IDEAS home Printed from https://ideas.repec.org/a/eee/eurman/v37y2019i1p67-77.html
   My bibliography  Save this article

To fit in or stand out? How optimal distinctiveness in technological diversification affects firm performance

Author

Listed:
  • Pan, Xin
  • Chen, Xuanjin
  • Li, Xibao

Abstract

Previous research has observed technological diversification from a strategic viewpoint and regarded it as a strategy used by firms to differentiate themselves from competitors. This perspective, however, overlooks the fact that firms' strategies can also be understood as conformity to institutional pressure to gain legitimacy. In order to study the technological diversification–firm performance relationship from a more comprehensive viewpoint, this paper starts from a strategic balance perspective and investigates how technological diversification conformity enhances firm performance. Using a unique dataset of Chinese listed firms' patenting activities from 2003 to 2014 and adopting ordinary least squares (OLS) regression, we produce empirical findings that reveal a curvilinear (inverted U-shaped) relationship between firms’ conformity in technological diversification and their performance. Our results further delineate the boundary conditions that influence this relationship. We find that firm age positively moderates the relationship, that is the conformity-performance relationship is steeper with the older firms. Moreover, the result suggests that state ownership negatively moderates the relationship, that is, the relationship is flatter when firms are controlled by the state.

Suggested Citation

  • Pan, Xin & Chen, Xuanjin & Li, Xibao, 2019. "To fit in or stand out? How optimal distinctiveness in technological diversification affects firm performance," European Management Journal, Elsevier, vol. 37(1), pages 67-77.
    • Handle: RePEc:eee:eurman:v:37:y:2019:i:1:p:67-77
    DOI: 10.1016/j.emj.2018.07.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S026323731830080X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.emj.2018.07.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Eric Yanfei Zhao & Greg Fisher & Michael Lounsbury & Danny Miller, 2017. "Optimal distinctiveness: Broadening the interface between institutional theory and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 93-113, January.
    2. Jaffe, Adam B, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits, and Market Value," American Economic Review, American Economic Association, vol. 76(5), pages 984-1001, December.
    3. Haiyang Li & Yan Zhang, 2007. "The role of managers' political networking and functional experience in new venture performance: Evidence from China's transition economy," Strategic Management Journal, Wiley Blackwell, vol. 28(8), pages 791-804, August.
    4. Gary P. Pisano, 2017. "Toward a prescriptive theory of dynamic capabilities: connecting strategic choice, learning, and competition," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(5), pages 747-762.
    5. Ramaswamy, Kannan & Purkayastha, Saptarshi & Petitt, Barbara S., 2017. "How do institutional transitions impact the efficacy of related and unrelated diversification strategies used by business groups?," Journal of Business Research, Elsevier, vol. 72(C), pages 1-13.
    6. Yasemin Y. Kor & Joseph T. Mahoney, 2005. "How dynamics, management, and governance of resource deployments influence firm‐level performance," Strategic Management Journal, Wiley Blackwell, vol. 26(5), pages 489-496, May.
    7. Gurneeta Vasudeva & Jennifer W. Spencer & Hildy J. Teegen, 2013. "Bringing the Institutional Context Back In: A Cross-National Comparison of Alliance Partner Selection and Knowledge Acquisition," Organization Science, INFORMS, vol. 24(2), pages 319-338, April.
    8. Vracheva, Veselina & Judge, William Q. & Madden, Timothy, 2016. "Enterprise strategy concept, measurement, and validation: Integrating stakeholder engagement into the firm's strategic architecture," European Management Journal, Elsevier, vol. 34(4), pages 374-385.
    9. David L. Deephouse, 1999. "To be different, or to be the same? It’s a question (and theory) of strategic balance," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 147-166, February.
    10. Anandhi S. Bharadwaj & Sundar G. Bharadwaj & Benn R. Konsynski, 1999. "Information Technology Effects on Firm Performance as Measured by Tobin's q," Management Science, INFORMS, vol. 45(7), pages 1008-1024, July.
