Kim Sarnoff and Shotaro Nakamura at work in the research office

Hybrid Economy

Researching into the emerging hybrid economy.

Following the failure of states, markets and charities to resolve persistent social problems, a hybrid economy is emerging in which new organisational forms and new multi-actor collaborations blend outcomes, behaviours and structures drawn from different sectors with the aim of achieving both social and financial returns. Examples of organisations and activities in this emerging economy include corporate firms that internalise social purpose, business-oriented philanthropists, private organisations that spin out of the state sector, social impact investment, and complex collaborative instruments such as social impact bonds.

These developments raise important technical, theoretical and policy questions about the ownership structures of hybrid organisations and interventions, the conditions under which they may possess a comparative advantage as a remedy for market, state and charity failures, and their relationship to government in conditions of austerity and a growing demand for services. Julian Le Grand, Jonathan Roberts and Gauri Chandra are undertaking research that explores this hybrid economy, drawing in particular upon economic and psychological theory to investigate actors’ motivations within public services and hybrid organisations. There have been three recent strands to this research.

Public services mutual and employee motivations

Newly emerging public service mutuals are employee-led organisations which contract with government to provide public services. The focus of investigation has specifically been upon the twofold motivational advantage which such organisations may carry: not only can public service mutuals align both self-interested and altruistic motivations so as to serve the public good, but also, by offering greater autonomy to public service professionals, mutuals are predicted to encourage energetic and persistent behaviours.

Crowding out of altruistic motivation

Current research investigates the phenomenon of ‘crowding out’ – the proposition that, in contradiction to standard economic theory, in certain circumstances material incentives can have a demotivating effect by displacing altruistic or other intrinsic motivations. Understanding the nature of crowding out, and hence how to maximise actors’ motivations, is an important foundation for the design of effective organisations and interventions in the field of private action for the public good.

Product [Red]: a hybrid enterprise

A small study considers Product [Red], a hybrid enterprise of consumerism and philanthropy which seeks to raise funds for interventions against HIV/AIDS in Africa. It explores the business model of the enterprise and consumer behaviours related to it.