(Oral Bac 2014 G1-G2)

Hybrid organizations are neither old-fashioned nationalized companies, 'designed to manage big sectors of the economy, nor classic private-sector firms that sink or swim according to their own strength. Instead they are confusing entities that seem to navigate between one world/and another to suit their own purposes.

What should we make of these hybrid organizations? Their supporters have long argued that they enjoy the best of both worlds: the security of the public sector and the dynamism of the private sector. They can use their global reach to provide their home countries with the pick of the world's resources. They can borrow money at a favorable rate thanks to "implicit" government guarantees. They can use their political muscle to do better than their less well-connected rivals. The government-run oil companies not only get the best deals at home, for example. They are also protected from asset strippers.

But the Dubai debacle suggests that the best of both worlds can easily turn into the worst of both worlds. The biggest problem with hybrid companies is that they are inherently confused organizations, -tormented by all sorts of contradictory pressures. This means that their internal operations can be hard to understand and their behavior difficult to predict.

Hybrid companies are almost always politicized. This often means giving jobs to political officials: Chinese firms are so entangled with the Communist Party that people have started talking about "red entrepreneurs". But it can also mean becoming involved in power struggles. In Russia corporate decisions are often driven as much by squabbles between factions' in the Kremlin as by strategic considerations. This problem is not just confined to the emerging world: before their downfall, Fannie Mae and Freddie Mac were omnipresent forces in Washington politics, protected from criticism by their generous contributions to the politicians who regulated them.

Adapted from The Economist, December 25th, 2009

Vocabulary:

reach: portée
strippers: dépouilleurs
plunder: pillage
squabble: dispute
buffeted: secoué, frappe