Category Divergence, Straddling, and Currency: Open Innovation and the Legitimation of Illegitimate Categories

31 Pages Posted: 26 Feb 2013

See all articles by Oliver Alexy

Oliver Alexy

Technische Universität München (TUM), TUM School of Management

Gerard George

Singapore Management University

Date Written: March 2013

Abstract

The organizational literature is increasingly interested in the origins and consequences of category emergence. We examine the effects of being affiliated with categories initially considered illegitimate (‘divergence’), and of organizational attempts to blur the boundaries between categories (‘straddling’), on capital market reactions to firm announcements. We develop arguments for how these effects likely vary with increasing legitimation (‘currency’) of the category. We apply event study methodology to the complete population of firms' announcements of open source activities, an open innovation model for software development that is novel and defies the extant dominant logic of software production and valorization. Over a ten‐year period, we find negative effects of divergence, positive effects of straddling, and that the magnitude of both these effects diminishes with increasing category currency. The implications for theories of organization and open innovation in the context of category emergence are discussed.

Keywords: category emergence, open innovation, open source software, organizational legitimacy, valuation

Suggested Citation

Alexy, Oliver and George, Gerard, Category Divergence, Straddling, and Currency: Open Innovation and the Legitimation of Illegitimate Categories (March 2013). Journal of Management Studies, Vol. 50, Issue 2, pp. 173-203, 2013. Available at SSRN: https://ssrn.com/abstract=2224470 or http://dx.doi.org/10.1111/joms.12000

Oliver Alexy (Contact Author)

Technische Universität München (TUM), TUM School of Management ( email )

Arcisstr. 21
Munich, 80333
Germany
+49-89-289-52803 (Phone)
+49-89-289-52899 (Fax)

HOME PAGE: http://www.ent.wi.tum.de

Gerard George

Singapore Management University ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

HOME PAGE: http://www.smu.edu.sg/faculty/profile/118836/Gerry-GEORGE

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