Competitors' Strategic Heterogeneity and Firm Performance

This paper explores intra-industry heterogeneity by proposing a new perspective. Whereas the strategic management literature tends to conceptualize strategic heterogeneity as the divergence between a focal firm and its rivals, we offer a complementary view in which we consider it to be the result of the differences among the strategic positions of the rivals of a firm. We argue that, when heterogeneity is examined from this perspective, vicarious learning and competitive alignment (instead of competition, collusion or legitimation) are the mechanisms that explain the impact of heterogeneity on performance. We also propose that the experience that firms accumulate by competing with the same rivals moderates this relationship. We test our hypotheses on the Spanish banking sector over the period 1999–2009. The results are consistent with them.