Strategic Similarity and Firm Performance: Multiple Replications of Deephouse (1999)

Abstract

Deephouse raised an important question as to whether firms should be different or should be the same. The strategic balance perspective proposed by him suggests that by balancing the competing pressures of conformity and differentiation, a moderate degree of similarity is what contributes most to firm performance. This perspective has been widely accepted by scholars but follow-up studies are few and have achieved mixed results, leaving the knowledge base in this stream on shaky ground. This study conducted multiple replications of Deephouse’s seminal work across 155 manufacturing industries in China and across two methods to examine its replicability, generalizability, and robustness to methods and to provide additional and cumulative information. The results show that strategic balance perspective was replicable, but with context limitations. Our exploratory analyses indicate several possible boundary conditions and promising topics for furthering the development of strategic balance perspective. Theoretical and methodological implications are discussed.