Managing the Degree of Hybridity: The Evolutionary Process of the Embeddedness of Subordinate Logic and Balanced Hybridization in State-owned Development Finance Institutions

This article explores the complex evolution of balanced hybridization in a state-owned development finance institution with a multifaceted mandate encompassing environmental and social impact, revenue generation, and national policy implementation. Through a single case study of a European national DFI, longitudinal data is analyzed from inception to present to investigate shifts in hybridity and organizational responses. Findings reveal that when a development logic as the subordinate logic gains prominence due to external institutional demands, the initial organizational response leans against the subordinate logic such as compromise or manipulation. However, as the subordinate logic gradually attains acceptance within the organization, the organization shifts towards a positive stance, aiming for a balanced hybridization. The resulting organizational identity reflects this equilibrium, showcasing a dynamic interplay between logics at field and organizational levels. The research offers novel insights into the mechanisms of change within hybrid organizations, particularly those that seek to enhance their positive socio-environmental impact, shedding light on how these entities adapt and thrive in an ever-evolving context.