According to Andrews et al. (2016), over the past 20 years, the issue of public sector performance and the ability to provide profitable and responsive services has gained significant political relevance, being a point of attention for market analysts and public policy makers. Faced with pressure from society and the need to update, the public sector has been relying on corporate governance practices, as they improve the efficiency and decision-making of public organizations, eliminating conflicts of interest (De Jesus & Dalongaro, 2018).

According to De Castro and Afonso (2018), the Brazilian public sector had a primary deficit of R$2.47 billion in 2016, which has been on a growth trajectory in recent years. The public sector constitutes a significant part of a country’s economy, and public purchases represent up to 16% of the Gross Domestic Product (GDP) of these countries. Unfortunately, this economic relevance is accompanied by political interference, non-active directors, and lack of transparency-that is, typical problems related to corporate governance. There is a lot to be done to improve the corporate governance practices of state organizations (Silva, 2018).

According to a report by the Brazilian Institute of Corporate Governance (IBGC, 2017), corporate governance practices in mixed public organizations are outdated in relation to the private sector. These movement came from an improvement in the public sector that brought public institutions-and those of the third sector-closer to market principles of efficiency, effectiveness, meritocracy, etc in addition to encouraging joint work between public and private companies, and between third sector organizations and private companies, creating a hybrid environment (Krøtel & Villadsen, 2016).

In terms of reporting the results of a Governance System (GS) - including performance, business model, and organizational strategy - Integrated Reporting (IR) is increasingly being used to provide a broad view of the organization’s capabilities to create value (Marrone & Oliva, 2020). Asserting or not whether a GS adds value to organizations has been researched for some time, and it is still not possible to reach a consensus. However, the perceived value of a GS can vary according to each stakeholder, due to several factors, such as corruption scandals, for example. The perception of value impacts and is impacted by the GS (Ford & Ihrke, 2019).

Given this context, the article seeks to answer the following research question: How to improve the IR based on gaps in the Governance System (GS) from state companies in Brazil? Thus, this paper aims to identify how to improve the IR based on gaps in the GS from state companies that have a negative impact in the results/performance’s perception of these companies.

These gaps represent attention points identified in the theory and/or during the interviews with Brazilian specialists in governance, regarding problems in the GS that impacts the results/performance’s perception of these companies. Addressing these gaps in IR will guarantee that the GS evaluation for state companies will be also improved, taking into account some aspects that are recognized as important in order to guarantee the state companies’ results/performance’s perception, if well done, or jeopardize it, if not well done. According to Gore et al. (2020) researchers into hybridity in public administration is more focused on typologies of governance considering the traditional public administration categories. This research extends this view, incorporating GS’s gaps identified in the literature and in the market, going beyond the traditional public administration, considering GS’s perception impacts in the public companies in a sustainability context represented by IR.

There is little research about IR and its use for the dissemination of information of a GS to guarantee companies sustainable results, including economic, social, and environmental (Oliveira et al., 2017; Ford & Ihrke, 2019). So, this research contributes with this discussion, suggesting improvements in the IR that will permit a better GS evaluation, based in the gaps that are perceived by academic and managerial stakeholders as relevant to guarantee the companies’ results/performance. If the IR better address these gaps, the GS of the state companies will be better evaluated in terms of perceiving contributions to sustainable state companies’ results/performance.

This paper also contributes to the academic field, showing how to execute a methodological approach defined by De Farias Filho et al. (2019), Marchisotti e Farias Filho (2022) and Marchisotti et al. (2022), that are used to identified gaps of knowledge for determined topics that consider academic and managerial perspectives.

For Menegassi and Barros (2019), the term hybrid organizations have different meanings and interpretations, according to the area of knowledge which is being researched; so, there is no single, academically widely accepted concept. According to Wood (2010), the term 'hybrid organization' first appeared in the scientific community in 2000, that is, it is a relatively recent topic of study. There are other terms associated with hybrid organizations such as “hybrid”, “hybridity” and “hybridization”. Making a metaphor with biology, organizational hybridity would be a mixture of different species, giving rise to a new one, different from those that gave rise to it; but that have characteristics of both, which came together in a specific and unique way (Walchhutter, 2017).

