Market Formation: Examining the Coordination of Heterogeneous Contributions

55 Pages Posted: 17 Oct 2013

See all articles by Jeroen Struben

Jeroen Struben

emlyon business school; Massachusetts Institute of Technology (MIT) - Sloan School of Management

Brandon H. Lee

Melbourne Business School; Melbourne Business School

Date Written: April 15, 2012

Abstract

While extant literature recognizes the central role of collective action in market formation, it undertheorizes the existence of collective action dilemmas and their impact on successful market emergence. We redress this gap by examining the central mechanisms governing the existence and resolution of collective action dilemmas in market formation. We use a computational model that centers on actors’ collective development of a market infrastructure to explore the impact of different degrees of collaboration on market formation. In particular, consistent with market settings where actors tend to perform entirely distinct roles, we allow actors’ resource contributions to be imperfectly substitutable. We find that while heterogeneity in growth strategies strongly reduces market emergence thresholds under perfect substitution, this effect is strongly suppressed under imperfect substitutability. Most important, our analyses point to a market emergence conundrum: market success depends mostly on collaboration precisely where the foundation for its existence is lowest. We develop a set of propositions and a grounded typology of ideal typical instances of market formation. We discuss the implications of our findings for connecting collective action and market formation research.

Suggested Citation

Struben, Jeroen and Lee, Brandon H. and Lee, Brandon H., Market Formation: Examining the Coordination of Heterogeneous Contributions (April 15, 2012). Available at SSRN: https://ssrn.com/abstract=2340799 or http://dx.doi.org/10.2139/ssrn.2340799

Jeroen Struben

emlyon business school ( email )

23 Avenue Guy de Collongue
Ecully, 69132
France

HOME PAGE: http://https://www.marketformationdynamics.org/jeroen-struben

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Cambridge, MA 02142
United States

HOME PAGE: http://web.mit.edu/jjrs/www/

Brandon H. Lee (Contact Author)

Melbourne Business School ( email )

200 Leicester Street
Carlton, VIC 3053
Australia

Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

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