Convergence or Divergence? Impact of Performance Below Aspiration Level on Strategic Deviance

Combining strategic balance theory and enterprise behavior theory, this study explores the relationship between the performance expectation gap (i.e., the actual performance of an enterprise is lower than the expected level) and strategic distinctiveness (referring to the degree to which an enterprise’s strategic choices deviate from industry norms). Strategic distinctiveness is a key strategic behavior that reflects an enterprise’s willingness to pursue unique resource allocation and competitive positioning, which may enhance differentiation advantages but also bring legitimacy risks. On the basis of the data of all A-share listed companies in China from 2005 to 2019, the fixed effect model was determined as the benchmark analysis method through the Hausman test. This study reveals that when an enterprise’s actual performance is lower than the historical expected level, to gain competitive advantages and reverse the unfavorable situation, the enterprise tends to increase strategic distinctiveness; however, when the performance gap further expands and threatens the enterprise’s survival, owing to concerns about institutional legitimacy, the enterprise is more inclined to strategic convergence, thus resulting in an inverted U -shaped relationship between the performance expectation gap and strategic distinctiveness. Further analysis reveals that economic policy uncertainty weakens this inverted U -shaped relationship, whereas nonstate-owned enterprises (compared with state-owned enterprises) strengthen this relationship. This study expands the relevant literature on the antecedents of strategic distinctiveness, enriches strategic balance theory and enterprise behavior theory, and provides practical implications for the strategic choices of enterprises in the state of performance expectation gap.