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Social Business Hybrids: Demand Externalities, Competitive Advantage, and Growth Through Diversification

Author

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  • Andrea Fosfuri

    (Department of Management and Technology, Bocconi University, 20136 Milan, Italy)

  • Marco S. Giarratana

    (Department of Strategy, IE Business School, 28006 Madrid, Spain)

  • Esther Roca

    (Department of Management and Technology, Bocconi University, 20136 Milan, Italy)

Abstract

Organization scholars have recently studied the internal challenges and opportunities faced by companies that combine business and social logics (i.e., social business hybrids). By adopting a demand-side perspective, this paper addresses the implications of hybridity for strategic choices with products and businesses by focusing on the role of social business hybrids’ customers. In the conceptual framework, social identity theory explains how hybridity generates both positive and negative demand-side externalities. Thus, hybridity can be a source of competitive advantage in the marketplace, but also create hurdles to firms’ ability to scale up their business. Diversification represents a potential choice that simultaneously generates growth, preserves hybridity, and avoids negative demand-side externalities. This paper analyzes the optimal type, timing, and scope of such diversification.

Suggested Citation

  • Andrea Fosfuri & Marco S. Giarratana & Esther Roca, 2016. "Social Business Hybrids: Demand Externalities, Competitive Advantage, and Growth Through Diversification," Organization Science, INFORMS, vol. 27(5), pages 1275-1289, October.
    • Handle: RePEc:inm:ororsc:v:27:y:2016:i:5:p:1275-1289
    DOI: 10.1287/orsc.2016.1080
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