Toward an Ecology of Market Categories

35 Pages Posted: 9 Aug 2012

See all articles by Elizabeth G. Pontikes

Elizabeth G. Pontikes

University of Chicago - Booth School of Business

Michael Hannan

Stanford Graduate School of Business

Date Written: July 2012

Abstract

This paper proposes that social categorization is driven by an ecological dynamic that operates in two planes: feature space and category space. It develops a theoretical model that links positions in feature space to label assignments in category space. The first part of the model predicts that movements in feature space affect label assignments in category space, with proximity to labeled clusters affecting label adoption. The second part predicts that the structure of category space affects this relationship. For lenient labels, positions in feature space are more weakly related to label adoption in category space. An empirical analysis of software producers, based on their positions in a feature space of patents, and a category space of market-label affiliations, supports these predictions. The results imply that social classification is characterized by this coupled ecological dynamic. Further, our findings have implications for the evolution of categories, suggesting that lenient categories will become more lenient, while constraining categories will become more constraining.

Suggested Citation

Pontikes, Elizabeth G. and Hannan, Michael, Toward an Ecology of Market Categories (July 2012). Available at SSRN: https://ssrn.com/abstract=2126857 or http://dx.doi.org/10.2139/ssrn.2126857

Elizabeth G. Pontikes (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://faculty.chicagobooth.edu/elizabeth.pontikes/

Michael Hannan

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-1511 (Phone)
650-725-7692 (Fax)

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