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Concept Innovation in the Software Industry: 1990-2002

61 Pages Posted: 19 Dec 2012 Last revised: 1 Sep 2017

Elizabeth G. Pontikes

University of Chicago - Booth School of Business

Date Written: January 1, 2016


This study investigates concept innovation, when firms create new market category labels to differentiate their products. Data suggest that concept innovation is frequent. But little is known about its antecedents. This study proposes that concept innovation is based both on recombinant processes and on constraints from existing classification. Firms that combine elements across market categories are more likely to engage in concept innovation – when categories are constraining. But when a firm’s categories are lenient, the relationship weakens and leniency leads to concept innovation as firms attempt to resolve ambiguity. Hypotheses are tested using three measures of combination, and results support hypotheses for all three measures in a longitudinal analysis of 4,566 firms and 456 market categories in the software industry between 1990 and 2002.

Keywords: Concept innovation, concepts, invention, innovation, categories, labels, classification, leniency, constraint, software

Suggested Citation

Pontikes, Elizabeth G., Concept Innovation in the Software Industry: 1990-2002 (January 1, 2016). Chicago Booth Research Paper No. 12-61. Available at SSRN: or

Elizabeth G. Pontikes (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States


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