What are the lessons from nature for doing well and doing good in different environments? A hybrid perspective of microfinance and slow money

• Date: 01 November 2018
• Author: Mark Rasmussen,Priyanka Jayashankar,Arvind Ashta
• DOI: http://doi.org/10.1002/jsc.2236
• Published date: 01 November 2018

RESEARCH ARTICLE

What are the lessons from nature for doing well and doing

good in different environments? A hybrid perspective of

microfinance and slow money

Priyanka Jayashankar

1

| Arvind Ashta

2

| Mark Rasmussen

1

1

Iowa State University, Ames, Iowa

2

CEREN, EA 7477, Burgundy School of

Business, Université Bourgogne Franche-

Comté, Dijon, France

Correspondence

Priyanka Jayashankar, Iowa State University,

Ames, IA.

Email: priyanka@iastate.edu

Abstract

Ten criteria derived from the evolutionary theory allow the comparison of the characteristics of

hybrid organizations in India and the United States. The resulting taxonomy enables us to

extrapolate management lessons based on our theory building initiative. We contribute to

hybrid theory by discussing how hybrid organizations mirror nature. We extend our theoretical

framework to social enterprise theory and naturological theory. Finally, we recommend strate-

gies for hybrid organizations to enhance their resilience and balance different priorities.

1|INTRODUCTION

The linkage between biological phenomena and corporations has cap-

tured the imagination of business scholars. This is a mutation of the

evolutionary economic approach that discusses how human actions’

mirror movements of natural seasons and forces (Veblen, 1898). Paral-

lels have been drawnbetween biological ecosystems and business net-

works, wherein firms, technologies and products are mutually

dependent just as species in a biological ecosystem (Iansiti & Levien,

2004), callingfor a need for cooperation at manylevels (Nielsen, 1988).

Some scholars have endorsed a human ecological approach

(i.e., applying biological analogy to social phenomena) to inter-

organizational analysis (Astley & Fombrun, 1983; Emery & Trist, 2012)

as well as intra-organizational issues such as adaptiveness of large

organizations (O'Reilly, Harreld, & Tushman, 2009), the evolution of

strategy (Lovas & Ghoshal, 2000), and the diffusion of innovation

(O'Mahoney, 2007). Others have made a concrete suggestion to add a

green narrative to help situate management actions in the environ-

mental or evolutionary context (Starkey & Crane, 2003).

These environmental considerations can be seen as a subset of

the wider research in business and society as ecological consider-

ations are shaping society and business is expected to chip in through

corporate social responsibility (Carroll, 1979; Davis, 1973; Wood,

2010), stakeholder management (Freeman & Reed, 1983), shared

value creation (Porter & Kramer, 2011), social entrepreneurship

(Arend, 2013; Grimes, McMullen, Vogus, & Miller, 2013; Haugh &

Talwar, 2016; Johnson, 2009; Pless, Maak, & Waldman, 2012) ecopre-

neurship (Pastakia, 1998; Phillips, 2013; Schaper, 2002; York, O'Neil, &

Sarasvathy, 2016), sustainable entrepreneurship (Gibbs, 2006;

Muñoz & Dimov, 2015; Poldner, Shrivastava, & Branzei, 2015;

Shepherd & Patzelt, 2011) and corporate sustainability (Hahn, Kolk, &

Winn, 2010; Slawinski, Pinkse, Busch, & Banerjee, 2015). As a result,

there is increasing interest in hybrid organizations that have a dual

mission of doing well and doing good (Costanzo, Vurro, Foster,

Servato, & Perrini, 2014; Stevens, Moray, & Bruneel, 2015). One can

ill-afford to ignore the impact of natural phenomena such as global

warming or El Nino on businesses (Frederick, 1998) and indeed

businesses and key stakeholders are paying considerable attention to

sustainable development, in the aftermath of events such as the

British Petroleum leakage, which impinge on environmental and socie-

tal well-being (Salimath & Jones III, 2011). One question is whether

we can learn from nature and make businesses sustainable. For this,

the environment impacts the survival strategy to be pursued. For

example Pinter-Wollman et al. (2013) find that environment impacts

the networking strategies of species in different environments.

However, there is still a dearth of literature linking evolutionary the-

ory with hybrid organizations in different environments (Kibler, Fink,

Lang, & Muñoz, 2015; Pache & Chowdhury, 2012). Our work in this

area combines evolutionary theory and the survival and impact of

hybrid organizations specializing in financial inclusion in developed

and developing countries. We juxtapose organizational strategies

adopted by hybrid organizations engaged in financial inclusion in

different institutional contexts with the survival mechanisms of

JEL Classification Code: G21.

DOI: 10.1002/jsc.2236

Strategic Change. 2018;27:523–538. wileyonlinelibrary.com/journal/jsc © 2018 John Wiley & Sons, Ltd. 523

biological species and provide conceptual linkages between hybrid

organizational behavior, naturological theory, and evolutionary theory.

