Attaining Optimal Distinctiveness in Technological Positioning: A Multi-dimensional Perspective

The strategic balance literature suggests that firms that have an intermediate level of similarity with their rivals are optimally distinctive and can achieve a balance between the pressures of conformity and competition. We examine optimal distinctiveness in the context of technological positioning and contend that the optimal level of distinctiveness for a firm depends on whether it is located in the core or the periphery of the industry. Further, we argue that similarity with the nearest rivals is more relevant that similarity with all the rivals in the industry or with the industry as a whole. Maintaining an intermediate level of similarity is not the only way that firms can achieve the optimal level of distinctiveness. Specifically, we hypothesize that core firms that are similar to their immediate rivals in domain knowledge but dissimilar in architectural knowledge achieve high levels of invention performance. We also hypothesize that firms that have a high level of technological complementarity with their immediate rivals also achieve high levels of invention performance, especially when they are in the core. We tested these hypotheses with patent data from the medical devices industry and found support for them.