How Firms Manage Competitive and Institutional Pressures Under Dynamic and Complex Conditions
The strategic equilibrium that firms aim to strike between legitimacy and distinctiveness has attracted considerable interest from business scholars over the years but has resulted in varying viewpoints. This divergence could be attributed to the intricate nature of Optimal Distinctiveness, which is influenced by both the specific context a business operates in as well as the passage of time.
New research led by Justin Tan, Professor of Strategic Management and the Newmont Chair in Business Strategy at Schulich, attempts to address this question. The research results are reported in a new paper recently published in Strategic Management Journal and provide a model for attaining Optimal Distinctiveness.
During business growth, companies must balance the need for consistency and differentiation to achieve Optimal Distinctiveness. This paradox, at the intersection of institutional theory and strategic management, has spurred extensive research with conflicting branches. Early research introduced the “balance perspective,” suggesting moderate distinctiveness for optimal performance. Conversely, the “trade-off perspective” forces companies to choose strong consistency or differentiation. The “threshold perspective” proposes that once a certain threshold is crossed, distinctiveness can legitimize. Optimal Distinctiveness strategies vary due to differing pressures at various development stages. However, prior research rarely combines these attributes, leading to fragmented viewpoints and a lack of an integrated framework.
The research paper, titled “How firms manage competitive and institutional pressures under dynamic and complex environment”, was co-authored by Professor Tan together with Jingqin Su, Professor of Management at the Dalian University of Technology, and Xin Gao, Assistant Professor of Management at the Dalian Maritime University, both in China.