FACULTY AND RESEARCH

Marketization—the entry of the market logic into a field originally insulated from it—is a transformative force that has reshaped many fields, including education, health care, the arts, and religion. Marketization brings a unique set of challenges for established organizations: it opens a field to market-style mechanisms of consumer choice and competition, which undermines the legitimacy of established organizations, and it creates contradictory demands for organizational actions. How can established organizations adapt to marketization? To answer this question, the authors study the adaptation of five established religious schools to the marketization of education in Brazil. They develop the novel hybridization strategy of nested coupling and explain that established organizations respond to marketization by balancing competing demands for differentiation and conformity. The authors show how religious schools nest the market logic within the religious logic by reconfiguring their resources to conform to market demands while differentiating themselves through their religious orientation. Nested coupling provides a novel strategic approach for established organizations in marketized or marketizing fields, such as hospitals, museums, and schools, to capitalize on a logic that preexists marketization and to create a unique competitive positioning in the market.