Arellano-Gault et al. (2013) states that there are many studies on hybrid organizations, that is, public organizations that carry out public-private partnerships or arenas of multiple interested areas, through the contexts of their interactions, interdependence, and cooperation. According to Bishop and Waring (2016), hybrid organizations are new organizations or inter-organizations that combine to meet a certain objective. An example of hybrid organizations would be partnerships between a public sector company, a private sector company, and a third sector company; each one with its work assumptions, qualities, resources, and capacities that will be united to attend to complex problems that need to be solved, for the best service of the citizen.

Initially, the focus of studies on hybridization was on public management, seeking to understand the public organizations that acted at the interface between the public sector - public demands - and the private sector - commercial demands -; such as the Public Universities that provide consultancy services to private companies in various areas of knowledge. Subsequently, studies began to consider organizations hybrid which combined characteristics of non-profit organizations - voluntarism and social value - with the characteristics of private organizations - self-interest, market focus and economic value. An example would be the US company Freddie Mac, which is a government guaranteed company| of the United States (government sponsored enterprise - GSE), which is not for profit, but provides financial services in the private market (Wood, 2010).

Santos (2018) states that, in public administration, examples of hybrid organization were government organizations that had characteristics of private companies; third sector organizations that acted in similar roles to the public sector; and private companies that operated in the production and service provision of the public sector. Hybridization followed historical evolution and impacted government, civil society, and market companies (Krøtel & Villadsen, 2016). There was a gradual influence of business logic in public administration and the third sector. At the same time, in the late 1980s and early 1990s, companies in the market were under external pressure to incorporate environmental and social issues into their business strategies - Corporate Social Responsibility. In this way, private companies were also influenced by different institutional logics from other sectors (Santos, 2018).

According to Santos (2018), despite the plurality of concepts and definitions about hybrid organizations, there are characteristics that are common to all of them: there is always the coexistence of more than one management style, purpose and mission, which in turn will generate different combinations of results, through the way they coexist within a given context (Menegassi & Barros, 2019). Hybrid organizations are organizations that incorporate different elements - activities, structures, processes, and identities - from different institutional logics, and involve two mechanisms in their formation: 1) Strategic Responses - when it faces external conflicting demands, and 2) Managerial Responses - when it faces internal conflicting demands and identity claims (Huang et al., 2017).

Laurett et al. (2018) and Santos (2018) have compiled several approaches regarding the meaning of hybrid organizations (Menegassi & Barros, 2019), namely: 1) they are organizations that have more than one characteristics of different sectors, such as private, public or social, through combined management models; 2) they are networks of collaboration and partnership between public, private, and non-profit organizations; 3) are those that unify the social mission with the organization's business structure, which combine business - profit -, environment - ​​environmental and charity - social; 4) they are organizations that share structures and practices, allowing the coexistence of values ​​and artifacts from different logics and value systems, coming from different sectors and 5) they are heterogeneous arrangements of cultures, rationalities, logics of action and ideals, which are pure and incongruous.

For Walchhutter (2017), hybrid organizations are those that have the following characteristics, which in turn give rise to domains, each with its own logic: 1) nature of ownership, 2) governance, 3) operational priorities, 4) human resources and 5) other sources of primary resources. Given the plurality of definitions, the most accepted, according to Mair et al. (2015) and Almeida (2018), is the one that considers organizational hybridism based on the understanding and presence of 4 (four) different variables: 1) Presence of multiple and conflicting objectives, due to conflicting institutional logics (intraorganizational and interorganizational); 2) Presence of different stakeholders; 3) Presence of divergent or inconsistent activities.

