IDEAS home Printed from https://ideas.repec.org/a/inm/orstsc/v3y2018i4p620-631.html
   My bibliography  Save this article

Category Strategy for Firm Advantage

Author

Listed:
  • Elizabeth G. Pontikes

    (Booth School of Business, University of Chicago, Chicago, Illinois 60637)

Abstract

The decision of where to position in a market is crucial to firm success. Most strategy research focuses on either choosing an attractive industry or firm-level differences that lead to sustained advantage. In both approaches, how the industry or submarket is defined is typically taken as an exogenous constraint. But firms also can shape market categories in ways that advantage the firm. In this article, I draw on research in strategy, sociology, and cognitive science to show category strategy is foundational to strategic decisions around competitive positioning. Cognitively, the market categories people use define the playing field for firms, as they partially determine competitive sets and evaluation standards. Sociologically, definitions of market categories are subject to social influence. This means strategic decisions about how to position within the market affect how market categories are defined and evolve, which firms can (and should) use to achieve long-term value.

Suggested Citation

  • Elizabeth G. Pontikes, 2018. "Category Strategy for Firm Advantage," Strategy Science, INFORMS, vol. 3(4), pages 620-631, December.
    • Handle: RePEc:inm:orstsc:v:3:y:2018:i:4:p:620-631
    DOI: 10.1287/stsc.2018.0070
    as

