Legitimacy of Social Hybrids: Navigating the Ambiguity in Prosocial Category of B Corps

Hybrid organizations seeking social impact often pursue legitimation of their social commitment by aligning with a prosocial category -i.e, a context for entities aiming to prove the legitimacy of their social entrepreneurial attitude (Conger et al. 2018). However, hybrids often align with ambiguous categories - i.e. whose schema of norms and values allows very heterogeneous types of members to join (Durand and Paolella 2013) – such as B-Corps. Despite prior literature argues that aligning with an ambiguous category does not yield the benefits of legitimacy, we do not fully know the mechanisms underlying this relationship, especially for social hybrids who often struggle to achieve legitimacy. In this study, we ask what are the consequences of becoming a member of an organizational category whose meaning is ambiguous, and the mechanisms by which this relationship is attenuate or amplified? To answer this question, we draw on a sample of 186 Italian social hybrid organizations, of which 157 became B Corps and 29 did not. We found that membership in ambiguous organizational category generally does not pay-off. We found two mechanisms explaining this relationship. First, the degree of alignment with the organizational category amplifies the downsides of the relationship, i.e., over time, the more a social hybrid aligned with an ambiguous category the lower the benefits. Second, audience affording legitimation forgave category ambiguity when they could construe the boundaries of the business’s impact through its products/services. In other words, the level of concreteness of the product/services attenuated the negative implications of affiliating to the B-Corp category. We contribute to the literature on hybrid organizations by theorizing the mechanisms of alignment and boundary construal to explain when do audiences penalize hybrids aligning with ambiguous categories.