Abstract
1- Opportunity-ambiguity dilemma in emerging market categories
2- The influence of socio-cognitive cues
3- Data and methodology
4- Results
5- Discussion and conclusion
References
Abstract
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.
Conclusions
In this study we endeavor to resolve an important but relatively understudied dilemma posed by our collective understanding of industry dynamics and emergence. On the one hand, a dominant realization in the literature that has been borne out by a significant body of empirical work, is that emergence in industries spurs innovation and growth. On the other hand, emergence can pose significant socio-cognitive challenges for industry incumbents due to its inherent ambiguity. We have tackled this paradox in industries belonging to the high-tech U.S. manufacturing sector and have empirically assessed the effects of the multiplicity of emerging market categories in such industries on innovation-related strategic behaviors of incumbent firms. Our findings suggest a co-existence of both opportunity and ambiguity, and the relative prevalence of one over the other is largely driven by an increasing multiplicity of emerging market categories and the socio-cognitive context of an industry. We believe that the explicit emphasis on the effect of this multiplicity on the opportunity-ambiguity tension in emerging contexts contributes to our collective knowledge of the interplay between market emergence and innovation.