    Download full text from publisher

    File URL: https://doi.org/10.1287/stsc.2018.0070
    Download Restriction: no
    File URL: https://libkey.io/10.1287/stsc.2018.0070?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. R. E. Caves & M. E. Porter, 1977. "From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(2), pages 241-261.
    2. John McGee & Howard Thomas, 1986. "Strategic groups: Theory, research and taxonomy," Strategic Management Journal, Wiley Blackwell, vol. 7(2), pages 141-160, March.
    3. William P. Barnett & Elizabeth G. Pontikes, 2008. "The Red Queen, Success Bias, and Organizational Inertia," Management Science, INFORMS, vol. 54(7), pages 1237-1251, July.
    4. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Gino Cattani & Joseph F. Porac & Howard Thomas, 2017. "Categories and competition," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 64-92, January.
    5. Kaplan, Sarah & Tripsas, Mary, 2008. "Thinking about technology: Applying a cognitive lens to technical change," Research Policy, Elsevier, vol. 37(5), pages 790-805, June.
    6. Violina P. Rindova & Antoaneta P. Petkova, 2007. "When Is a New Thing a Good Thing? Technological Change, Product Form Design, and Perceptions of Value for Product Innovations," Organization Science, INFORMS, vol. 18(2), pages 217-232, April.
    7. Giacomo Negro & Michael T. Hannan & Hayagreeva Rao, 2010. "Categorical contrast and audience appeal: niche width and critical success in winemaking," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(5), pages 1397-1425, October.
    8. Philippe Monin & Hayagreeva Rao & Rodolphe Durand, 2005. "Border crossing : Bricolage and the Erosion of Categorical Boundaries in French Gastronomy," Post-Print hal-02311675, HAL.
    9. Rodolphe Durand & Lionel Paolella, 2013. "Category Stretching: Reorienting Research on Categories in Strategy, Entrepreneurship, and Organization Theory," Journal of Management Studies, Wiley Blackwell, vol. 50(6), pages 1100-1123, September.
    10. Nina Granqvist & Stine Grodal & Jennifer L. Woolley, 2013. "Hedging Your Bets: Explaining Executives' Market Labeling Strategies in Nanotechnology," Organization Science, INFORMS, vol. 24(2), pages 395-413, April.
    11. Margaret Peteraf & Mark Shanley, 1997. "Getting To Know You: A Theory Of Strategic Group Identity," Strategic Management Journal, Wiley Blackwell, vol. 18(S1), pages 165-186, July.
    12. Sarah Kaplan & Keyvan Vakili, 2015. "The double-edged sword of recombination in breakthrough innovation," Strategic Management Journal, Wiley Blackwell, vol. 36(10), pages 1435-1457, October.
    13. David L. Deephouse, 1999. "To be different, or to be the same? It’s a question (and theory) of strategic balance," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 147-166, February.
    14. Karel O. Cool & Dan Schendel, 1987. "Strategic Group Formation and Performance: The Case of the U.S. Pharmaceutical Industry, 1963--1982," Management Science, INFORMS, vol. 33(9), pages 1102-1124, September.
    15. Greta Hsu & Michael T. Hannan, 2005. "Identities, Genres, and Organizational Forms," Organization Science, INFORMS, vol. 16(5), pages 474-490, October.
    16. Gino Cattani & Daniel Sands & Joe Porac & Jason Greenberg, 2018. "Competitive Sensemaking in Value Creation and Capture," Strategy Science, INFORMS, vol. 3(4), pages 632-657, December.
    17. Elizabeth G. Pontikes & William P. Barnett, 2015. "The Persistence of Lenient Market Categories," Organization Science, INFORMS, vol. 26(5), pages 1415-1431, October.
    18. Clark, Kim B., 1985. "The interaction of design hierarchies and market concepts in technological evolution," Research Policy, Elsevier, vol. 14(5), pages 235-251, October.
    19. Durand , Rodolphe & Paolella , Lionel, 2013. "Category Stretching: Reorienting Research on Categories in Strategy, Entrepreneurship, and Organization Theory," HEC Research Papers Series 996, HEC Paris.
    20. Joseph F. Porac & Howard Thomas & Charles Baden‐Fuller, 1989. "Competitive Groups As Cognitive Communities: The Case Of Scottish Knitwear Manufacturers," Journal of Management Studies, Wiley Blackwell, vol. 26(4), pages 397-416, July.
    21. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    22. Rodolphe Durand & Lionel Paolella, 2013. "Category Stretching: Reorienting Research on Categories in Strategy, Entrepreneurship, and Organization Theory," Post-Print hal-01026129, HAL.
    23. Felipe A. Csaszar, 2018. "What Makes a Decision Strategic? Strategic Representations," Strategy Science, INFORMS, vol. 3(4), pages 606-619, December.
