Navigating Paradox as a Mechanism of Change and Innovation in Hybrid Organizations

Abstract

Hybrid organizations combine institutional logics in their efforts to generate innovative solutions to complex problems. They face unintended consequences of that institutional complexity, however, which may impede their efforts. Past scholars have emphasized conflicting external demands, and competing internal claims on organizational identity. Data from an in-depth field study of the public-private Cambridge Energy Alliance suggest another consequence: paradoxes of performing (Smith & Lewis, 2011) that generate ambiguity about whether certain organizational outcomes represent success or failure. This article develops a process model of navigating such paradoxes: in sensemaking about paradoxical outcomes, actors grapple with definition of success and can transform the organizational logic. The result can be oscillation among logics, or novel synthesis between them when outside perspectives enable a clearer view of the paradox. Hybrid organizations' capacity for innovation depends in part on the results of this change process.