Focusing on a period of institutional friction when institutions are in transition, this study examines the dueling institutional logics that simultaneously operated as business groups were implemented to foster strategic entrepreneurship activities in China. Our findings from 1,095 Chinese business group-affiliated firms show that the original institutional logic of state control and ownership remains a potent factor, while the new institutional logic in support of strategic entrepreneurship takes place through business groups' informal and formal organization controls. Further, the state logic causes rigidity and inflexibility for firms to react to the new institutional demands, thus weakening the positive effects of business group formal and informal controls on strategic entrepreneurship. This study contributes to the institution-based view by highlighting that dueling logics coexist in business groups and investigating how they can be sources of variation in advancing strategic entrepreneurship during periods of institutional friction. Copyright © 2014 Strategic Management Society.