The Strategic Potential of Community‐Based Hybrid Models: The Case of Global Business Services in Africa

Abstract

Research Summary Firms in latecomer economies, such as Sub‐Saharan Africa, often have limited success with traditional business models. We explain why it can be more feasible to adopt a hybrid model in such a region that combines profitability with serving local communities, e.g., by promoting inclusive employment or by targeting underserved markets. Sub‐Saharan Africa supports hybrid models and social enterprises mainly through local community resources (e.g., labor, market ideas), community organizations giving access to such resources, and experience with business‐community alliances. Hybrid models can benefit from such conditions when business clients and governments support the social mission and when firms are ready to target niche rather than mainstream markets. We illustrate the business potential of hybrid enterprises based on the case of ‘impact sourcing’ in global business services in Kenya and South Africa. Managerial summary As a latecomer economy, Africa faces persistent difficulties with catching up in global markets. This study examines the strategic potential of community‐based hybrid models, which balance market profitability with social impact in local communities. Focusing on the global business services industry in Kenya and South Africa and the practice of ‘impact sourcing’ (the hiring and training of disadvantaged staff servicing business clients), we find that while regular providers struggle to compete with global peers, hybrid model adopters manage to access underutilized labor pools through community organizations, and target less competitive niche client markets. We further identify key industry‐, institutional‐, and firm‐level factors that affect hybrid model adoption. Findings have important implications for research on catch‐up processes in latecomer economies, hybrid models, and global business services. Copyright © 2016 John Wiley & Sons, Ltd.

African and Chinese Managerial Practices: A Cross-Cultural Comparison

“…These visions, although humanistic or philosophical, provide useful information for management practices in Africa and China . They contrast most of the firm theories developed in the West (profit-seeking) and emphasise the social dimension of firms (Manning, Kannothra & Wissman-Weber, 2017) . This is summarised in the famous quote by the Dalai Lama cited by Braithwaite (2002: 3) 'Learning to forgive is much more useful than merely picking up a stone and throwing it at the object of one's anger, the more so when the provocation is extreme .…”

Africa Business Research as a Laboratory for Theory-Building: Extreme Conditions, New Phenomena, and Alternative Paradigms of Social Relationships

“…While hybrid organizations have become increasingly important in various contexts, as they help address social issues when state and philanthropic approaches are limited in their ability to do so (Kickul & Lyons, 2012), in the African context, in particular so-called ‘community-based hybrids’ are on the rise. They have been defined as hybrid organizations that serve local communities but also make extensive use of community resources to serve regional or global markets with their products and services (Holt & Littlewood, 2015; Manning, Kannothra, & Wissman-Weber, 2017). Examples of this are so-called impact sourcing service providers (ISSPs), such as Craft Silicon and Digital Divide Data, that operate out of African countries and that specialize in hiring and training of staff from disadvantaged groups in society for global business services (IAOP, 2014; Rockefeller Foundation, 2013).…”

“…Examples of this are so-called impact sourcing service providers (ISSPs), such as Craft Silicon and Digital Divide Data, that operate out of African countries and that specialize in hiring and training of staff from disadvantaged groups in society for global business services (IAOP, 2014; Rockefeller Foundation, 2013). In sub-Saharan Africa, ISSPs enjoy a competitive advantage over regular outsourcing firms as they better utilize community resources, along with a sophisticated infrastructure of community support organizations, to access talent better while promoting more inclusive employment and development (Manning et al, 2017).…”

“…For example, such forms may allow – but also force – firms to align their growth and diversification strategies with community needs rather than just firm resources or market opportunities in the traditional sense (Kannothra, Manning, & Haigh, 2017). While a firm like the software producer Craft Silicon in Kenya requires different skills to target different customers for its different offerings, both its staffing strategy and its product lines may exploit the same community ties for marketing, branding and implementation (see also Manning et al, 2017). This brings both unique synergistic opportunities while also posing significant challenges.…”

Intellectual capital in East and West African social enterprises

“…In this resource‐scarce context, the pivotal role of social enterprises (SEs) emerges in both social and economic terms (Manning Kannothra, & Wissman‐Weber, 2017; Rivera‐Santos, Holt, Littlewood, & Kolk, 2015). Social enterprises are hybrid organisations since they are characterised by a balanced combination of entrepreneurial and social dimensions (Defourny & Nyssens, 2010; Rivera‐Santos et al, 2015).…”