Scholars have sought to understand the relationship between organizations and institutions, and research to date has generated findings that speak to both the top down effects of institutions on organizations as enabling and constraining, and the bottom up influence of organizations shaping institutions. This dissertation explores the context of sustainability in the apparel industry and inquires how organizations participate in self-regulation to influence institutional change, using a mixed methods approach to understand this question. In particular, I observe the process of building a specific self-regulatory institution – the Sustainable Apparel Coalition (SAC). First, I study the impact of a reputation crisis on the different ways firms attend to sustainability, and hypothesize that threat attention firms will be more likely to join the self-regulatory institution. I deploy a Cox Model event history analysis and find that indeed threat attention firms are more likely to participate in the self-regulatory institution. Second, I focus on the founding firms of the SAC – Patagonia, Walmart, and Nike – to inductively investigate the process of building a novel institutional logic around sustainability as a result of hybridization of founding firms’ disparate logics. I find that through dominating, contesting, and assimilating processes, a novel hybridized logic for the SAC is constructed embodying new values such as interdependence and transformation, as well as standardization and self-assessment practices. The findings of this dissertation make theoretical contributions to the institutional logics perspective, self-regulatory institutions, and research on sustainability. They also have practical implications towards understanding how sustainability measurement indices and a distinct organizational structure to govern a self-regulatory institution influence the diffusion of sustainability.