Categories in Markets: Origins and Evolution: Volume 31

The concept of a “category” and the social process of “categorization” occupy a crucial place in current theories of organizations. In this introductory chapter to Research in the Sociology of Organization's volume on Categories in Markets: Origins and Evolution, we review published work in various streams of research and find that studies of organizational forms and identities, institutional logics, collective action frames, and product conceptual systems have key commonalities and predictable differences.

This study focuses on how the creation of a new market identity, defined here by the social categories that specify what to expect of products and organizations, helps legitimize normatively illegitimate products and thereby facilitate the formation of markets for these products. A product is given a legitimate market identity by recombining existing product and status categories in a way that is both isomorphic with and differentiated from these preexisting categories. I argue that the creation of a new market identity helped create a market for feature films that combined legitimate comedy and illegitimate pornography following the legalization of pornography in Denmark in 1969. Topological analyses of the cultural content of all the film posters used to promote Danish films between 1970 and 1978, and regression analyses of the status of the actors appearing in these films document the importance of market identity in legitimizing illegitimacy.

We explore how the long-run success of cultural products is affected by the identities of the product's originators and early adopters. Using U.S. jazz recordings from 1920 to 1929, we found that songs were more likely to be later covered from 1944 to 2004 if they followed a pattern of having black originators and white early adopters. Moreover, we provide evidence that this pattern is independent of a song's commercial success, resources available to a song's originators, and group-level indicators such as size and experience. We conclude that late adopters (musicians after World War II (WWII)) were attracted to songs that followed a narrative of both “lowbrow” origins and early adoption by those considered “highbrow” with respect to jazz. The findings also support a new means for considering the role of identities as the building blocks of genres, in particular, and categories more generally.

Understanding when new forms will emerge constitutes a core theoretical issue for organizational theory. The ecological theory of form emergence falls short of providing a full explanation because it treats legitimation as a primitive (unexplained) concept. Here, we use Hannan, Pólos, and Carroll's (2007) revised theory of organizational evolution to interpret and respecify the legitimation part of the density dependence model. Among other advantages, the respecification allows us to incorporate the insights of the “cultural-frame” institutional perspective. We study early Dutch accounting, an industry setting where form legitimation was fiercely contested by several professional associations in the period 1884–1939. We develop an analytical narrative about the historical legitimation process, and we also present systematic tests of the theory examining predictions about “fuzzy” density and population contrast. Estimated models of firm exit support the revised theory and reveal that fuzziness, induced from fragmented collective action, hampers it.

With growing interest in the penalties associated with straddling market categories, it is important to develop a stock of evidence about the relative importance of consideration and valuation penalties in different empirical settings. In this chapter, we isolate the possible adverse implications for currently kosher Israeli wine producers that were established as non-kosher producers. Our analysis suggests that crossing the kosher categorical boundary exposes these producers to experience-based penalties that are reflected in lower product quality ratings. However, we find no evidence of additional penalties associated either with consideration (i.e., market access) or with the possession of a convoluted organizational identity.

Recent research finds that producers assigned to multiple categories receive less attention and legitimacy and have lower chances of success and survival. We argue that the effect of category spanning on the reception from the audience depends on the fuzziness of the categories. When a set of categories lacks contrast (have very fuzzy boundaries), spanning them does not cause much additional confusion for the audience, thus the penalties associated with spanning ought to be slight. But, when the contrasts of the categories spanned are high, audience members will have difficulty interpreting the producer, so spanning categories will be devalued more. We study these processes using data from an online-review web site. Results show that audience members devalue organizations that span high-contrast categories more than those that span low-contrast categories. These effects are weaker for more active reviewers.

We study how tape drive producers respond to the almost continuous emergence of new drive formats across the technology's history. The analysis characterizes the technological formats of tape drives according to their degree of contrast (distinctiveness and visibility) from other formats. We also develop and test arguments about how different types of tape drive manufacturers add and drop the production of formats as a function of the producer density of formats. In the empirical analysis, we find that firms producing formats with high contrast experience a lower rate of mortality. In terms of new format adoption, we find that firms characterized by high levels of contrast are more likely to add formats. Regarding the target of adoption, tape drive producers are more likely to add higher density formats; and these producers are also less likely to drop higher density formats.

