Category Stretching: Reorienting Research on Categories in Strategy,Entrepreneurship, and Organization Theory

We advocate for more tolerance in the manner we collectively address categories and categorization in our research. Drawing on the prototype view, organizational scholars have provided a ‘disciplining’ framework to explain how category membership shapes, impacts, and limits organizational success. By stretching the existing straightjacket of scholarship on categories, we point to other useful conceptualizations of categories – i.e. the causal‐model and the goal‐based approaches of categorization – and propose that depending on situational circumstances, and beyond a disciplining exercise, categories involve a cognitive test of congruence and a goal satisfying calculus. Unsettling the current consensus about categorical imperatives and market discipline, we suggest also that audiences may tolerate more often than previously thought organizations that blend, span, and stretch categories. We derive implications for research about multi‐category membership and mediation in markets, and suggest ways in which work on the theme of categories in the strategy, entrepreneurship, and managerial cognition literatures can be enriched.     

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

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.     

Figuring out IT markets: How and why industry analysts launch,adjust and abandon categories

Despite being a source of significant change, there has been little focus on how and why industry analysts constantly launch, adjust and abandon market-defining categories. To address this issue, we investigate the Big Three industry analyst firms and find that they promote categories clients find valuable and adjust or abandon those no longer attracting attention. Bringing together insights from information systems research and category scholarship, we show that industry analysts ensure their expertise is seen as relevant to clients through material and visual processes theorised as category-work, figuring-work, and client-mapping, which together create client-induced categories’. This novel theorisation throws light on the processes market intermediaries use to align categories with client concerns and how incorporating categories in graphical figurations can intensify the cycle of category creation and abandonment. It also enhances understanding of the dynamics surrounding transitory terminologies and opens up new research opportunities for studying IT markets.     

Categorizing Categorization Research: Review,Integration, and Future Directions

This paper offers a systematic review of the literature on organizational categories and categorization published in the last 14 years (1999–2012). After identifying a core of roughly 100 papers on categories that appeared in management, organization, and sociology journals, we classified them based on several key dimensions, and analysed a few trends within the categorization literature. Our most surprising finding may be the fact that until recently, there was no mutual recognition of the existence of a distinct ‘literature on categories’ despite the wealth of published material on the topic. After summarizing some core theoretical features of that emergent literature, we propose integrative definitions of its core constructs and suggest several areas of research that could further enrich it in the future.     

An Ontological Turn in Categories Research: From Standards of Legitimacy to Evidence of Actuality

In this Counterpoint to Durand and Paolella, we argue that prior work on categories has neglected processes of category emergence and dissolution. In response, we call for studies of categories that focus on how they emerge and fall out of use and on what they come to mean. We call this an ontological turn in categories research because systems of categorization and their associated meanings capture and reflect what societies view as social realities, or ontologies. As a guide to this broad topic, we develop a framework that relates the effects of categories to the familiarity of (1) occasions and motivations for their usage and (2) meanings and ontologies they carry, and we use this framework to elaborate two paths by which previously unfamiliar categories become accepted as elements of common knowledge. These paths jointly inform the recognition front of the emergence question, an understudied problem in organization studies. Finally, we outline two methodologies – set theoretic analysis and network‐based analysis – that offer particular promise for analysing processes of category emergence and dissolution.     

Policy modes,firms and the natural environment

This paper examines how different environmental policy types differentially impact firms and why firms vary in their responses to such policies. Based on the mechanisms embedded in policy instruments to create incentives for firms to comply, the characteristics of benefits/costs that policies impose on firms and the institutional context in which policy instruments were created and are sustained, the paper identifies five policy categories. These are category I (command and control), category II (market based), category III (mandatory information disclosures), category IV (business–government partnerships) and category V (private voluntary codes). Different policy types often bestow asymmetrical benefits/costs on firms. Some benefits/costs may constitute ‘private/club goods’ while others may constitute ‘public goods’. Drawing insights from public policy literature, the paper argues that firms can be expected to favor policies whose benefits have the characteristics of private/club goods but the costs of public goods. Thus, understanding the nature of benefits/costs (private/club versus public) and the magnitude of their excludability is critical in explaining the variations in firms' responses. To understand how managers perceive the nature of benefits/costs (monetary as well as non‐monetary), the paper draws on theories and perspectives in the business and public policy field. In doing so, the paper examines the ‘demand’ and the ‘supply’ sides as well as the market and non‐market environments of a given policy. Thus, the paper makes a case for a multi‐theoretic approach to understand variations in managerial assessments of benefits/costs, and consequently variations in their responses to various policy types. Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment.     

