diVerentiate from competitors in an eVort to achieve or maintain sustained
competitive advantage. On the other hand, there are isomorphic pressures based
on normative rationality, which lead organizations to become increasingly alike in
order to achieve legitimacy in their organizationalWeld. Legitimacy is needed
in order to acquire resources from potential exchange partners such as customers,
suppliers, and regulators. A legitimateWrm will manage to obtain resources of
higher quality and at more favorable terms than aWrm whose legitimacy is
challenged (Deephouse 1999 : 152 ).
These two forces are examined in research undertaken by Deephouse ( 1999 ). In
a longitudinal study of commercial banks, heWnds empirical support for hisstrategic
balance theory. This states that moderately diVerentiatedWrms, which achieve
a balance between a focus on legitimacy and a market focus, tend to have higher
performance than either highly conforming Wrms, which emphasize meeting
legitimacy requirements, or highly diVerentiatedWrms maximizing the economic/
market dimension.
Within theWeld of HRM, Paauwe ( 2004 ) uses the theory of strategic balance in
his contextually based human resource theory. Here, long-term viability can only
be achieved if a balance is realized between economic and relational rationalities.
Organizations need to pursue economic rationality with an emphasis on creating
added value, but they are also confronted with the challenge of relational or
normative rationality. This implies establishing sustainable and trustworthy rela-
tionships with all relevant stakeholders (not just customers and shareholders)
based on criteria of legitimacy and fairness as moral values (Paauwe 2004 : 67 ).
The strategic tension in achieving a balance between sometimes competing or
conXicting forces is recognized by Boxall and Purcell ( 2003 : 7 ). They distinguish
goals of labor productivity, organizationalXexibility, and social legitimacy that
need to be met, to some degree, in order to achieve organizational viability. They
emphasize the ‘harsh’ reality of strategic tensions among these three critical goals:
seen, for example, when companies transfer activities to low-cost countries to
achieve productivity/eYciency goals at the expense of societal legitimacy in the
high-wage countries where mass lay-oVs occur.
Relatively little attention has been paid to the challenge of simultaneously
achieving the goals of productivity/Xexibility and social legitimacy despite the
fact that reconciling opposing goals is extremely important for the long-term
survival of organizations. With increasing international competition, organizations
are forced to implement work systems that place increasing demands on employees
to work smarter, better, or faster. This may require the implementation of lean
manufacturing work systems or, more generally, high-performance or high-
involvement work systems. In a growing number of cases, the need is to achieve
an agile work system, which emphasizes fast and eYcient learning, encouraging
multi-skilling, empowerment, and reconWgurable teams and work designs (Dyer
and Shafer 1999 ; Sharp et al. 1999 ). If these forms of work reorganization are not
178 jaap paauwe and paul boselie