Keywords: optimal distinctiveness; differentiation; conformity; legitimacy; strategic balance; institutional theory
Author(s): ERIC YANFEI ZHAO, GREG FISHER, MICHAEL LOUNSBURY, and DANNY MILLER
Date: 2016
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Being different enough from peer firms to be competitive, but similar enough to peers to be recognizable.
We advocate for moving beyond research that has employed strategic balance theory. In particular, we believe the focus on one single, static convergence point where the legitimate distinctiveness of a firm is maximized, has been limiting. While this focus might usefully capture the main way firms seek to balance conformity versus differentiation tensions in highly institutionalized and competitive market environments, it fails to capture the variety of strategies firms might employ to achieve optimal distinctiveness, especially in more complex and dynamic markets. In such markets, stakeholders are multiplex with heterogeneous preferences, and legitimacy expectations might vary across time and space. As a result, strategic positioning cannot be simply gauged against a stable set of competitors, but needs to be adapted according to the changing criteria associated with different stakeholders, various organizational life stages, and unique trajectories of an industry’s evolution. Hence, managers must be open to appreciating how their firms might be better conceptualized as complex, multidimensional entities, and how their challenge is to align different organizational attributes to fit contextual requirements in order to be optimally distinct.
Attaining optimal distinctiveness—positive stakeholder perceptions about a firm’s strategic position that reconciles competing demands for differentiation and conformity—has been an important focal point for scholarship at the interface of strategic management and institutional theory. We provide a comprehensive review of this literature and situate studies on optimal distinctiveness in the broader scholarly effort to integrate institutional theory into strategic management. Our review finds that much extant research on firm-level optimal distinctiveness is grounded in the strategic balance perspective that conceptualizes conformity and competitive differentiation as a trade-off along a single organizational attribute. We argue for a renewed research agenda that draws on recent developments in institutional theory to conceptualize organizational environments as more multiplex, fragmented, and dynamic, and discuss its implications for core strategic management topics.
This article aims to provide managers with a more comprehensive and contemporary view of how firms can become optimally distinct—being different enough from peer firms to be competitive, but similar enough to peers to be recognizable. We aim to equip managers with an understanding of firms as complex, multidimensional entities, and encourage them to identify and orchestrate various types of strategic resources to reconcile conformity versus differentiation tensions, address the multiplicity of stakeholder expectations, and aptly modify their positioning strategies in order to succeed in dynamic environments.