There has been much attention given to the growing activism of institutional investors in corporate governance. However, past research has been unable to establish a consistent relationship between institutional investors and firm behavior. This may have occurred because institutional investors have been assumed to be a homogenous group possessing the same objectives and behaviors. For a sample of 271 U.S. Fortune 500 firms for the years 1990 to 1992, we categorized the firms' institutional investors into four distinct types: pension funds, mutual funds, banks, and insurance companies. We found significantly different relationships between these categories of institutional investors and firms' strategic investments.