Ideological Purity vs. Hybridization Trade-Off: When Do Islamic Banks Hire Managers from Conventional Banking?

Organizations that compete in institutional environments in which oppositional logics compete for dominance face a risk‐return trade‐off between maintaining ideological purity versus pragmatism by borrowing template elements from the rival ideology. Deviating from ideological purity might improve a firm’s competitive strength, however, at the same time, it might also undermine its very identity and legitimacy. Although such decisions are of strategic importance, research about why, how, and where these trade‐offs are made is still limited. We develop the argument that organizations will be more likely to deviate from ideological purity when the potential return of borrowing from the oppositional template exceeds the perceived risk of doing so. The more organizations aspire to be ideologically pure, the more they are constrained by the moral codes that define the category, and, therefore, the higher the risk associated with deviating from purity. However, given the potential benefits of pragmatism, pure organizations will be particularly sensitive to contextual cues that reduce the perceived risk of borrowing, tilting their trade‐off balance toward pragmatism. Specifically, we expect that pure (compared to less pure) organizations will be particularly tempted to seize the opportunities offered by pragmatism when (1) they perform below aspiration, (2) the relevant market attaches less importance to ideological purity, and (3) pragmatism is becoming taken‐for‐granted. We test our hypotheses on detailed data of the hiring process of branch managers of Turkish Islamic banks analyzing when and in which communities Islamic banks hire managers from conventional banking in order to implement their geographical expansion strategy in the period 2003–2016.