Managing Knowledge in Loosely Coupled Networks: Exploring the Links between Product and Knowledge Dynamics

The contemporary literature concentrates on ‘make or buy’ decisions in design and production activities, assuming that decisions about the underlying fields of technological knowledge will automatically be the same. Building on previous research on multitechnology firms and products, this paper argues that firms know more about technology than they apply in their own production. We propose two major dimensions according to which firms should adjust their knowledge and production boundaries, namely systemic interdependencies across components and uneven rate of change across components’ underlying knowledge bases. We analyse the implications of this less‐than‐perfect overlap between knowledge and production boundaries for the management of firms’ external relationships.     

Statistical methods for some simple disclosure limitation rules

To guard the confidentiality of information provided by respondents, statistical offices apply disclosure limitation techniques. An often applied technique is to ensure that there are no categories for which the population frequency is presumed to be small (‘rare’ categories). This is attained by recoding, top-coding or setting values to ‘unknown’. Since population frequencies are usually not available, the decision that a category is rare is often based on intuitive considerations. This is a time consuming process, involving many decisions of the disclosure limitation practitioners. In this paper it will be explored to what extent the sample frequencies can be used to make such decisions. This leads to a procedure which enables to automatically scan a data set for rare category combinations, whereby ‘rare’ is defined by the disclosure limitation policy of the statistical office.     

An unsuitable job for a woman: a ‘native category’ approach to gender,diversity and cross-cultural management

This paper takes an ethnographic study of the recruitment of women at BMW MINI between 2003 and 2006 as the basis to explore the impact of the concepts of ‘native categories’ and ‘recontextualisation’ on diversity management and cross-cultural management. I consider how managers' and workers' subconsciously held cultural categories relating to gender and work affected efforts to increase the number of female line workers in the plant, and how these were further complicated by the recontextualisation of German native categories in a British context. In doing so, this paper will develop a better understanding of the way native categories affect management and international business, provide an addition to the literature on recontextualisation, by introducing the concept of ‘native categories’ to research exploring the effects of recontextualisation on cross-cultural knowledge transfer, international human resource management strategy and marketing, and, finally, develop some understanding of how diversity management initiatives can fail in practice.     

A Global Value Chain Analysis of the ‘Regional Strategy’ Perspective

In this counterpoint paper we argue that the findings presented by the ‘regional strategy’ literature do not capture the full array of global activities of the multinational enterprise (MNE). While this literature makes an important contribution to the field by showing that sales and production activities in the MNE are regionally structured, we argue that this assessment is biased for two reasons. First, this approach overly focuses on geographical location of downstream activities, while disregarding that of knowledge creation and other relevant upstream activities in the MNE. Second, the approach associates the firm's value creation only with its internalized activities and does not capture the value created through any activities that are externalized. Many MNEs rely to a significant extent on value creation outside the firm's legal boundaries. We argue that such omissions are likely to lead to biased interpretations using different theoretical lenses, such as the knowledge‐/resource‐based view, internalization theory and more general transaction cost economics. Based on our reasoning, we provide recommendations for future research both within and beyond the ‘regional strategy’ literature.     

Categories,Identities, and Cultural Classification: Moving Beyond a Model of Categorical Constraint

Categorization processes have gained currency in organizational theory. Categories are endemic to organizations and markets, serving as touchstones for organizational identity claims and for audience attention, legitimation, and valuation. Durand and Paolella argue for an expansion of current perspectives on categories, particularly that of prototype theory. Although we agree in spirit, we advocate an expansion of their perspective, which seems to focus primarily on the cognitive aspects of categorization and the force of their constraint, particularly at the individual level of analysis. We suggest three revisions to Durand and Paolella's arguments in order to extend the conversation. First, we advocate that categorization processes might usefully be understood by socio‐cultural perspectives that explicitly consider the role of audiences and the embeddedness of categories in wider classification systems. Second, we connect categorization processes to identity formation and maintenance at the levels of both the organization and the market. Third, we move beyond the constraining power of categories to consider their generative capabilities in processes of emergence and change. Overall, we discuss these in the context of organizational identities and cultural classification systems.     