Bishop and Waring (2016) also highlighted the importance of micro-level interactions, which report the disagreements and conflicts related to daily work - work organization, priorities and performance -, considering this hybrid organizational context. The authors proposed a way of dealing with these conflicts, analyzing how interactions at the micro level reflect and reconstitute broader institutional tensions. It brings to light the importance of the negotiation strategies of the actors inserted in the day to day of the organization, which with the establishment of points of difference and disagreement within these relationships, provided the basis for new forms of social order to be established.

According to Emery and Giauque (2014), hybrid environments can bring out the best or worst of organizations' environments, since the principles, rules, and values ​​of different markets differ greatly from one another, and are often in conflict with each other. In this dubious environment, the agreements that the actors can negotiate among themselves are what allow them to overcome any contradictions between the different universes of reference. In the public initiative, this new way of acting by the public servant, who needs to reconcile multiple demands from society and the market, and the conflicts arising from this hybridization of the way public organizations work is the focus of what many authors call studies of 'post-bureaucracy', or 'new Weberian state', or 'new public service', or 'public value management', or 'new public governance'.

Based in the bibliographic research (theorical) and in the interviews (practical) some gaps in the GS of state companies that have a negative (or a less positive) impact in the results/performance of these companies were identified, considering that these state companies are in a hybrid environment. The relevant gaps will be explained in the sequence, in the next subtitle, as these gaps were used to compare with the IR to be able to answer the paper research’s question.

The logic of this research is inductive, as it seeks to identify and analyze the theoretical, practical, and theoretical-practical gaps in the GS of state organizations that have a negative impact in the results/performance of these companies, comparing them with the IR. Regarding the objectives, this is exploratory research (Gray, 2016). The research methodology is mixed, as it mixes quantitative and qualitative approaches, as shown in Figure 1, to broaden and deepen its understanding and corroboration on the research topic (Creswell & Clark, 2015).

Figure 1. Source: Adapted from Marchisotti et al. (2022 ) and De Farias Filho et al. (2019).

The theoretical gaps - 1^st phase of the methodology - were identified through bibliographic research, obtaining an initial mass of articles after researching the expression research (“public governance”) AND (organ* OR entit* OR corporat* OR organizat* OR “publics sector”) in the Capes Journal database. Next, there was a prioritization and analysis of selected articles through multi-criteria analysis - number of article citations (weight 0.23), first author’s index h (weight 0.13), journal classification (weight 0.22) and thematic alignment (weight 0.42), using EndNotes and Excel (Treinta et al., 2014; Marchisotti & Farias Filho, 2022). Finally, 54 articles were selected that make up the 3^rd Quartile of the prioritized sample, which will undergo lexical and content analysis (Vergara, 2008; Bardin, 2016), using NVIVO, identifying the 30 most frequently used words in the articles, with later obtaining of their meaning, through 4 (four) categorization cycles, using an expression associated with the word to name the category.

The practical gaps - 2^nd phase of the methodology - were obtained through interviews with 10 specialists with an average of 15 years of experience, using the critical incident technique (CIT). They responded to a survey that presented a scenario that described a situation in which there were doubts on the part of a fictitious company about the advantages and disadvantages of GS, followed by questions that sought to understand the opinion of respondents in this regard, as well as to identify the factors of success and failure of a GS and what would be the ideal GS for the interviewees. This survey was reviewed by three researchers with experience in CIT and by an expert in the GS topic. The interviews were transcribed, and their content analyzed, after four cycles of categorization using NVIVO as well (Vergara, 2008; Bardin, 2016).

The theoretical-practical gaps-3^rd phase of the methodology-were identified as those that are present both in theory and in practice and were obtained by comparing the categories found in the application of the 1^st phase of the methodology with the 2^nd phase, according to the analysis of their meaning. Thus, the categories previously created were compared and those from theory that had the same meaning as those from the interviews, which reported the same concern or problem, were considered as common and classified as theoretical-practical gaps, representing problems converging between theory and practice (Gray, 2016).

