Balancing Legitimacy in a Context of Nonprofit-Business Hybridity: The Case of the Flemish Wellbeing and Social Economy Sector

Nonprofit organizations (NPOs) hybridizing toward the market domain by adopting business practices has sparked an ever-growing debate. There is research showing a rather positive effect on organizational legitimacy. However, considering the literature discussing other performance dimensions (e.g. social effectiveness), this trend is argued to erode the prosocial underpinnings of NPOs, increasingly leaving their stakeholders wondering what distinguishes them from business enterprises. When examining these previous studies, most research only focuses on one dimension of organizational legitimacy and/or one type of stakeholder. In this study, we aim to provide a more fine-grained picture of how nonprofit-business hybridity impacts nonprofit legitimacy by adopting (a) a multi-dimensional understanding of legitimacy, and (b) a multi-stakeholder perspective. We draw on survey data from Flemish NPOs to sample two matched pairs of opposite cases, i.e. a ‘low’ and ‘high’ hybridized NPO for qualitative examination. Our findings suggest that nonprofit-business hybridity is significantly detrimental for stakeholders who are closely involved, and beneficial in the eyes of stakeholders who are more distant from the organization.