Collective Action and Market Formation: An Integrative Framework
Strategic Management Journal, Forthcoming
45 Pages Posted: 1 Aug 2018 Last revised: 27 Mar 2020
Date Written: August 23, 2017
While extant research recognizes the importance of collective action for market formation, it provides little understanding about when and to what extent collective action is important. In this paper, we develop a novel theoretical framework detailing what collective action problems and solutions arise in market formation and under what conditions. Our framework centers on the development of market infrastructure with three key factors that influence the nature and extent of collective action problems: perceived returns to contributions, excludability, and contribution substitutability. We apply our framework to diverse market formation contexts and derive a set of attendant propositions. Finally, we show how collective action problems and solutions evolve during market formation efforts and discuss how our framework contributes to strategic management, entrepreneurship, and organization literatures.
Keywords: Market Formation, Collective Action, Collective Action Problems, Coordination, Uncertainty
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