Hybrid Organization

Most simply, a hybrid organization shares characteristics of both public and private organizations. As with most social science concepts, things become slippery after that. Interest in hybrid organizations has grown as reformers seek to bring the perceived flexibility and efficiency of private organizations into the public sphere, but concerns about the accountability of these arrangements have grown as well.

The central question in defining hybrid organizations is, What distinguishes public organizations from private organizations? There are two general approaches to this task. The first places public and private at opposite ends of a continuum and then defines the characteristics that separate them. James L. Perry and Hal G. Rainey provided a typology of hybrid organizations based on this method in 1988 that focused on three variables: (1) public or private ownership of the organization, (2) public or private funding of the organization, and (3) the means of social control—that is, whether the organization is regulated by the market or through the governmental process (polyarchy). Private organizations are privately owned and financed, and the market provides the means of social control. Public organizations are owned, financed, and controlled by a government. Hybrid organizations share characteristics of both.

Perry and Rainey identified six kinds of hybrid organizations: Government corporation, government-sponsored enterprise, regulated enterprise, governmental enterprise, state-owned enterprise, and government contractor. Government corporations, for example, are publicly owned and have a strong legal connection with the government but are funded through private sources. Government contractors, conversely, are privately owned and operate according to the market but get their funding from public sources.

The second method of defining hybrid organizations asks whether the organization is a governmental agency (defined by a statutory relationship) that is assigned some of the characteristics of private organizations, for example, increased discretion over hiring and firing, or a private organization that is provided characteristics normally associated with governmental agencies, usually the provision of a governmental service. The former are frequently called quagos or quasi-governmental organizations, and the latter called quangos or quasi-nongovernmental organizations.

Interest in hybrid organizations has grown as reformers have searched for ways to improve governmental performance, but their use by governments raises a number of questions. Hybrid organizations, and privatization more generally, appear to offer the flexibility and efficiency of the market with the resources and (at least implicit) coercive power of a government, thus delivering better performance than traditional governmental agencies. One tradeoff for this flexibility, however, is public accountability. To whom are these organizations responsible? Their shareholders? Their governmental overseers? The public at large? Additionally, many governmental agencies have to meet legal requirements, such as equitable treatment of applicants, that private organizations do not. At what point should these legal requirements give way to management flexibility?