Hybrid Governance, Organisations and Society

Value Creation Perspectives

Jarmo Vakkuri, Jan-Erik Johanson, Jarmo Vakkuri, Jan-Erik Johanson

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000208320
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The era of hybrid governance is here. More and more organizations occupy a position between public and private ownership. And value is created not through business or public interests alone, but through distinct forms of hybrid governance. National governments are looking to transform their administrative systems to become more business driven. Likewise, private enterprises are seeing value gains in promoting public interest in their corporate social responsibility programs.

But how can we conceptualize, evaluate and measure the value and performance of hybrid governance and organizations? This book offers a comprehensive overview of how hybrids produce value. It explores the drivers, obstacles and complications for value creation in different hybrid contexts: state-owned enterprises, urban policy-making, universities and non-profits from around the world. The authors address several types of value contents, for instance financial, social and public value. Furthermore, the book provides a novel way of understanding multiple forms of doing value in hybrid settings. The book explains mixing, compromising and legitimising as important mechanisms of value creation.

Aimed at researchers and students of public management, public administration, business management, corporate social responsibility and governance, this book provides a theoretical, conceptual and empirical understanding of value creation in hybrid organizations. It is also an invaluable overview of performance evaluation and measurement systems and practices in hybrid organizations and governance.

Part I
Muddling through value creation in evolving society

1 Value creation among hybrids

Jarmo Vakkuri and Jan-Erik Johanson

The aim of the chapter

Irrespective of its significant impact on organising societal activities, the valuation of economic and social action is a quagmire. Among other things, it depends on the perspective we take on social and economic activities. It has become commonplace to refer to the tension between financial and social values, where “financial” value is associated with calculable forms of worth resulting from the processes of market exchange and use (Lepak et al. 2007) and where “social” value is a bricolage of service impacts on different stakeholders and constituencies within society (Stark 2009; Domenico et al. 2010; Mazzucato 2018). In the public administration literature, the notion of public value (or values) has been conceived to describe value creation in the public sphere as something that cannot be encapsulated in market transactions and their residuals (Moore 1995; Hartley et al. 2017).

It appears complicated to link value creation mechanisms to the institutional contexts where value is created and enacted. This chapter fills this research gap by providing a theoretico-conceptual account of the dissonance of value creation in the context of hybridity. By “hybridity” we refer to the interface of public, private and civil society through distinct modes of ownership, parallel but competing institutional logics, a diverse funding base and various forms of social and institutional control (Billis 2010; Johanson and Vakkuri 2017). We contend that there is a significant lack of theoretical, conceptual and empirical understanding of value creation in the context of hybridity and of the ways in which the dissonant characteristics of value are conceptualised (Stark 2009; Jagd 2011), measured (Nicholls 2009), created and captured (Mazzucato 2015), blended (Emerson 2003) and shared (Porter and Kramer 2011). We aim to improve the understanding of the plethora of value concepts and value creation mechanisms in the context of hybridity, where value has a mixed, polysemic and ambiguous character and where institutions, organisations and networks of actors may provide several categories of value simultaneously: value for society, taxpayers and the public, as well as value for customers and shareholders (cf. Witesman and Walters 2015). The chapter draws from previous interdisciplinary research and theoretical thinking, and it uses empirical findings from illustrative case studies for argumentation.

The chapter is structured as follows: First, we provide basic conceptualisations of value, values and value creation in society. Our aim is to provide a tentative synthesis of the mechanisms of “doing value” in society. Second, we illustrate the context of hybridity and discuss how hybridity is linked with value creation. The final section of the chapter presents the conclusions.

Value(s) and value creation: what are we talking about?

Fundamentally, the puzzle of value creation is to define what is valuable to human beings, institutions and societies. In terms of its political, institutional and even practical implications, the conceptualisation of value, directly or indirectly, precludes the “rationality” and “usefulness” of social activities. Depicting something as “valuable” makes it preferable to alternative choices of resource allocation, attention directing and political action.

Value may not be one single thing, service or good, which is why we often tend to address value in both the singular and plural forms (Jørgensen and Bozeman 2007; Meynhardt 2009). When we talk about one single value, we often end up having discussions on whether anything can be transformed into monetary value or wealth, or whether we should focus on more elaborate and nuanced conceptualisations of value (Boltanski and Thévenot 2006; Mazzucato 2018).

Values are, by definition, contested concepts (van der Wal et al. 2006, 317), which is why value definitions cannot be monopolised by any discipline or academic tribe. Instead, discussions of value have been predominant in several disciplinary traditions, originally and most notably in moral philosophy and the ethical reflections of the Greeks, as well as the incredibly rich variety of subsequent discussions on how to define “right” or “wrong” and “good” or “bad” and how to organise societal activities based on those assumptions and principles (Hardin 1988; Elster 1989; Moore and Grandy 2017).

In social life, values may be treated as the outcomes of social interaction and communication, where something is valuable with respect to the context of interaction. According to Stark (2011), those contexts of interaction may be associated with economic exchange and monetary valuations, but not necessarily. They may also be related to non-market orders of worth that people hold dear and consider valuable in their lives. Stark offers three different modes for such interaction. First, based on the Marshallian scheme of economic equilibrium, we may use prices as a system of balancing the accounts of agents. Second, we may use prizes of competitions and contests to indicate the value of social activities. Modern social and institutional life is becoming rife with ratings, rankings and tests of different types. Finally, we may praise activities and actors when they express imaginative performance – that is, when they are able to inspire, move or amaze us (Dewey 1939; Stark 2011). Moreover, the “worlds” of value constellations may include different types of value hierarchies where some things have intrinsic value, as they are regarded as goals or ends to be achieved, and others have extrinsic value – that is, they serve as a means to higher ends (Boltanski and Thévenot 2006; van der Wal et al. 2006; Gale 2019).

