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To be different, or to be the same? It’s a question (and theory) of strategic balance

✍ Scribed by David L. Deephouse

Publisher
John Wiley and Sons
Year
1999
Tongue
English
Weight
125 KB
Volume
20
Category
Article
ISSN
0143-2095

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✦ Synopsis

This paper addresses the performance consequences of firm-level strategic similarity. Past research observed that firms face pressures to be different and to be the same. By differentiating, firms reduce competition. By conforming, firms demonstrate their legitimacy. Both reduced competition and legitimacy improve performance. This paper begins building a theory of strategic balance by synthesizing the differentiation and conformity perspectives. The theory directs attention to intermediate levels of strategic similarity where firms balance the pressures of competition and legitimation. Empirical support for the theory is found in a longitudinal study of commercial banks. Several suggestions for developing a theory of strategic balance conclude the paper. The theory's major implication is that firms should be as different as legitimately possible.

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