Serving Multiple Masters: The role of micro-foundations of dynamic capabilities in addressing tensions in for-profit hybrid organizations

Abstract

Regular for-profit companies might claim social and environmental goals, beyond their primary economic objectives, but sustainability-driven for-profit hybrids explicitly design and implement their organizational activities to pursue social, environmental and economic goals equivalently, which typically generates tensions, inherent to their hybrid nature. The ability to address these tensions is key to these organizations’ success, yet the manner in which they do so remains poorly understood. In this case-based qualitative study, the authors explicate how specific individual and collective practices contribute continuously to alleviating hybridity-related tensions among for-profit hybrids and allow them to achieve success. With a micro-foundational perspective on for-profit hybrids’ dynamic capabilities, this study’s findings identify four central, dynamic capabilities of for-profit hybrids, supported by respective sets of micro-foundations. Nine of these micro-foundations contribute specifically to addressing central tensions, to different extents. This study thus highlights how for-profit hybrids embrace hybridity-related tensions to foster the creation of sustainable value.