Hybrid organisations, which must accommodate the interests of multiple principals if they are to survive, take many forms. Intra-sector hybrids, either with only public sector principals, such as the Port Authority of New York and New Jersey, or with only private sector principals, such as social enterprises that seek to promote both social purpose and profitability, typically face tensions between goals that complicate the tasks of managers, sometimes resulting in the dominance of the goal of one, or one kind of, principal to resolve the tension. The potential for goal tension is more acute in cross-sector hybrid organisations that have both public and private principals (public?private hybrids) especially when the private principal seeks to maximise profit and profit maximisation is not the primary public purpose of the hybrid. Based on the fractionalised property rights (FPR) framework we describe below, we argue that the extent to which the potential for dysfunctional conflict materialises depends on the specific characteristics of the property rights that define the claims and duties of the organisation’s principals and managers (Vining and Weimer, 2016). Further, we present a diagnostic FPR framework based on what we consider to be the six most important dimensions of organisational property rights. The unpacking of the FPR framework helps to explain why certain kinds of public?private hybrids are more or less prone to dysfunction, and consequently the framework may assist organisational designers in reducing the chances of dysfunction within a category of hybrids. If public?private hybrids are particularly vulnerable to goal tensions, why have they become so common? There are several reasons why public?private hybrids are especially attractive to legislative and bureaucratic organisational designers. From a normative perspective, public?private hybrids offer the pleasant prospect of marrying public purposes to private sector efficiency and strategic flexibility (Eckel and Vining, 1985; Pargendler et al., 2013). They also offer political benefits. By employing the private sector, legislative and executive actors can obscure responsibility for performance outcomes, while implying that they are dragging reluctant bureaucrats towards more ‘business-like’ behaviour. This message is attractive to right-of-centre politicians who are critical of the Leviathan, but who still wish to provide services to voters.
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