Optimal Distinctiveness

Optimal distinctiveness research is a rapidly growing area of scholarship that integrates key theoretical insights from strategic management and institutional theory. Strategic management research highlights differentiation as a key driver of competitive advantage and superior performance, while institutional theory emphasizes conformity as a central driver of organizational legitimacy and resource acquisition. Optimal distinctiveness research synthesizes these two perspectives and explores the tension that arises from conflicting pressures for differentiation (distinctiveness) and conformity (similarity). This emerging body of research departs from traditional positioning research in strategic management—which primarily explored corporations’ strategic positions within mature industries—by attending to a variety of competitive settings (e.g., newly emerging market categories, online marketplaces), forms of differentiation (e.g., based on product features, narratives, or category affiliations), levels of analysis (e.g., business level, product level), and performance outcomes (e.g., customer demand, resource acquisition, audience evaluations). By advancing understanding about a broad array of phenomena, optimal distinctiveness research has profound implications for strategic management, entrepreneurship, and organization studies. A central concern in this rapidly growing body of research is to understand how positions on the continuum between similarity and distinctiveness affect performance outcomes. Early optimal distinctiveness research showed that organizations often benefit from positioning themselves near the middle of this continuum, where the relationship between their distinctiveness and performance resembles an inverted U-shape. Over time, however, scholars spotlighted various contingencies that shape the distinctiveness–performance relationship, pointing to important boundary conditions under which organizations derive the most desirable (i.e., optimal) outcomes through low or high levels of distinctiveness. Extant research also shows that organizations can strategically alleviate the tension between differentiation and conformity by, for instance, buffering legitimacy in alternative ways or by differentiating on dimensions that do not impose any related conformity pressures. Scholarship further explores the sources of heterogeneity in organizations’ distinctiveness, including the conditions and strategic considerations that lead organizations to pursue distinctiveness. Toward this aim, extant research particularly emphasizes organizations’ strategic efforts to attain optimal distinctiveness through storytelling and other symbolic forms of differentiation and conformity. Collectively, these explorations help to understand why, when, and how organizations pursue distinctiveness and how distinctiveness shapes varied performance outcomes.