Identity movements rely on a shared “we-feeling” among a community of participants. In turn, such shared identities are possible when movement participants can self-categorize themselves as belonging to one group. We address a debate as to whether community diversity enhances or impedes such protests, and investigate the role of racial diversity since it is a simple, accessible, and visible basis of community diversity and social categorization. We focus on American communities’ protests against Walmart's entry from 1998 until 2005 and ask whether racial diversity affects protests after accounting for a community's sense of pride and attachment to their town. We use distance from historical monuments as a proxy of a community's pride and attachment, and after controlling for it, we find that community's racial homogeneity significantly increases protests against Walmart.

Organizational scholars increasingly appreciate the role of categories as bases of order or “cognitive infrastructures” in markets. Yet they construe categories as disciplinary devices. They understand category formation, implementation, and revision as the purview of professionals. And they tie those processes to notions of institutional development that sharply distinguish settled from unsettled or disordered eras. We challenge these conceptions through a historical study of how manufacturers, associations, and cost accountants broke from the disciplinary functions of accounting categories underlying mass production to create new categorical schemes devoted to learning, innovation, and improvement. Reformers reconfigured the uses of categories in markets, mobilizing classifications to spark reflection, experimentation, and improvement among firms by perturbing taken-for-granted assumptions. They also redesigned the practices of producing, implementing, and revising categories. Manufacturers themselves produced and routinely revised classifications through collective deliberation, while accountants served as their consultants, rather than autonomous authorities who monopolized category formation and implementation. In so doing, reformers forged foundations for upgrading markets and fostering competition based on innovation and improvement in a variety of industries. Based on these findings, we extend existing research beyond categorical imperatives to highlight how categories also serve as cognitive infrastructures for learning, discovery, and innovation in markets.

Empirical research demonstrates that category specialism is aligned with competitive success and that social actors indulging in perceptual violations of social codes are subjected to devaluations. Through category generalism, however, social actors may obtain access to diverse set of audience segments. This chapter investigates such a trade-off in the context of political ideologies – conceived here as composed of social codes and exposed to a discipline similar to that of market categories. A successful instance of repositioned identity is introduced and discussed: the case of the British Liberal Democrats Party during the post-WWII period. Particular attention is dedicated to the process of recombination of own and oppositional social codes. This strategy contributed to increase the audience attention received on each of the issues traditionally “owned” by the Liberal Democrats Party. Party level analyses suggest that the borrowed issues improved audience attention when they contributed to extend and clarify the ideological roots of the Liberal Party. The implications of this case study for current research on market categories are further discussed.

Miller McPherson's approach to measuring the inherent duality of organizational forms and the environmental niches that they occupy is adapted and applied to an analysis of the institutional field of (outdoor) poverty relief organizations operating in New York City (1888–1917). In contrast to McPherson's approach that emphasizes how organizations are differentially arrayed within “Blau space,” this chapter focuses on how organizational forms are distributed across an institutional “logic space” that is itself dually ordered and defined by the kinds of organizational forms that are understood to exist. The resulting niche maps are employed to trace out the jurisdictional conflicts that erupted during the Progressive Era between two competing organizational forms – scientific charities and settlement houses – each of which embodied a particular vision and practice for delivering social relief to the poor.

In markets, audiences generally discount offerings that fail to fit established product categories, but when misfit offerings change category meaning, the effects of conformity and deviation can reverse so that previously overlooked or unappealing offerings become popular while previously appealing products fall into disfavor. After introducing the idea of category currency to explain how the value of conformity changes with ongoing meaning construction, we use it to make sense of the emergence of nanotechnology. In conclusion, we argue that category currency is useful for explaining the changing value of conformity both in and beyond markets.