2|LITERATURE REVIEW

2.1 |Reconciling competing values in hybrid

organizations

Much of the contemporary literature on hybrid organizations has focused

on the competing values. For example, the following themes have been

identified by Haigh and Hoffman (2014): The underlying tensions in

hybrids, the identification of opportunities by social entrepreneurs, the

ability of social enterprises to solve societal problems, and the tendency

of hybrid organizations of becoming too managerialist.

Battilana, Sengul, Pache, and Model (2015), who have demon-

strated how staff members of hybrid organizations can coordinate

contradictory sets of activities through formal structures and

processes, have called for further studies on how hybrids sustain their

focus on their social mission while at the same time accomplish

productive operations as well as the internal and external factors

influencing social performance.

Likewise, Ebrahim,Battilana, and Mair (2014)have pointed out that

the process by which social enterprises maintain their hybridity of cre-

ating both social and economic value is an under-researched theme in

organization studies. There remaininvestigative opportunities todeter-

mine how socialenterprises, subjugate their profitmission to social mis-

sion to achieve sustainability (Dacin, Dacin, & Matear, 2010) and how

they balancetheir financial and social performance (Khavul,2010).

Doherty, Haugh, and Lyon (2014), who have examined the dual

mission and conflicting values of social enterprises, have discussed

the need for further theory building with respect to the influence of

institutional frameworks and contexts on social enterprises, the condi-

tions under which social enterprises' dual mission can be achieved and

the relationships between social enterprises and stakeholders having

competing goals.

Haigh and Hoffman (2014) posited that hybrid organizations are

adept in internalizing social and ecological systems in which they oper-

ate and also exhibit a deeper understanding of nature (for instance, by

promoting biomimicry-inspired products and services). Non etheless,

scholarshave not yet determined howhybrids are connected withsocial

and ecological systems and serendipitously mirror aspects of nature

while addressing competing values. The above research gap paves the

way for the essential thesis of our study, whereas we discuss how

diverse evolutionary phenomena are embedded in hybrid organizations.

For example, we look at the process by which hybrid organizations

select andnurture their offspring,in different institutionalcontexts.

2.2 |Advancing application of evolutionary theory

to hybrid organizations

We also build on the application of evolutionary theory to entrepre-

neurship to develop a more holistic conceptual framework of hybrid

organizations. In an evolutionary analysis of entrepreneurship, Aldrich

and Martinez (2001) have described how entrepreneurs modify their

organizations (adaptation), the circumstances leading to the success of

organizations (selection), and the imitation of successful arrangement

by other entrepreneurs (replication). There remains much scope to

conduct further evolutionary analysis of how entrepreneurs create

organizations, deploy resources, knowledge and social capital while

dealing with environmental forces and learn from feedback (Aldrich &

Martinez, 2001).

Although scholarssuch as Mendoza-Abarca, Anokhin,and Zamudio

(2015) have lenta population ecology perspectiveto compare the crea-

tion of social and commercial ventures, more in-depth, evolutionary

studies of social ventures and hybrids remain scant. We address this

gap by delving deeper into how hybrid organizations nurture enter-

prises and sociallyand ecologically mold the institutional environment.

2.3 |Competing values in naturological theory

Scholars seek to integrate biological and social phenomena to gain

better insight into the functioning of business corporations. For

instance, the naturological theory likens the corporation to a complex

adaptive system and draws a parallel between the host community

and a dense interactive network of diverse systems. Both the corpora-

tion and the community are natural systems, which co-evolve and

interact in response to biological and physical processes. Corporate-

community relations can be analyzed on the basis of complexity the-

ory, which provides insight into nonlinear systems such as business

organizations (Frederick, 1998).

Prior research in naturological theory sheds light on competing

goals such as self-survival and altruism. For example, Hill and Cassill

(2004) have applied the evolutionary concept of skew selection, which

encompasses conflicting values such as competition, cooperation, and

trickle-down sharing. Nonetheless, there is a lack of rigorous empirical

analysis on how organizations reconcile such competing values to

address societal problems across diverse economies.

When Hill (2010) applied the naturological concept in the context

of the bottom of the pyramid (BoP) market, he found that impover-

ished BoP consumers cannot fully participate in markets due to the

lack of reciprocal altruism and fairness. Hill’s work (2010) brings to

light the limitations of skew selection in BoP markets, wherein there is

no trickle-down impact. However, Hill (2010) does not elaborate in his

naturological analysis how inequity in BoP markets can be addressed.

According to Kurland and Zell (2011), ecologizing behavior occurs at

an ecosystem level, which helps perpetuate communities through

linking relationships and activities. On the other hand, economizing

behavior occurs at a firm level, whereby organizations prosper

through the efficient use of resources. Kurland and Zell (2011) have

called for further research to link organizational phenomena with

other established human ecology theories. They have pointed out that

researchers need to establish a symbiotic link between ecologizing

and economizing behavior of firms and also analyze the behavior of

key stakeholders. We fill the above literature gap by taking a closer

look at how organizations promoting financial inclusion can simulta-

neously exhibit both ecologizing and economizing behavior.

Despite the extension of evolutionary concepts to BoP markets

and utility management, there still remain several investigative

opportunities to further strengthen the links between biological and

524 JAYASHANKAR ET AL.