Problemistic search and hybrid organizations: multiple sources of performance feedback in diversifications by corporate foundations in Korea

Abstract

In this study, we view corporate foundations as a unique form of hybrid organizations that embody both for-profit and nonprofit institutional logics and examine how the coexistence of the multiple logics affects their diversification decisions. Based on the problemistic search argument of the organizational learning literature, we posit that diversifications by a corporate philanthropic foundation are affected by negative performance feedback both at for-profit level (e.g., parent company's economic performance) and at nonprofit level (e.g., legitimacy of foundation's philanthropic activities). The results of our empirical analysis of the data of 157 Korean corporate philanthropic foundations for a twenty-year period (1990-2009) support these predictions. We also find that the effects of performance feedback at nonprofit level on diversification vary depending on whether a parent corporation is visibly connected to its foundations via name. General implications on hybrid organizations and corporate philanthropy are discussed.