Optimal distinctiveness in platform markets: Leveraging complementors as legitimacy buffers

Abstract

Entrepreneurial ventures strategically communicate information about themselves to convey their distinctiveness and attract favorable audience attention. This study explores how the possession of quality-signaling resources, such as patents, influences the degree to which entrepreneurial ventures convey distinctiveness in their entrepreneurial narratives. Cultural entrepreneurship research spotlights such resources as the ingredients around which entrepreneurs construct distinctive narratives and proposes that resource-rich ventures will present themselves as particularly distinctive. Challenging this, we argue that ventures rich in quality-signaling resources-while ideally positioned to convey their distinctiveness-will likely forgo this symbolic differentiation opportunity under certain industry conditions due to a lack of external incentives. Our analysis of 31,270 UK-based ventures launched between 2010 and 2021 finds that, compared to patent-poor ventures, patent-rich ventures exhibit higher levels of narrative distinctiveness when situated in industries that receive little attention, but substantially lower levels of narrative distinctiveness when situated in hot industries that attract a lot of attention. In doing so, our study challenges the assumption that entrepreneurial ventures always aim to present themselves as distinctive as legitimately possible, delineates conditions under which this assumption is likely violated, and lays the groundwork for a broader research agenda on organizations' substantive and symbolic differentiation.

Keywords: Positioning, Differentiation, Legitimacy, Optimal Distinctiveness, Platforms, Platform Competition, Platform Strategy, Inter-organizational ties, Status, Complementors, Massive Open Online Courses (MOOCs), Entrepreneurial Ventures

JEL Classification: L26, L14, L86, D21, M13, M31