Internationalizations and Performance in Hybrid Organizations

Tigist Woldetsadik Sommeno of the School of Business and Law at the University of Agder has submitted her thesis entitled «The Impact of Internationalization on Performance in Hybrid Organizations» and will defend the thesis for the PhD-degree Wednesday 15 September 2021.

She has followed  the PhD-programme at theSchool of Business and Law at the University of Agder.

Summary of the thesis by Tigist Woldetsadik Sommeno:

Internationalizations and Performance in Hybrid Organizations

Hybrid organizations, or “social enterprises” or “the fourth sector” as they are sometimes called, combine social and financial goals to tackle social causes with a sustainable business solutions (Haigh and Hoffman, 2011; Battilana and Lee, 2014).

Recently, international business scholars are describing a growing internationalization of hybrid organizations and call for more research in the area (Alon et al., 2020; Zahra et al., 2008).

The dissertation contributes to the research on the internationalization of hybrid organizations by focusing on the performance impact of three different aspects of internationalization: 1) international inception, 2) international board membership, and 3) international debt.

As an empirical base, the essays in the dissertation use secondary data  from hybrid organizations which are involved in microfinance business. Below is the summary of each essays.

The first essay extends the concept of liability of foreignness to “hybrid” organizations by closely examining the social and financial performance of foreign versus domestic hybrid organizations.

The empirical results show that the liability foreignness is apparent in the financial performance of hybrid organizations; however, not on the social performance. Instead, foreignness accounts for part of the trade-off between the two goals. The foreignness related drift towards social performance is also more apparent in institutionally weaker places. Finally, the results also highlight the role of size and tenure in mitigating the liability of being a foreign hybrid organization. Overall, the essay enriches the understanding of both international hybrid organization and the concept of liability of foreignness.

The second essay examines the performance of hybrid organizations that combine the access to information and resources of international board members with the superior organization-specific knowledge of an internally recruited CEO.

The findings indicate that the combined effect of an international board and an insider CEO augments the financial performance of an organization. This imply that hybrid organizations can potentially benefit from a corporate governance structure that includes an internally recruited CEO and international board representation. Generally, the essay enriches the argument that internationalization can be leveraged best when combined with superior organizations specific local knowledge in a hybrid organization.

The third essay examines the impact of international debt on the efficiency of hybrid organizations.

The finding show that international debt is associated with lower efficiency in hybrid organizations such as microfinance. The lower efficiency associated with international debt is more pronounced for hybrid organizations exposed to large institutional distances from their debtholders’ home country, and partially for hybrid organizations located in an institutionally weak country.

Overall, the essay connects the literature on capital market liability of foreignness (CMLOF) to the literature on hybrid organizations. In particular, the essay show that institutional distance in international debt transactions not only creates debtholders’ home bias as indicated in the CMLOF literature in the past (e.g., Gu et al., 2019; Chan et al., 2005; Lau and Yu, 2010), but also creates cost inefficiency in the borrowing organization.

Opponent ex auditorio:

The chair invites members of the public to pose questions ex auditorio in the introduction to the public defense, with deadlines. It is a prerequisite that the opponent has read the thesis. Questions can be submitted to the chair Roger Normann on e-mail roger.h.normann@uia.no