Achieving optimal distinctiveness in incubation markets: Hierarchy of needs perspective

Abstract

As competition intensifies, business incubators face conflicting pressures: the need to conform to market prototypes to gain legitimacy while also differentiating themselves from peers to avoid competition. Optimal distinctiveness (OD) theory explores how organizations manage this pressure to gain legitimacy and achieve superior performance. This study introduces a hierarchy-of-needs perspective to categorize the services provided by incubators into two dimensions: generic service market infrastructure development (MID) addressing basic incubatee needs, and customized service business capability development (BCD) catering to specific needs. We empirically investigate how new private incubators in China strategically position themselves along these dimensions to pursue OD. Furthermore, we discuss the configurational effects of MID and BCD distinctiveness, alongside contextual conditions, identifying four paths to achieving high performance. These findings offer fresh insights into the orchestration view of OD by developing a new categorization of strategic dimensions from a hierarchy-of-needs perspective, as well as elucidating their individual effects and contextual contingencies.