Antecedents of Convergence and Divergence in Strategic Positioning: The Effects of Performance and Aspiration on the Direction of Strategic Change

This paper investigates drivers of convergence and divergence in strategic positioning in terms of resource-allocation decisions. The study, based on the behavioral theory of the firm, suggests two unexplored kinked-curve relationships between performance gaps and strategic convergence-divergence. First, the study suggests a negative relationship between a focal firm’s performance relative to aspiration levels and strategic convergence-divergence, where the slope is steeper when performance is above the aspiration level. Second, it suggests a positive relationship between a target firm’s performance relative to a focal firm’s performance and strategic convergence-divergence, where the slope is steeper when a target firm’s performance is below a focal firm’s performance. Empirical analysis of dyad-level data in the U.S. food processing industry reveals that the direction of a firm’s strategic change is shaped by its aspiration level, its performance level, and the performance gap between it and the firm it selects as a model. This study contributes to the current literature by offering preliminary indications of when and how a firm moves closer to or further away from other competing firms in its strategic position.