In economic and managerial thought, it has become common to conceptualise value through exchange and use. Lepak et al. (2007) described use value as referring to specific characteristics of a new task or service whose value is determined by users with respect to their expectations. Value materialises in the utilisation mechanisms of a given commodity or task. Value in exchange is intrinsically embedded in the market- and transaction-driven systems of societies. Here, the idea of exchange refers to the monetised form of value that manifests itself in the process of transaction and exchange. This can be observed from the “seller” side – the recipient of the monetary value – or from the “purchaser” side – the investor in the transaction process. This thinking yields several interpretations (Mazzucato 2015, 2018).

The public administration literature puts forward the idea that one should talk about public value as something that has a life of its own. Hartley et al. (2017) explored the concept of public value in the following ways: (1) as contributions to the “public sphere” (cf. Meynhardt 2009), (2) as value addition through different institutional arrangements and (3) as the strategic heuristics of the triangle approach proposed by Moore (1995). There have been systematic attempts to conceptualise public value as related not only to government activities but also to different types and levels of contributions to the public sphere (Jørgensen and Bozeman 2007; Meynhardt 2009; Osborne et al. 2016; Bozeman 2019). If one loosens the assumption that value is calculable, then the list of values tends to become longer. For that purpose, an inventory is needed. Jørgensen and Bozeman (2007) identified 72 public values with respect to seven associations: (1) the public sector’s contribution to society, (2) the transformation of interests to public decisions, (3) the relationship between public administration and politicians, (4) the link between public administration and the environment, (5) the intraorganisational aspects of public administration, (6) the behaviour of public sector employees and (7) the connection between public administration and citizens. With this extensive public value inventory, Jørgensen and Bozeman were able to identify both the set of public values and the relative proximity of different values.

Another interesting example of value constellations is the comparison of public and private sector characteristics as “judgments of worth, principles or standards which should have weight in the choice of action” (van der Wal et al. 2006, 318). Following this idea, there is a value continuum or a value panorama, where some values may be different in the public and private sectors. For instance, impartiality and obedience may be inherently predominant in the public sector, while profitability and innovativeness may be more emphasised in the business sector. On the other hand, there may be common core values, such as efficiency and transparency, that are relevant for both contexts. For example, efficiency is frequently linked with New Public Management (NPM) reforms in the government, with the assumption that efficiency is relevant due to NPM-type reforms (van der Wal et al. 2008). The common wisdom is that governments apply the efficiency principle because public organisations are being transformed into business firms. This idea omits the fact that efficiency has been one of the cornerstones of classic public administration discussion and that the problem of efficiency has been how to allocate and organise scarce resources. Efficiency is about being parsimonious (Simon and Barnard 1947), but it is both an instrumental and a moral value. Using taxpayers’ resources in an attempt to mitigate the absence of waste may also be considered a moral argument (van der Wal et al. 2006).

(Obsession with) value neutrality and value creation in society

The dissonance of value conceptualisations has several implications for society. Most importantly, it is complicated to find a coherent and conceptual, let alone evidence-based, understanding for decisions to facilitate value in society. It is easier for societies to discuss the “production” of value rather than the value itself. Such ambiguity may explain the comprehensive yet fairly biased discussion on the content of value vis-à-vis the production of value. John Dewey was one of the early scholars who observed this. He explored the ways to understand valuation, not merely as values themselves but also through the conditions that generate value (Dewey 1939). This was also a linguistic indication of the English language preferring verbs over nouns; in human thinking, a link exists between the intellectual and emotional, cognitive and affective and objective and subjective dimensions of value. As always, such dissonance may be interpreted and used differently. It may be treated not only as a limitation to palpable value definitions but also as a source of legitimisation and sometimes rhetoric manoeuvring (Stark 2009; Aspers and Beckert 2011).

There are two important methods for bridging the variety of dimensions of value. In the process of evaluation, value is assigned to a given good or service based on fairly static principles or “criteria,” as they are frequently called in contemporary evaluation research and practice. In other words, an object is evaluated based on certain sets of criteria or principles, and the process aims at assigning value to the objects based on the criteria. On the other hand, the process of valorisation reflects an assumption of more dynamic characteristics of economic activity. Valorisation is an activity that creates and increases value. While evaluation updates the value in a given good or service, valorisation is about establishing or augmenting value by doing (see Vatin 2013).

Let us consider another viewpoint regarding the connection between the form and content of value creation. This distinction is closely aligned with the historically constituted emphasis on, or obsession with, value neutrality – wertfreiheit – in the social sciences (Porter 1995, 2006). The idea is to view ends as given and define the task of the scientist as the search for optimal means for achieving those ends (Johanson and Vakkuri 2017). In neoclassical economics, the attempt to insist on value neutrality was historically regarded as pushing academic research into a mo...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• List of contributors
• Preface
• Acknowledgements
• Part I Muddling through value creation in evolving society
• Part II Mixing value forms in the context of hybridity
• Part III Compromises on value creation in hybrid settings
• Part IV Creating value through legitimisation
• Part V Value creation and beyond
• Index