Privatization the creation of markets for welfare goods and public services has developed to major reform trend in European welfare states. As a result, public goods and services are increasingly delivered by private for-profit providers these days.
From the perspective of private providers the entry into these new markets is not an easy one. Welfare markets are characterized by complex governance constellations and hybrid accountability relations combining market accountability with political, administrative, professional, and social accountability. Even though marketization has become a major trend in European welfare state policy, markets for welfare goods and services are clearly framed as a public policy which is highly regulated. Thus, private providers are operating on the boundary between the for-profit and non-profit world and are embedded in differing institutional environments. They have multiple stakeholders and are confronted with competing and very often contradicting external expectations.
The paper investigates how these organizations cope with such a situation. Possible strategies can be passive or active. The former aims at dealing with the status quo by a strategy of defense or adaptation. In contrast, active strategies seek to shape or alter the situation through a strategy of redefining the organization’s accountability relationships.
The paper contributes to a better understanding of organizational action in hybrid environments. While most of the literature addressing hybridity of accountability constellations in organizational fields has thus far focused on the design of the institutional arrangements, there has been little research yet on how the institutions of accountability are in fact implemented, maintained and redefined over time. In terms of theory the paper refers to the literature on organizational institutionalism. In terms of research design the paper is based on a case study approach, taking major privatization processes of public policies in Germany as examples.
