Organizational innovation efforts in multiple emerging market categories: Exploring the interplay of opportunity, ambiguity, and socio-cognitive contexts

Industries with emerging market categories offer greater opportunities for firms to innovate. However, such opportunities are not a matter of “the more, the better.” An increasing number of emerging market categories poses a dilemma. While more emerging market categories arguably bring about increasing growth opportunities, they can also generate greater ambiguity for incumbent firms, which may hinder their innovation efforts. This study attempts to address this dilemma by proposing that the number of emerging market categories in an industry will have an inverted U-shaped relationship with incumbent firms’ innovation efforts. We further argue that this curvilinear relationship will be influenced by the socio-cognitive context of a firm's focal industry, in the sense that the degree of collective identity incoherence at the industry level will intensify the proposed inverted U-shaped relationship, whereas the prevalence of trade associations in the industry will depress this relationship. We test our hypotheses by examining research and development (R&D) investments of a sample of U.S. high-technology manufacturing firms and find support for our main prediction and the hypothesized effect of collective identity incoherence. We also find a surprising but intriguing moderating effect of trade associations.