    11. Christine Oliver, 1997. "Sustainable competitive advantage: combining institutional and resource‐based views," Strategic Management Journal, Wiley Blackwell, vol. 18(9), pages 697-713, October.
    12. Felicia M. Fai, 2003. "Corporate Technological Competence and the Evolution of Technological Diversification," Books, Edward Elgar Publishing, number 2065.
    13. Herbert A. Simon, 1991. "Bounded Rationality and Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 125-134, February.
    14. Hongquan Chen & Saixing Zeng & Han Lin & Hanyang Ma, 2017. "Munificence, Dynamism, and Complexity: How Industry Context Drives Corporate Sustainability," Business Strategy and the Environment, Wiley Blackwell, vol. 26(2), pages 125-141, February.
    15. Rhonda K. Reger & Anne Sigismund Huff, 1993. "Strategic groups: A cognitive perspective," Strategic Management Journal, Wiley Blackwell, vol. 14(2), pages 103-123, February.
    16. Danny Miller & Isabelle Le Breton-Miller & Richard H. Lester, 2013. "Family Firm Governance, Strategic Conformity, and Performance: Institutional vs. Strategic Perspectives," Organization Science, INFORMS, vol. 24(1), pages 189-209, February.
    17. Wernerfelt, Birger & Montgomery, Cynthia A, 1988. "Tobin's q and the Importance of Focus in Firm Performance," American Economic Review, American Economic Association, vol. 78(1), pages 246-250, March.
    18. Wang, Yuandi & Ning, Lutao & Chen, Jin, 2014. "Product diversification through licensing: Empirical evidence from Chinese firms," European Management Journal, Elsevier, vol. 32(4), pages 577-586.
    19. Christopher Marquis & Cuili Qian, 2014. "Corporate Social Responsibility Reporting in China: Symbol or Substance?," Organization Science, INFORMS, vol. 25(1), pages 127-148, February.
    20. Wang, Qian & Wong, T.J. & Xia, Lijun, 2008. "State ownership, the institutional environment, and auditor choice: Evidence from China," Journal of Accounting and Economics, Elsevier, vol. 46(1), pages 112-134, September.
    21. Turunen, Taija & Finne, Max, 2014. "The organisational environment’s impact on the servitization of manufacturers," European Management Journal, Elsevier, vol. 32(4), pages 603-615.
    22. Kim, Jungho & Lee, Chang-Yang & Cho, Yunok, 2016. "Technological diversification, core-technology competence, and firm growth," Research Policy, Elsevier, vol. 45(1), pages 113-124.
    23. Andrew D. Brown, 1998. "Narrative, Politics and Legitimacy in an IT Implementation," Journal of Management Studies, Wiley Blackwell, vol. 35(1), pages 35-58, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tagliazucchi, Giulia & Marchi, Gianluca & Balboni, Bernardo, 2021. "A nonlinear relationship between the team composition and performance in university spin-offs," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    2. Chenhao Hu, 2023. "The dual role of state shareholders in disclosed corporate misconduct: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1732-1748, April.
    3. Yuanyuan Dong & Zepeng Wei & Tiansen Liu & Xinpeng Xing, 2020. "The Impact of R&D Intensity on the Innovation Performance of Artificial Intelligence Enterprises-Based on the Moderating Effect of Patent Portfolio," Sustainability, MDPI, vol. 13(1), pages 1-17, December.
    4. Newaz, Md Tarique & Chandna, Vallari & Dass, Mayukh & Arnett, Dennis, 2023. "Using R-A theory and the optimal distinctiveness perspective to understand the strategic marketing approaches used by platform-based organizations: The cases of Facebook and Twitter in digital ecosyst," Journal of Business Research, Elsevier, vol. 167(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christopher Marquis & Cuili Qian, 2014. "Corporate Social Responsibility Reporting in China: Symbol or Substance?," Organization Science, INFORMS, vol. 25(1), pages 127-148, February.
    2. White, George O. & Rajwani, Tazeeb & Krammer, Sorin M.S., 2022. "Legal distance and entrepreneurial orientation of foreign subsidiaries: Evidence from Southeast Asia," Journal of World Business, Elsevier, vol. 57(6).
    3. Yongqiang Gao & Haibin Yang & Taïeb Hafsi, 2019. "Corporate giving and corporate financial performance: the S-curve relationship," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 687-713, September.