    24. Pontikes, Elizabeth G. & Barnett, William P., 2015. "The Persistence of Lenient Market Categories," Research Papers 3002, Stanford University, Graduate School of Business.
    25. Gerard Hoberg & Gordon Phillips, 2010. "Product Market Synergies and Competition in Mergers and Acquisitions: A Text-Based Analysis," The Review of Financial Studies, Society for Financial Studies, vol. 23(10), pages 3773-3811, October.
    26. Keith Weigelt & Ian Macmillan, 1988. "An interactive strategic analysis framework," Strategic Management Journal, Wiley Blackwell, vol. 9(S1), pages 27-40, June.
    27. Ashish Arora & Michelle Gittelman & Sarah Kaplan & John Lynch & Will Mitchell & Nicolaj Siggelkow & Steven J. Kahl & Stine Grodal, 2016. "Discursive strategies and radical technological change: Multilevel discourse analysis of the early computer (1947–1958)," Strategic Management Journal, Wiley Blackwell, vol. 37(1), pages 149-166, January.
    28. Rodolphe Durand & Hayagreeva Rao & Philippe Monin, 2005. "Border Crossing: Bricolage and the Erosion of Categorical Boundaries in French Gastronomy," Post-Print hal-00457938, HAL.
    29. Violina Rindova & Walter J. Ferrier & Robert Wiltbank, 2010. "Value from gestalt: how sequences of competitive actions create advantage for firms in nascent markets," Strategic Management Journal, Wiley Blackwell, vol. 31(13), pages 1474-1497, December.
    30. Constance E. Helfat, 1997. "Know‐how and asset complementarity and dynamic capability accumulation: the case of r&d," Strategic Management Journal, Wiley Blackwell, vol. 18(5), pages 339-360, May.
    31. Aaron K. Chatterji & Rodolphe Durand & David I. Levine & Samuel Touboul, 2016. "Do ratings of firms converge? Implications for managers, investors and strategy researchers," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1597-1614, August.
    32. Tyler Wry & Michael Lounsbury & Mary Ann Glynn, 2011. "Legitimating Nascent Collective Identities: Coordinating Cultural Entrepreneurship," Organization Science, INFORMS, vol. 22(2), pages 449-463, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jerker Denrell & Balázs Kovács, 2020. "The Ecology of Management Concepts," Strategy Science, INFORMS, vol. 5(4), pages 293-310, December.
    2. Aaron K. Chatterji & Jiao Luo & Robert C. Seamans, 2021. "Categorical Competition in the Wake of Crisis: Banks vs. Credit Unions," Organization Science, INFORMS, vol. 32(3), pages 568-586, May.
    3. Paolo Aversa & Annelore Huyghe & Giulia Bonadio, 2021. "First Impressions Stick: Market Entry Strategies and Category Priming in the Digital Domain," Journal of Management Studies, Wiley Blackwell, vol. 58(7), pages 1721-1760, November.
    4. Elizabeth George Pontikes, 2022. "Category innovation in the software industry: 1990–2002," Strategic Management Journal, Wiley Blackwell, vol. 43(9), pages 1697-1727, September.
    5. Joost Rietveld & Robert Seamans & Katia Meggiorin, 2021. "Market Orchestrators: The Effects of Certification on Platforms and Their Complementors," Strategy Science, INFORMS, vol. 6(3), pages 244-264, September.
    6. Majid Majzoubi & Eric Yanfei Zhao, 2023. "Going beyond optimal distinctiveness: Strategic positioning for gaining an audience composition premium," Strategic Management Journal, Wiley Blackwell, vol. 44(3), pages 737-777, March.
    7. Karl Taeuscher & Eric Yanfei Zhao & Michael Lounsbury, 2022. "Categories and narratives as sources of distinctiveness: Cultural entrepreneurship within and across categories," Strategic Management Journal, Wiley Blackwell, vol. 43(10), pages 2101-2134, October.
    8. Jeroen Struben & Brandon H. Lee & Christopher B. Bingham, 2020. "Collective Action Problems and Resource Allocation During Market Formation," Strategy Science, INFORMS, vol. 5(3), pages 245-270, September.
    9. Balázs Kovács & Gianluca Carnabuci & Filippo Carlo Wezel, 2021. "Categories, attention, and the impact of inventions," Strategic Management Journal, Wiley Blackwell, vol. 42(5), pages 992-1023, May.
    10. Elizabeth G. Pontikes & Violina P. Rindova, 2020. "Shaping Markets Through Temporal, Constructive, and Interactive Agency," Strategy Science, INFORMS, vol. 5(3), pages 149-159, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elizabeth George Pontikes, 2022. "Category innovation in the software industry: 1990–2002," Strategic Management Journal, Wiley Blackwell, vol. 43(9), pages 1697-1727, September.
