. I propose the concept of logic salience to capture agency through the adherence of actors to a particular institutional logic under conditions of organizational hybridity. Logic salience serves as an enabler whereby individuals’ salience to a particular logic conditions organizational responses. If a particular salience becomes dominant, it means that the organization becomes more market-oriented or more mission-oriented, respectively. This in effect results in a lopsidedness in hybridity – a precursor to a possible collapse of hybridity (Kraatz and Block 2008) as our case study suggests. However, if an intermediate salience becomes dominant, the hybridity is reinforced as it is anchored between the opposites that define the market-mission spectrum of hybrid logics. This is illustrated in Figure 2.

Insofar as logic salience is conditioned by individuals’ ideological preferences and identification, I anticipate that logic salience may also be used in studying management and organizational responses in any hybrid context beyond the third sector. Since the increasing marketization of NPOs is primarily due to outsourcing and funding challenges, studying the public policy and the role of NPM and NPG would further our understanding of how policies affect nonprofits.

How Skyddsvärnet responded to the competing logics exemplifies how similar nonprofit actors may respond to funding scarcity or cessation, with direct implications for both their financial survival and mission effectiveness. Nonprofits’ funding structure and their collaboration with governments in the delivery of public services contributes to the emergence of nonprofit hybrids, a development of great relevance for research, practice, and not least for policy. Specifically, this paper highlights the under-theorization of the hybrid concept within the public administration and nonprofit literatures (Skelcher and Smith 2015). Of particular relevance are the possible long-term implications as nonprofits, like Skyddsvärnet, continue to act as the public sector’s surrogate in delivering public services through contracts and tenders (Walsh 1995). What such arrangements imply for the future of nonprofit-government relations (Young 2000) is especially important as nonprofits become a dominant means for providing public services.

Failing to do what is right, and prioritizing what is commercially viable due to market pressures, can undermine nonprofits’ commitments to their core values (Young and Salamon 2012). Public policymakers need to recognize that if nonprofits are to achieve their social goals – especially where the goods they provide are socially-valuable but privately-unprofitable – as was the case with Skyddsvärnet, they need access to other sources of revenue divorced from selling private goods or responding to government demands that conflict with their missions (Weisbrod 1998,173).

The position, background and length of tenure of organizational members could each (or in combination) have a strong bearing on forming members’ logic saliences (i. e. profession-related salience) and therefore also deserve future research attention. As a single case study, this paper has only sought analytical relevance. To achieve empirical generalizability, research with multiple case studies to further develop and apply logic salience is recommended.