Being similar or being different? Paradox of nascent entrepreneurial firms

I examine how firms’ conforming behaviors to isomorphism and firms’ strategies for competitive advantages influence firms’ different performances measures (i.e. market and operational performance) in the firms’ formative stage. This study shows that coercive and normative isomorphism, and firms’ pricing strategy (i.e. lowering prices) have positive and significant impacts on firms’ market performance. However, mimetic isomorphism does not have any impacts on the measure. Interestingly firms’ product and innovation strategy has a negative impact on firms’ market performance. Also, none of measures has significant relationships with operational performance. These results suggest that firms’ behaviors of ‘being similar’ under isomorphic pressures and ‘being different’ for competitive advantages are more related with ‘market performance’ because those organizational behaviors make nascent organizations to be ‘legitimately distinctive’ to the eyes of customers and stakeholders but do not necessarily have any implications on internal operational efficiency of firms.