    2. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Gino Cattani & Joseph F. Porac & Howard Thomas, 2017. "Categories and competition," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 64-92, January.
    3. Paolo Aversa & Annelore Huyghe & Giulia Bonadio, 2021. "First Impressions Stick: Market Entry Strategies and Category Priming in the Digital Domain," Journal of Management Studies, Wiley Blackwell, vol. 58(7), pages 1721-1760, November.
    4. Eric Yanfei Zhao & P. Devereaux Jennings & Masakazu Ishihara & Michael Lounsbury, 2018. "Optimal Distinctiveness in the Console Video Game Industry: An Exemplar-Based Model of Proto-Category Evolution," Organization Science, INFORMS, vol. 29(4), pages 588-611, August.
    5. Goldenstein, Jan & Hunoldt, Michael & Oertel, Simon, 2019. "How optimal distinctiveness affects new ventures' failure risk: A contingency perspective," Journal of Business Venturing, Elsevier, vol. 34(3), pages 477-495.
    6. J.-P. Vergne & Tyler Wry, 2014. "Categorizing Categorization Research: Review, Integration, and Future Directions," Journal of Management Studies, Wiley Blackwell, vol. 51(1), pages 56-94, January.
    7. Diego Zunino & Fernando F. Suarez & Stine Grodal, 2019. "Familiarity, Creativity, and the Adoption of Category Labels in Technology Industries," Organization Science, INFORMS, vol. 30(1), pages 169-190, February.
    8. Martina Montauti & Filippo Carlo Wezel, 2016. "Charting the Territory: Recombination as a Source of Uncertainty for Potential Entrants," Organization Science, INFORMS, vol. 27(4), pages 954-971, August.
    9. Alaa Chaabo, 2022. "Semantic Multiplicity : How Lexical Ambiguity Elicit Imperfect Organizational Discourse Sustaining Category Ambiguity In Case of NPD," Post-Print hal-04090505, HAL.
    10. Rory McDonald & Cheng Gao, 2019. "Pivoting Isn’t Enough? Managing Strategic Reorientation in New Ventures," Organization Science, INFORMS, vol. 30(6), pages 1289-1318, November.
    11. Michael Lounsbury & Christine M. Beckman, 2015. "Celebrating Organization Theory," Journal of Management Studies, Wiley Blackwell, vol. 52(2), pages 288-308, March.
    12. Laura Toschi & Elisa Ughetto & Andrea Fronzetti Colladon, 2023. "The identity of social impact venture capitalists: exploring social linguistic positioning and linguistic distinctiveness through text mining," Small Business Economics, Springer, vol. 60(3), pages 1249-1280, March.
    13. Vossen, Alexander & Ihl, Christoph, 2020. "More than words! How narrative anchoring and enrichment help to balance differentiation and conformity of entrepreneurial products," Journal of Business Venturing, Elsevier, vol. 35(6).
    14. Callen Anthony & Andrew J. Nelson & Mary Tripsas, 2016. "“Who Are You?…I Really Wanna Know”: Product Meaning and Competitive Positioning in the Nascent Synthesizer Industry," Strategy Science, INFORMS, vol. 1(3), pages 163-183, September.
    15. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Eric Yanfei Zhao & Greg Fisher & Michael Lounsbury & Danny Miller, 2017. "Optimal distinctiveness: Broadening the interface between institutional theory and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 93-113, January.
    16. Dominika Wruk & Achim Oberg & Jennifer Klutt & Indre Maurer, 2019. "The Presentation of Self as Good and Right: How Value Propositions and Business Model Features are Linked in the Sharing Economy," Journal of Business Ethics, Springer, vol. 159(4), pages 997-1021, November.
    17. Heewon Chae, 2022. "Income or education? Community‐level antecedents of firms' category‐spanning activities," Strategic Management Journal, Wiley Blackwell, vol. 43(1), pages 93-129, January.
    18. Christophe Boone & Serden Özcan, 2020. "Oppositional Logics and the Antecedents of Hybridization: A Country-Level Study of the Diffusion of Islamic Banking Windows, 1975–2017," Organization Science, INFORMS, vol. 31(4), pages 990-1011, July.
    19. Jean‐François Soublière & Christi Lockwood, 2022. "Achieving cultural resonance: Four strategies toward rallying support for entrepreneurial endeavors," Strategic Management Journal, Wiley Blackwell, vol. 43(8), pages 1499-1527, August.
    20. Karl Taeuscher & Eric Yanfei Zhao & Michael Lounsbury, 2022. "Categories and narratives as sources of distinctiveness: Cultural entrepreneurship within and across categories," Strategic Management Journal, Wiley Blackwell, vol. 43(10), pages 2101-2134, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orstsc:v:3:y:2018:i:4:p:620-631. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.