New Research: How Firms Manage Competitive and Institutional Pressures Under Dynamic and Complex Conditions
TORONTO – Friday, September 22, 2023 – 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 York University’s Schulich School of Business, attempted to address this question. The research results were 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.
In light of this, the primary objectives of this research involved addressing two key inquiries. These inquiries were tackled through extended interviews, surveys and comparative case studies involving four prominent Chinese companies within their respective industries. The two key inquiries were: 1) How do these companies adaptively sustain Optimal Distinctiveness while navigating changing competitive and institutional pressures over time? And 2) What are the underlying interactive mechanisms between legitimacy and distinctiveness that drive the dynamic evolution of a company’s Optimal Distinctiveness strategies?
The primary contributions of this research are as follows: it integrates the context-sensitivity and time-sensitivity of Optimal Distinctiveness, identifies corresponding Optimal Distinctiveness strategies under different intensities of competitive-institutional pressures, and explores their co-evolutionary processes, thus establishing a “pressure-response” process model for dynamically maintaining Optimal Distinctiveness in companies.
The study also reveals the dynamic mechanisms behind this evolution, bridging the contradictory hypothesis of “opposition or synergy” between legitimacy and distinctiveness and enriching the dynamic interactive relationship between the two from opposition, balance, to complementarity. Therefore, by revealing “why” and “how” companies achieve Optimal Distinctiveness, it provides a new integrated framework to alleviate the tension between different research viewpoints and advance the research agenda on Optimal Distinctiveness.
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.
Professor Justin Tan is available for interviews about the findings.