Optimal distinctiveness: Broadening the interface between institutional theory and strategic management

Zhao, Eric Yanfei; Fisher, Greg; Lounsbury, Michael; Miller, Danny

doi:10.1002/smj.2589

Cited by 355 publications

(395 citation statements)

References 153 publications

(168 reference statements)

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“…If audiences tend to label clusters of objects (c.f. Hannan, 1 Contrast this with optimal differentiation research stemming from institutional theory, which argues that producers' optimal distinctiveness involves a balance between competitive and institutional conformity pressures (Zhao et al 2017). In the present article, producers balance competition against a generalized fear that excessive differentiation will lead to something going wrong.…”

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confidence: 80%

“…The dominant thread of recent theory relies on conformity pressure resulting from audience cognition (Zuckerman 2017;Zhao et al 2017): it argues that people search for objects in a market by categorizing them, and find it difficult to evaluate or understand objects that are difficult to categorize (Zuckerman 1999;Hannan, Pólos, and Carroll 2007). The theory aims to explain an empirical pattern: objects in markets often come with categorical labels attached and objects with multiple or ambiguous labels face market penalties.…”

Section: Introductionmentioning

confidence: 99%

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Producer Exploration can Generate Categories without Audiences

Vashevko¹

2016

AMPROC

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Category theory finds that markets tend to partition producers into categories and that producers who do not fit one specific category-or who span multiple categories-perform worse than their single-category peers. The major thread of category theory argues that categorizations stem from the bounded rationality of market audiences, who are forced to impose categorizations and ignore miscategorized producers in order to efficiently interact with the market. I present an alternative model in which producers in a market segregate into categories and experience a miscategorization penalty without any reliance on an audience process: working in an uncertain world, producers tend to imitate past successful peers, and an ex-post rationalization process identifies such clusters as categories. Categories reflect, but do not cause, producer success. This model of dynamic exploration of an uncertain world not only accounts for the basic findings of category theory but further explains how categories shift and emerge over time, in ways consistent with recent extensions of the literature. In all cases, miscategorization results not from the limited knowledge of the audience but the limited knowledge of producers. I establish these results in a formal model and simulation.

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confidence: 80%

Section: Introductionmentioning

confidence: 99%

Producer Exploration can Generate Categories without Audiences

Vashevko¹

2016

AMPROC

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“…Second, and relatedly, the study underlines the importance of a firm's historical path, beyond positions at one point in time (e.g., optimal distinctiveness; Zhao et al 2017). An historical perspective is required to understand the nature of the relationship between a focal firm and its environment (Barnett 2007): product releases, for instance, are data points in a larger trajectory that stakeholders can observe to make sense of the level of institutional specialization a firm has achieved.…”

Section: Discussionmentioning

confidence: 99%

“…legitimacy; Suddaby et al 2017) may erode. Firms may be prompted to adapt and opt for some form of intermediate conformity (Bascle 2016), orchestrating stakeholders' demands associated with the various institutional logics of the industry (Deephouse 1999, Zhao et al 2017). Alternatively, others may 'dig in their heels' and stick with a weakening logic, or rather fully embrace an emerging minority logic in the industry (Durand and Jourdan 2012).…”

Section: Introductionmentioning

confidence: 99%

Institutional Specialization and Survival: Theory and Evidence from the French Film Industry

Jourdan

2018

Strategy Science

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Firms increasingly face fragmented institutional environments where stakeholders endorse different institutional logics. Although the effects of market specialization have been extensively studied, we do not know much about the firm-level implications of institutional specialization, i.e., when firms demonstrate consistent conformity to an institutional logic. In this study, I explore whether and to what extent institutional specialization affects firm survival. In contrast with arguments and evidence highlighting the potential negative survival effect of market specialization, I posit that institutional specialization is positively associated with survival. Because they may be more skilled at interacting with stakeholders, which perceive them as more appealing and understandable, institutional specialists, I argue, are more likely than other firms to form and maintain the reciprocal stakeholder relationships needed to operate and survive. I expect the survival benefit of institutional specialization to be accentuated when the contrast between logics decreases. I test and find support for these ideas using unique population data on French film producers (1994–2008).

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“…A unique feature of the logics approach, though, is the recognition that logics are also internalized by organization members and thus affect how managers allocate their attention, interpret external stimuli, and make decisions (Thornton & Ocasio, 1999). As scholars increasingly come to recognize that organizations face institutionally complex environments that comprise conflicting external demands, the link between logics and managerial cognition has taken on heightened importance for understanding organizational behavior (Battilana & Dorado, 2010;Greenwood, Raynard, Kodeih, Micelotta, & Lounsbury, 2011;Wry & York, 2015;Zhao, Fisher, Lounsbury, & Miller, 2016). In this regard, there is evidence that logics affect which external influences a firm attends and responds to (Pache & Santos, 2013), while also guiding its action across diverse institutional contexts (Vasudeva et al, 2013).…”

Section: An Institutional Logics Approach To Microfinance Fundingmentioning

confidence: 99%

Funding Financial Inclusion: Institutional Logics and the Contextual Contingency of Funding for Microfinance Organizations

Cobb

Wry

Zhao

2016

AMJ

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110

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Microfinance is a promising tool for addressing the grand challenge of global poverty. Yet, while many studies have examined how microfinance loans affect poor borrowers, we know little about how microfinance organizations (MFOs) themselves finance their lending activities. This is a significant oversight because most MFOs do not self-fund their lending, but, rather, rely on loans from external funders. To better understand microfinance funding, we apply and extend the institutional logics perspective to analyze the lending practices of commercial and public funders, who together provide most of the capital for global microfinance. We argue that these funders adhere to financial and development logics, respectively, and that this leads them to invest in different types of MFOs. Yet, in the face of uncertainty, we suggest that the practices motivated by these logics will start to converge in ways that are problematic for a nation's microfinance sector. Using a proprietary database of all traceable loans to MFOs from 2004 to 2012, we find strong support for our hypotheses. In particular, our findings show that the relationship between institutional logics and organizational practices is contextually contingent, and this insight contributes important understanding about the efficacy of microfinance as a poverty-reduction tool. The Wharton School University of Pennsylvania Eric Yanfei Zhao Assistant Professor of Management and EntrepreneurshipThe Kelley School of Business Indiana University Acknowledgements:The authors gratefully acknowledge the excellent suggestions and support provided by Laszlo Tihanyi and the three anonymous reviewers. We also thank

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Optimal distinctiveness: Broadening the interface between institutional theory and strategic management

Cited by 355 publications

References 153 publications

Producer Exploration can Generate Categories without Audiences

Producer Exploration can Generate Categories without Audiences

Institutional Specialization and Survival: Theory and Evidence from the French Film Industry

Funding Financial Inclusion: Institutional Logics and the Contextual Contingency of Funding for Microfinance Organizations

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