Green to gone? The impact of regional institutional logics on new firm survival

The study of hybrid organizations, which combine previously incompatible logics within a firm, has emerged as an area of interest for scholars interested in how new (de novo) organizations can address social and environmental problems in an economically sustainable manner. However, the survival of such ventures has not yet been systematically examined. This study examines the impact of sector density, competition from diversifying de alio firms, and regional institutional logics – regionally bound, socially constructed meaning systems that legitimize specific practices and goals – on the persistence of hybrid ventures. Drawing on a unique, multi-year panel of entrants into the green building supply industry, our results show regional economizing and ecologizing institutional logics moderate: a) the impacts of sector legitimation and competition effects, and b) the ability of de novo hybrid entrants to compete against diversifying incumbents. We find that ecologizing logics intensify legitimation and dampen competition effects, while economizing logics have the opposite influence. Consistent with prior studies, hybrid ventures in this context are largely outlasted by diversifying incumbents. However, in regions with complex institutional logics, that is where both economizing and ecologizing logics are present, we observe that hybrid entrants can achieve competitive parity with incumbents. Our study integrates research on population ecology, institutional logics, and is one of the first to examine the strategic consequences of new venture hybridity.