The Role of Hybrid Organizations in Scaling Social Innovations in Bottom‐of‐the‐Pyramid Markets: Insights from Microfinance in India

Abstract

While social innovations that solve financial exclusion have gained increasing attention as a means of helping the poor in developing markets, little research has empirically investigated the types of organizations that drive these innovations to achieve scale. Hybrids, a type of organization that exist in between traditional organizational forms, are said to have rapidly gained prevalence, especially in bottom-of-the-pyramid markets. Some scholars claim that hybrids are largely responsible for the spread of established social innovations, yet hybrids do not constitute a homogenous group; instead each hybrid form exists on a spectrum between pure for-profit and not-for-profit organizational forms. It is important that empirical research investigates the role that various hybrid forms play in scaling established social innovations, especially under various bottom-of-the-pyramid market conditions. To this end, using two market-level outcome measures of scale achieved (prevalence and usage), the authors pursue two research objectives: to study (1) the extent to which, alternative hybrid forms (not-for-profit, quasi-profit, and for-profit hybrids) drive social innovation; and (2) the relative propensity of these hybrid forms to drive social innovation under varying bottom-of-the-pyramid market conditions, specifically varying levels of development and social diversity. By theorizing how different organizational forms act given their degree of hybridity, the authors develop and test six hypotheses using data sets on microfinance organizations in India. Accordingly, they find that (1) compared with not-for-profit and for-profit hybrids, quasi-profit hybrids have a propensity to become more prevalent and achieve greater usage in bottom-of-the-pyramid markets overall. Yet, within the spectrum of hybrid forms, (2) not-for-profit hybrids are more likely to become more prevalent and achieve greater usage in markets with lower development levels, whereas (3) for-profit hybrids are more likely to become more prevalent and achieve greater usage in markets with lower social diversity when compared with other hybrid forms.• Relative to the other hybrid organizational forms, for-profit hybrid forms are more prevalent and achieve greater usage in subnational bottom-of-the-pyramid markets with lower social diversity levels.

Social Innovation in an Interconnected World: Introduction to the Special Issue

“…In their article “The Role of Hybrid Organizations in Scaling Social Innovations in Bottom‐of‐the‐Pyramid Markets: Insights from Microfinance in India,” Vassallo, Banerjee, Prabhu, and Voola () examine three hybrid forms of organizations for social innovation. The authors empirically explore what types of hybrid organizational forms are more likely to achieve greater usage in bottom‐of‐the‐pyramid markets, especially given market heterogeneity relating to varying levels of development and social diversity.…”

“…How do these market actors balance the cost and benefits of social innovation efforts? While Vassallo et al () evaluate three types of organizations and show that each organizational form achieves greater usage under various conditions in India and Paparoidamis et al () focus on consumer responses to green products, if the cost to providers and users are taken into consideration, would their results be different? ‐Though all articles in this special issue identify the complexities of social innovation and the corresponding high effort that is needed to implement it successfully, the implicit higher costs (in terms of time, human resources, organizing, etc.) are not measured.…”

The Convergence of Sustainability and Marketing: Transforming Marketing to Respond to a New World

“…Similarly, in a public policy setting, Sachs et al (2019) have identified six SDG transformations and associated priorities. Both studies recognize the strong interdependencies across the 17 SDGs (e.g., Vassallo et al, 2019). As marketing scholars embrace RRBM principles, their work can further progress on the SDGs.…”

Social innovations and the fight against poverty: An analysis of India's first prosocial P2P lending platform

“…Battilana and Lee (2014) drew on insights from three strands of literature and conceptualised hybridity as combinations of (a) organisational identities, (b) organisational forms, and (c) institutional logics. In recent years, much of the conceptual development around the notion of hybridity has drawn on social enterprises, which confront a vivid hybridity challengeto effectively combine their business-orientation and their charity-orientation (eg, Ebrahim et al, 2014;Litrico & Besharov, 2019;McMullen, 2018;Ramus & Vaccaro, 2017;Vassallo, Prabhu, Banerjee, & Voola, 2019). Battilana and Lee's (2014) review speaks largely to this body of work and focuses on hybridization that combines business-and charity-oriented actions.…”