    4. Miller, Danny & Amore, Mario Daniele & Le Breton-Miller, Isabelle & Minichilli, Alessandro & Quarato, Fabio, 2018. "Strategic distinctiveness in family firms: Firm institutional heterogeneity and configurational multidimensionality," Journal of Family Business Strategy, Elsevier, vol. 9(1), pages 16-26.
    5. Julien Jourdan, 2018. "Institutional Specialization and Survival: Theory and Evidence from the French Film Industry," Strategy Science, INFORMS, vol. 3(2), pages 408-425, June.
    6. Yongqiang Gao & Haibin Yang, 2021. "Does Ownership Matter? Firm Ownership and Corporate Illegality in China," Journal of Business Ethics, Springer, vol. 168(2), pages 431-445, January.
    7. Julien Jourdan, 2018. "Institutional Specialization and Survival : Theory and Evidence From the French Film Industry," Post-Print hal-01819590, HAL.
    8. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Eric Yanfei Zhao & Greg Fisher & Michael Lounsbury & Danny Miller, 2017. "Optimal distinctiveness: Broadening the interface between institutional theory and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 93-113, January.
    9. Jiang, Shuiquan & Yang, Jie & Yu, Mingchuan & Lin, Han & Li, Chao & Doty, Harold, 2022. "Strategic conformity, organizational learning ambidexterity, and corporate innovation performance: An inverted U-shaped curve?," Journal of Business Research, Elsevier, vol. 149(C), pages 424-433.
    10. Lee, Hyunmin, 2023. "Strategic similarity in the co-evolution of technological and business diversification for firm growth: Evidence from smart-manufacturing related firms," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    11. Anirvan Pant & J Ramachandran, 2017. "Navigating identity duality in multinational subsidiaries: A paradox lens on identity claims at Hindustan Unilever 1959–2015," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(6), pages 664-692, August.
    12. Zongshi Chen & Douglas B. Fuller & Lu Zheng, 2018. "Institutional isomorphism and Chinese private corporate philanthropy: state coercion, corruption, and other institutional effects," Asian Business & Management, Palgrave Macmillan, vol. 17(2), pages 83-111, April.
    13. Newaz, Md Tarique & Chandna, Vallari & Dass, Mayukh & Arnett, Dennis, 2023. "Using R-A theory and the optimal distinctiveness perspective to understand the strategic marketing approaches used by platform-based organizations: The cases of Facebook and Twitter in digital ecosyst," Journal of Business Research, Elsevier, vol. 167(C).
    14. Eric Yanfei Zhao & P. Devereaux Jennings & Masakazu Ishihara & Michael Lounsbury, 2018. "Optimal Distinctiveness in the Console Video Game Industry: An Exemplar-Based Model of Proto-Category Evolution," Organization Science, INFORMS, vol. 29(4), pages 588-611, August.
    15. Jianlei Han & Jing He & Zheyao Pan & Jing Shi, 2018. "Twenty Years of Accounting and Finance Research on the Chinese Capital Market," Abacus, Accounting Foundation, University of Sydney, vol. 54(4), pages 576-599, December.
    16. Weiting Zheng & Na Ni & Donal Crilly, 2019. "Non‐profit organizations as a nexus between government and business: Evidence from Chinese charities," Strategic Management Journal, Wiley Blackwell, vol. 40(4), pages 658-684, April.
    17. Juan Bu & Eric Yanfei Zhao & Krista J. Li & Joanna Mingxuan Li, 2022. "Multilevel optimal distinctiveness: Examining the impact of within‐ and between‐organization distinctiveness of product design on market performance," Strategic Management Journal, Wiley Blackwell, vol. 43(9), pages 1793-1822, September.
    18. Jaime Gómez & Raquel Orcos & Henk W. Volberda, 2021. "How imitation of multiple reference groups drives the evolution of firm strategy," Review of Managerial Science, Springer, vol. 15(8), pages 2319-2350, November.
    19. Cheng, Louis T.W. & Chan, Ricky Y.K. & Leung, T.Y., 2018. "Impact of perk expenditures and marketing expenditures on corporate performance in China: The moderating role of political connections," Journal of Business Research, Elsevier, vol. 86(C), pages 83-95.
    20. Kamini Gupta & Donal Crilly & Thomas Greckhamer, 2020. "Stakeholder engagement strategies, national institutions, and firm performance: A configurational perspective," Strategic Management Journal, Wiley Blackwell, vol. 41(10), pages 1869-1900, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eurman:v:37:y:2019:i:1:p:67-77. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/115/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.