Ontology With Human subjects Testing:

A bstract The paper presents a framework for the formulation and testing of ontological theories embodied in human cognition, concentrating primarily on the domain of geographic categories. Evidence for and against alternative theories of cognitive categories, for example on the part of E. Rosch and her associates, has been hitherto hased primarily on studies of categorization of entities of table-top space (pets, tools, fruits). We hypothesize that the structure of our categories does not remain constant as we move from categories of abjects at manipulable scales to geographic categories suchas nation, mountain, river. Mre precisely: Geographic objects are not merely located in space, they are tied intrinsically to space in such a way that they inherit from space many of its structural (mercological, topological, geometrical) properties. Categorization in the geographic world is often size-or scale-dependent (consider:pond, lake, sea, ocean), and to a much greater extent than in the world of table-top space, the realization that a thing or type of thing exists at all in the geographic world may have individual or culturalvariability. Geographic objects are in very many cases the products of delineation within a continuum, and the boundaries of such objects are themselves highly salient phenomena for purposes of categorization. A battery of experiments is described to test these hypotheses and to serve as bases for more detailed ontological theorizing.     

An empirical investigation of environmental performance and the market value of the firm

This paper analyzes the shareholder value effects of environmental performance by measuring the stock market reaction associated with announcements of environmental performance. We examine the market reaction to two categories of environmental performance. The first category includes 417 announcements of Corporate Environmental Initiatives (CEIs) that provide information about self-reported corporate efforts to avoid, mitigate, or offset the environmental impacts of the firm's products, services, or processes. The second category includes 363 announcements of Environmental Awards and Certifications (EACs) that provide information about recognition granted by third-parties specifically for environmental performance. Although the market does not react significantly to the aggregated CEI and EAC announcements, we find statistically significant market reactions for certain CEI and EAC subcategories. Specifically, announcements of philanthropic gifts for environmental causes are associated with significant positive market reaction, voluntary emission reductions are associated with significant negative market reaction, and ISO 14001 certifications are associated with significant positive market reaction. The difference between the market reactions to the CEI and EAC categories is statistically insignificant. Overall, the market is selective in reacting to announcements of environmental performance with certain types of announcements even valued negatively.     

Role of Knowledge in Value Creation in Business Nets*

abstract This paper focuses on the role of knowledge in intentionally created business networks called nets. Nets are seen to offer firms collective benefits beyond those of a single firm or market transaction. We propose that the types of knowledge and learning required in the management of different types of business net are dependent on the value creation characteristics of the net types. Based on this we suggest a classification of three generic net types –‘current business nets’, ‘business renewal nets’, and ‘emerging new business nets’– and argue that they pose different conditions for management in nets. Using this framework and integrating notions from the industrial network approach, strategic management and dynamic capabilities view, and organizational learning we make a number of observations and propositions about the role of knowledge and learning in the three types of business net. The paper contributes to the emerging theory of network management.     

Institutional monitoring,coordination and corporate acquisitions in China

Within the context of corporate acquisition decisions of China’s Publicly Listed Corporations (PLCs), this paper investigates the monitoring and coordination behaviour of institutional shareholders. Institutional shareholders are divided into four groups: large outsider, large insider, small outsider and small insider. The outsider and insider categorization, respectively, represents the absence of significant business links with relevant PLCs. In China, institutional shareholders tend to either monitor the acquisitions decisions of PLCs or coordinate their response with the controlling shareholders (coordination in the present context amounts to cooperation). Using micro data from China’s stock market over the 2003–2008 period, we find that (through ex-ante coordination with the controlling shareholders) the insider institutional investment tends to increase the likelihood of PLC acquisitions. However, through ex-ante monitoring of the PLC acquisition offers, the outsider institutional investment tends to decrease the acquisition likelihood. We find that, through ex-post monitoring of PLC acquisitions, institutional investors with large shareholdings can help improve the post-acquisition performance of Chinese PLCs. On the other hand, institutional investors with small shareholdings tend to coordinate their actions with the controlling shareholders. Accordingly, small institutional shareholders cannot affect the post-acquisition performance of China’s PLCs. Finally, we find that the so-called ‘cherry-picking effect’ exists only in the case of large outsider institutional investors.     

