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Toward an Ecology of Market Categories

  • Pontikes, Elizabeth G.

    (University of Chicago)

  • Hannan, Michael T.

    (Stanford University)

Registered author(s):

    This paper proposes that social categorization is driven by an ecological dynamic that operates in two planes: feature space and category space. It develops a theoretical model that links positions in feature space to label assignments in category space. The first part of the model predicts that movements in feature space affect label assignments in category space, with proximity to labeled clusters affecting label adoption. The second part predicts that the structure of category space affects this relationship. For lenient labels, positions in feature space are more weakly related to label adoption in category space. An empirical analysis of software producers, based on their positions in a feature space of patents, and a category space of market-label affiliations, supports these predictions. The results imply that social classification is characterized by this coupled ecological dynamic. Further, our findings have implications for the evolution of categories, suggesting that lenient categories will become more lenient, while constraining categories will become more constraining.

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    File URL: https://gsbapps.stanford.edu/researchpapers/library/RP2110.pdf
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    Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 2110.

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    Date of creation: Jul 2012
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    Handle: RePEc:ecl:stabus:2110
    Contact details of provider: Postal: Stanford University, Stanford, CA 94305-5015
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    Web page: http://gsbapps.stanford.edu/researchpapers/Email:


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    1. Iain M. Cockburn & Megan J. MacGarvie, 2009. "Patents, Thickets and the Financing of Early-Stage Firms: Evidence from the Software Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 729-773, 09.
    2. Hall, Bronwyn H & Jaffe, Adam B & Trajtenberg, Manuel, 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," CEPR Discussion Papers 3094, C.E.P.R. Discussion Papers.
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