Global Development Institute Blog

How can organisations manage the tensions between business goals and international development goals?  These tensions often derail projects, organisations and partnerships but a newly-published paper identifies three strategies used in initiatives that sustain: combining, compromising and decoupling.

Hybrid organisations are on the rise: public-private partnerships; multi-stakeholder partnerships between private, NGO and public sector actors; and business—development hybrids that include venture philanthropists, impact investors, fair and ethical trade, cooperatives, social enterprises, and state-owned enterprises.

Using the lens of “institutional logics”, the paper analyses evidence from two organisations – one (“Alphacorp”) in Pakistan that was more business-oriented, one (Kudumbashree) in India that was more development-oriented, and both successfully involved for more than a decade with IT impact sourcing: the outsourcing of IT-related work to disadvantaged groups.

Both were business—development hybrids.  They had some business orientation towards profit goals, market legitimacy, and strategic practices of market growth and improvement in economic efficiency.  And they had some development orientation towards one or more of the SDGs, developmental legitimacy, and strategic practices of beneficiary support and improvement in mechanisms for poverty alleviation and gender equity.

Tensions between these two orientations / logics were managed in three ways:

Combining logics: amalgamating elements from the two logics.  For example, Alphacorp set up a new office in a remote area devastated by the 2005 earthquake, seeking to assist reconstruction efforts and particularly provide new livelihoods for unemployed women.  But that decision was equally driven by business logic of locating a backup office far from the political disruption being experienced in main cities of Pakistan, and with ready access to cheap labour.

Compromising logics: watering-down of values and practices of one logic because of the exigencies of the other logic.  For example, Kudumbashree softened its initial development goals in order to improve commercial viability: closing down IT units in rural areas and focusing only on urban locations; reducing the number of members in each unit drawn from below-poverty-line families from ten to five; and removing the requirement that all members should be women.

Decoupling logics: presenting externally the symbols and values of one logic while adhering internally to the other logic.  For example, Alphacorp’s developmentalism was enclaved in one small part of the organisation in Pakistan.  In all other ways – in its US headquarters, in its dealings with clients – it gave the appearance of being a standard commercial enterprise.

The paper also analyses the dynamics, sustainability and determinants of the three hybrid strategies.  It shows how the lens of institutional logics provides development studies researchers with a language, a framework and a set of insights to understand not just business—development hybrids but other types of hybrid as well.

As a practical recommendation, the paper advises open discussion of logics and their manifestations, and more deliberate consideration and selection of the hybrid strategies available.

For further details, please refer to the full paper: Understanding and managing business—development hybrids: an institutional logics case analysis –  Richard Heeks, Fareesa Malik, Sharon Morgan & Brian Nicholson

Photo by Farzad Nazifi on Unsplash

Note: This article gives the views of the author/academic featured and does not represent the views of the Global Development Institute as a whole.

 

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