Finally, to identify what should be adjusted in the IR to improve it, based on gaps in GS from state companies in Brazil, comparative and content analysis methods were used. The objective is to identify similarities and differences between the most relevant theoretical and practical gaps, and all other theoretical-practical gaps with the IR - universe of analysis. It was compared 9 (nine) gaps - categories that define the dimensions to be analyzed - with the content of the IR 4B content elements - direct assessment - and the 6 IR capitals - indirect assessment, as shown in Figure 2. Thus, it was possible to identify the points of convergence and divergence between the gaps in GS and the IR (Prieto et al., 2009; Balestro et al., 2007; Bardin, 2016), that could orient what could be improved in the IR.

Figure 2. Source: Authors

In this way, it is possible to identify the possible impact of each model variable on the IR, directly and indirectly, enabling a better understanding of what needs to be done in the Brazilian public organization so that its SG is focused on results. In addition, it enables greater visibility of the contributions of the SG to the results of Brazilian public companies, so that they are better seen, disclosed and evaluated by different stakeholders, increasing the perception of value of the SG.

From the analysis of the results, it was possible to meet the research objective - identify how to improve the IR based on gaps in the Governance System from state companies in Brazil that have a negative (ou less positive) impact in the results/performance’s perception of these companies. It was also possible to identify that the IR could be adjusted, from the perspective of GS’s gaps, so that it is possible to better assess and show, directly and indirectly, the contribution of the GS to the results/performance of state organizations in the face of different interested parts, considering the hybrid context.

By comparing the theoretical and practical gaps, it was possible to identify the theoretical-practical gaps, which added to the main theoretical and practical gap, led to the generation of a model that answers the research question, which is composed of the following variables: Harmful political influence, Bad project management, GS not focused on results, Inadequate People Management, Organizational Culture not aligned with the GS, Inadequate Organizational Structure, Bureaucratic and Complex Processes, Conflicts in Cooperation and Partnerships - organizational hybridisms, and Unbalanced Controls. It can be seen, therefore, that the dynamics of the interaction between management and governance are mutually impacting, for better or for worse, on the perception of GS value.

It was identified that the IR indirectly reflects the GS’s gaps in at least one of its capitals. Considering the direct impact of the variables on the assessment of the GS from the IR perspective, it was identified some gaps that could be better addressed in the IR - Unbalanced controls, GS not focused on results, Inadequate People Management and Bureaucratic and Complex Processes -, as despite being partially reflected in the RI, their assessment could be broadly incorporated. There is also some GS´s gaps that were totally ignored in the IR’s direct assessment of the GS - harmful political influence, conflicts in partnerships/cooperation, and project governance. Thus, it is suggested that such elements could be more clearly incorporated into the direct assessment of the GS by the IR.

A limitation of this research involves the use of content analysis and potential biases and personal limitations of researchers in their decisions and analyses, which may interfere with the research results. Another identified limitation is the fact that the bibliographic research was carried out only on the international theoretical framework, which eventually failed to consider national contributions that may be relevant to the studied public environment.

It is noticed that the article contributes academically, as it allows the identification of possible research problems, which can later be better detailed and worked on by researchers. From a managerial point of view, the work adds value to professionals who work in the GS area, in their respective organizations. Knowledge about practical gaps makes managers able to visualize and subsequently work with their employees to mitigate such gaps, improving the governance of state organizations and their performance.

It was possible to infer a relationship between the different gaps, which opens the possibility of generating hypotheses for proposing improvements in the best governance practices for state organizations, to be carried out in future studies. The model, to be tested in the field in the future, has the potential to improve the GS of state organizations, so that it is possible to create a system more suited to the reality and needs of their different stakeholders.

Thus, a special attention to the variables of the model proposed in this article, together with the adoption of IR by public organizations, has the potential to expand the understanding of different stakeholders regarding the actual situation of the organization and the direct and indirect contribution of the GS in the results/performance of public organizations, improving the perception of GS value by different stakeholders.