Organizational identity ambiguity occurs when external constituents fail to develop a good sense and clear understanding of who organizations are and what they do. Previous research claims that identity ambiguity is disadvantageous because it indicates organizations’ misfit with well-established categories, causes external constituents’ misunderstanding of organizational identity. This study presents an alternative view of identity ambiguity–it enables new firms to avert attention from rivals and reduce competitive pressures from them by creating competitive asymmetry, a situation wherein the perception of rivalry between two firms is nonreciprocal. This analysis predicts that competitive asymmetry is more likely to occur between a new firm in emerging market segments and an incumbent when the new firm’s identity is equivocal and ambiguous from the perspectives of the incumbent–namely, when the new firm is dissimilar from the incumbent, belongs to multiple product categories, and identifies itself as a member of emerging market segments with which most incumbents are still unfamiliar. This study supports its arguments using data on IPO firms in retail categories during the emergence of e- commerce in the US. The findings show a nexus of the strategy and organizational identity literatures, and provide a new insight on identity ambiguity.