Hybrid organizations beyond externalities and organizational duality: The case of Chinese “People’s Mediation Committees”

The increasing complexity of real-world business environments, problem-solving, and governance has outgrown traditional organizational theories, which are based solely on negative externalities and the market-hierarchy duality. We add a social-network dimension to “market” and “hierarchy” and develop an extended conception of a hybrid organizational space. We fill this two-dimensional space, the “organizational triangle”, with a more specific hybrid organizational structure. We not only consider this structure a combination of the three allocation mechanisms but also integrate multiple and heterogeneous entities into that triangle, i.e., firms, local public-private networks, and state agencies (e.g., courts). This entails multiple and diverse interrelations, objectives, values, and behaviors. In joint conflict-solving, entities will have to adapt to each other, and often to adopt principles of other entities, implementing the hybridity of the system within their own organization, decision-making, and learning of new emerging social institutions. This is investigated in case studies of Chinese non-governmental local “People’s Mediation Committees”. These function as hubs that, with their conflict-settling arrangements, link the agents in new ways and through new informal institutions to be learned. They also use specific explicit and implicit contracts, complementing hierarchical, market, and network contracting. Such more comprehensive hybridity may help advance organizational theories in economics and management studies.