The organizational literature is increasingly interested in the origins and consequences of category emergence. We examine the effects of being affiliated with categories initially considered illegitimate (‘divergence’), and of organizational attempts to blur the boundaries between categories (‘straddling’), on capital market reactions to firm announcements. We develop arguments for how these effects likely vary with increasing legitimation (‘currency’) of the category. We apply event study methodology to the complete population of firms' announcements of open source activities, an open innovation model for software development that is novel and defies the extant dominant logic of software production and valorization. Over a ten-year period, we find negative effects of divergence, positive effects of straddling, and that the magnitude of both these effects diminishes with increasing category currency. The implications for theories of organization and open innovation in the context of category emergence are discussed.
category emergence, open innovation, open source software, organizational legitimacy, valuation
Business | Strategic Management Policy | Technology and Innovation
Strategy and Organisation
Journal of Management Studies
ALEXY, Oliver and GEORGE, Gerard.
Category Divergence, Straddling, and Currency: Open Innovation and the Legitimation of Illegitimate Categories. (2013). Journal of Management Studies. 50, (2), 173-203. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/4673
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