Aspirational Motivation and Competitive Conformity

Abstract

In a rapidly growing industry where all firms are doing extremely well, a firm whose performance is merely good may seem inadequate by comparison. By incorporating behavioral theory of the firm (BTOF) logic, we examine the degree to which managers choose to conform to the competitive actions and repertoires of peers based on the joint effects of their social performance (performance relative to peers) and historic performance (performance relative to their past performance). We assess the actions of 303 firms from 2001 to 2017 and find that poor social performance leads firms to imitate their more successful competitors, moving more closely to competitive repertoires that reflect the norms or “recipe” for the industry. We further find that this relationship is contingent on how the focal firm performs relative to historical aspirations, depending primarily on whether the signals from social and historic performance are congruent or inconsistent. Our results extend work on competitive dynamics and behavioral theories of the firm, as well as informing past research that has discussed the benefits that imitation provides to organizations, such as institutional theory and theories of mimetic isomorphism, which argue that firms benefit when they model themselves on other successful organizations.