This paper provides a partial answer to the question of what strategic characteristics drive the growth of Internet portals. First, it examined the effect of category diversification within the Internet portal industry—a form of intra-industry diversification—on portal growth. Second, it examined whether the strategic balance theory, which integrates the advantages of mimetic isomorphism for acquiring legitimacy as proposed by new institutionalism and the advantages of differentiation for avoiding competition among similar firms as suggested by strategic theory, also holds in competition among Internet portals. Using weekly user web traffic data for 18 domestic Internet portal domains over a 40-month period from September 2001 to December 2004, a portal-specific fixed effect panel data model was applied for empirical analysis. The hypothesis testing results supported the hypothesis that category diversification has a positive effect on portal growth, and a growth pattern among Internet portals consistent with the strategic balance theory was identified.