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Oppositional Logics and the Antecedents of Hybridization: A Country-Level Study of the Diffusion of Islamic Banking Windows, 1975-2017

Journal Contribution - Journal Article

Little is known about when and where hybrid organizations diffuse. We argue that neo-institutional perspectives, which stress the constraining role of market categories and institutional logics, have to be complemented with demand-side perspectives that stress the enabling force of economic incentives to explain the origins of hybrids. We develop theory to predict the country-level diffusion of hybrid forms in Islamic banking in the 1975-2017 period, during which many conventional banks invaded the domain of Islamic banking by starting to sell Islamic banking services, or so-called "Islamic windows." Our findings underscore the relevance of simultaneously studying the impact of constraining and enabling forces. Consistent with neo-institutional theory, we find strong evidence that a lack of constitutive legitimacy of the window form-only in countries where Muslims make up a large share of the population-and the ideological polarization of local audiences reify the ideological boundaries between the oppositional banking logics, which in turn hampers the diffusion of windows in the focal country. At the same time, however, it appears that the failure of local credit markets and country-level economic globalization, the latter even more in countries with a Muslim majority, provide potent economic incentives for the diffusion of windows. By stressing the role of utilitarian incentives and material exchange as drivers of hybridization, we bridge the gap between neo-institutional and more rationalist approaches of institutional change.
Journal: Organization science : a multidisciplinary journal dedicated to advancement of knowledge about organizations
ISSN: 1047-7039
Volume: 31
Pages: 990 - 1011
Publication year:2020
Keywords:A1 Journal article
BOF-publication weight:3
CSS-citation score:1