Fitting in or Starting New? Invention, Leniency, and Category Emergence in the Software Industry, 1990-2002
Elizabeth G. Pontikes
University of Chicago - Booth School of Business
December 1, 2012
Chicago Booth Research Paper No. 12-61
This article proposes that the emergence of new markets depends on both organizational innovation and constraints from the classification structure. Previous research suggests that new market categories emerge when actors combine elements in novel ways. This paper proposes that the structure of classification is also critical. When classification contains labels that have porous boundaries – lenient labels – actors create new market labels for the purpose of reinforcing categorical distinctions. Importantly, leniency also weakens the relationship between technical recombination and new label creation. In lenient contexts, recombination is not a reliable predictor of new category formation. This is because when labels are lenient many types of organizations can credibly claim membership. A longitudinal study of software organizations and their claimed market labels finds support for these ideas. Results imply that new label emergence depends on either technological recombination or attempts to resolve ambiguity within the existing classification structure. These processes counter-balance one another, such that when labels are constraining, technical recombination is the source of market emergence, but when constraints are weak, it is leniency itself that drives new label creation.
Number of Pages in PDF File: 54
Keywords: Labels, categories, leniency, constraint, software
Date posted: December 19, 2012
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