A Capabilities Perspective on the Evolution of Firm Boundaries: A Comparative Case Example from the Portuguese Moulds Industry*

ABSTRACT The issue of vertical firm boundaries continues to attract interest both for economics and management research. The transaction cost economics approach, emphasizing transaction‐specific assets and opportunism in order to explain discrete ‘make‐or‐buy’ decisions, dominates the literature. Nevertheless, alternative perspectives, developed under the guise of the capabilities, competence or knowledge‐based theories of the firm, have gained attention recently. They focus on the evolutionary dynamics of boundaries in the context of the division of labour among firms in an industry and on what is to be divided and co‐ordinated – i.e. productive knowledge. The conceptual links between this line of research, which some refer to as neo‐Marshallian, and the Industrial Networks approach are explored in this paper. The paper emphasizes both a vision of firms as sets of direct and indirect capabilities, developed and combined in different ways over time, and the connectedness between inter‐firm relationships. The discussion is illustrated with the cases of two firms, which are contrasted in terms of the dynamic evolution of their boundaries. The analysis made supports the argument that firms’ vertical boundaries reflect their relationships with specific counterparts and the way they address through time the division and integration of knowledge through the configuration of direct and indirect, counterpart specific, capabilities.     

Strategic entrepreneurship and knowledge spillovers: spatial and aspatial perspectives

The literature in the Strategic Entrepreneurship (SE) is increasingly embracing the concept and implications of knowledge spillovers. In this paper, we add to the theoretical repertoire on SE and knowledge spillovers by investigating the types of knowledge spillovers and what they imply for various dimensions of SE. On the one hand, we distinguish between spatial and aspatial knowledge spillovers. On the other hand, we distinguish between three dimensions of SE, i.e. inputs, resource orchestration, and output. Finally, we conceptually link the various types of knowledge spillovers and dimensions of SE and discuss the implications. Doing so, we argue that spatial knowledge spillovers (inter-firm) has received the major attention in previous research in increasing the amount of ‘inputs’ dimension of SE, while the aspatial knowledge (either inter-regional or intra-firm) has been relatively neglected not only for ‘inputs’, but also for ‘resource orchestration’ dimension. At the end, the paper provides suggestions for future research.     

Anchors in Rough Seas: Understanding Category Spanning as a Source of Market Coordination

Prior research has deemed products that span market categories a source of cognitive and institutional disruption. Portraying spanning products as purely disruptive elements, however, does not consider their large presence in markets and, consequently, the fact that producers and consumers continue to coordinate their activities on established categories despite pervasive spanning. Our paper addresses this gap by focusing on commercial success as an important condition under which spanning products, rather than being a source of disruption, sustain market coordination. From the producer side, an increasing number of commercially successful products spanning a focal category stimulates mimicry. From the consumer side, this mimicry, net of the overall level of spanning observed in the category, improves consensus. We test these arguments by focusing on the styles that map electronic music as the established categories of a market. Empirical analyses lend support to our hypotheses.     

Categorizing Neighborhoods: The Invention of ‘Sensitive Areas’ in France and ‘Historic Districts’ in the United States

This essay offers a reflexive return to two research projects to demonstrate the value of Bourdieu's emphasis on the symbolic for the analysis of contemporary urban transformation. Bourdieu's insistence that we track the social genesis and diffusion of spatial categories of thought and action directs us to the empirical study of the struggles between agents and organizations that promote and/or oppose these categories, as well as the political, economic and other interests animating the agents. A retracing of the parallel invention of the ‘at‐risk neighborhood’ (quartier sensible) coined for and targeted by French urban policy since the late 1980s and the emergence of ‘historic’ or ‘diverse’ neighborhoods touted by gentrifying residents, cultural organizations and real estate agents in the United States since the 1960s challenges misleading oppositions between materiality and representations that often underpin and cramp urban research.