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What's the value of being different when everyone is? The effects of distinctiveness on performance in homogeneous versus heterogeneous categories

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  • Richard F. J. Haans

Abstract

Research Summary Is moderate distinctiveness optimal for performance? Answers to this question have been mixed, with both inverted U and U‐shaped relationships being argued for and found in the literature. I show how nearly identical mechanisms driving the distinctiveness‐performance relationship can yield both U‐shaped and inverted U‐shaped effects due to differences in relative strength, rather than their countervailing nature. Incorporating distinctiveness heterogeneity, I theorize a U‐shaped effect in homogeneous categories that flattens into an inverted U in heterogeneous categories. Results combining a topic model of 69,188 organizational websites with survey data from 2,279 participants in the Dutch creative industries show a U‐shaped effect in homogeneous categories, flattening and then disappearing in more heterogeneous categories. How distinctiveness affects performance thus depends entirely on how distinct others are. Managerial Summary A core strategy recommendation is to be different from competitors. Recent work highlights the notion of optimal distinctiveness—being different enough to escape competition yet similar enough to be legitimate, thus yielding the highest performance. This article challenges the notion that one “optimal” level of distinctiveness exists and focuses on distinctiveness heterogeneity (representing variation in firm positions in a category) as a key contextual factor. Results from a sample of firms in the Dutch creative industries show that either being entirely different or entirely the same to competitors pays off when one's category is very homogeneous. However, being different loses its performance effects entirely when heterogeneity in firm positions is higher. Being different from competitors, therefore, no longer pays when others tend to be different, too.

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  • Richard F. J. Haans, 2019. "What's the value of being different when everyone is? The effects of distinctiveness on performance in homogeneous versus heterogeneous categories," Strategic Management Journal, Wiley Blackwell, vol. 40(1), pages 3-27, January.
  • Handle: RePEc:bla:stratm:v:40:y:2019:i:1:p:3-27
    DOI: 10.1002/smj.2978
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    Cited by:

    1. Jaeho Choi & Anoop Menon & Haris Tabakovic, 2021. "Using machine learning to revisit the diversification–performance relationship," Strategic Management Journal, Wiley Blackwell, vol. 42(9), pages 1632-1661, September.
    2. Karl Taeuscher & Hannes Rothe, 2021. "Optimal distinctiveness in platform markets: Leveraging complementors as legitimacy buffers," Strategic Management Journal, Wiley Blackwell, vol. 42(2), pages 435-461, February.
    3. Vossen, Alexander & Ihl, Christoph, 2020. "More than words! How narrative anchoring and enrichment help to balance differentiation and conformity of entrepreneurial products," Journal of Business Venturing, Elsevier, vol. 35(6).
    4. Xu, Jin & Peng, Biyu & Cornelissen, Joep, 2021. "Modelling the network economy: A population ecology perspective on network dynamics," Technovation, Elsevier, vol. 102(C).
    5. Yung-Shuan Chen & Han-Sheng Lei & Wei-Che Hsu, 2019. "A Study on the Sustainable Development Strategy of Firms: Niche and Social Network Theory," Sustainability, MDPI, vol. 11(9), pages 1-25, May.
    6. Williamson, Amanda J. & Short, Jeremy C. & Wolfe, Marcus T., 2021. "Standing out in crowdfunded microfinance: A topic modeling approach examining campaign distinctiveness and prosocial performance," Journal of Business Venturing Insights, Elsevier, vol. 16(C).
    7. Dharmani, Pranav & Das, Satyasiba & Prashar, Sanjeev, 2021. "A bibliometric analysis of creative industries: Current trends and future directions," Journal of Business Research, Elsevier, vol. 135(C), pages 252-267.
    8. Buhr, Helena & Funk, Russell J. & Owen-Smith, Jason, 2021. "The authenticity premium: Balancing conformity and innovation in high technology industries," Research Policy, Elsevier, vol. 50(1).

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