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 the concept 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, a professor of strategic management and the Newmont Chair in Business Strategy at York University’s Schulich School of Business, attempts to address this debate and provide a model for attaining optimal distinctiveness. The research results were reported in a new paper, titled “How firms manage competitive and institutional pressures under dynamic and complex environment,” published recently in the Strategic Management Journal. The paper was co-authored by Tan together with Jingqin Su, a professor of management at the Dalian University of Technology, and Xin Gao, an assistant professor of management at the Dalian Maritime University, both in China.
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 combined these attributes, leading to fragmented viewpoints and a lack of an integrated framework.
In light of this, the primary objectives of Tan’s research involved addressing two key inquiries: how do these companies adaptively sustain optimal distinctiveness while navigating changing competitive and institutional pressures over time; and what are the underlying interactive mechanisms between legitimacy and distinctiveness that drive the dynamic evolution of a company’s optimal distinctiveness strategies? Those questions were tackled by conducting extended interviews, surveys and comparative case studies involving four prominent Chinese companies within their respective industries.
The study 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, the study provides a new integrated framework to alleviate the tension between different research viewpoints and advance the research agenda on optimal distinctiveness.