Deviation from Who? Differentiating the Performance Effect of CSR Deviation from Multiple Peers

Optimal distinctiveness (OD) studies increasingly perceive OD strategy as multidimensional, contextualized, and dynamic, yet research has largely explored intra-category heterogeneity. Incorporating insights from institutional complexity and social embeddedness, this study proposes that firms are simultaneously embedded in multiple distinctive categories (i.e., geographical community and industry) in which the relative strength of legitimacy and competitiveness pressures vary substantially. Based on a matched sample of 3,970 public firms in the U.S. and their CSR activities over a 24-year period, we find that firm CSR deviation from community peers decreases market value, and CSR deviation from industry peers increases market value. Furthermore, we develop a multilevel moderating framework in which the above effects are amplified or attenuated by community liberalism, industry regulation, and firm visibility. We contribute by unveiling significant inter-category heterogeneity in imposing pressures on firms and introducing a novel approach to achieve OD.