Positioning for optimal distinctiveness: How firms manage competitive and institutional pressures under dynamic and complex environment

Abstract Research Summary How firms strategically balance legitimacy and distinctiveness has garnered significant attention but reflects inconsistent perspectives. This inconsistency may stem from the inherent complexity of optimal distinctiveness (OD), which are sensitive to both the context and temporality. This article explores dynamic changes in institutional and competitive pressures and how they co‐evolve with different OD strategies. Through an exploratory, multi‐case study, we propose a pressure‐response model to uncover how firms dynamically pursue OD in response to different combinations of pressures. Furthermore, our findings reveal the mechanisms that drive the dynamic interactions between distinctiveness and legitimacy across different OD strategies. In essence, this study contributes to the OD research agenda by providing insights into the evolution of OD strategies, addressing the how and why behind their development. Managerial Summary Can enterprises effectively balance their needs for legitimacy and distinctiveness by achieving an optimal level of similarity and differentiation from their competitors? This article demonstrates that, in the face of multiple pressures with varying intensities, enterprises continuously adapt their strategic choices to achieve optimal distinctiveness (OD). As institutional and competitive pressures gradually intensify, an enterprise's OD strategies may transition from isomorphic and balancing approaches toward deviation. However, when accumulated inertia hinders the enterprise's ability to respond to emerging pressures, adjustments to the OD strategy may become necessary. Therefore, this study offers entrepreneurs a practical guide on how to dynamically maintain their enterprise's OD by selecting appropriate strategies based on the specific circumstances at hand.