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To be different, or to be the same? It’s a question (and theory) of strategic balance
Author(s) -
Deephouse David L.
Publication year - 1999
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199902)20:2<147::aid-smj11>3.0.co;2-q
Subject(s) - legitimation , competition (biology) , legitimacy , balance (ability) , conformity , balance theory , industrial organization , economics , similarity (geometry) , empirical research , strategic planning , microeconomics , business , politics , sociology , management , political science , psychology , computer science , social psychology , epistemology , neuroscience , ecology , social science , philosophy , artificial intelligence , law , image (mathematics) , biology
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. Copyright © 1999 John Wiley & Sons, Ltd.