Embedded Categories: Three Studies on the Institutional Shaping of Categories and Category Effects

Abstract

Over the past fifteen years, a rich program of research has emerged among scholars interested in the role of categories within fields and industries. In this context, studies have shown that categories shape organizational and market processes by grouping firms and products in ways that convey their identities, enable commensuration, and provide a basis for social conformity. However, this work reflects a general analytic strategy of studying individual categories and the ways that they constrain their members. Building on evidence that categories may be more or less distinctive from each other, I argue that category effects are contingent and can vary in important ways depending on how categories are related to each other within a system of classification. My research context is the field for nanotube technology; an area where pan-disciplinary scientists, established firms, and new ventures are working to develop revolutionary commercial applications for carbon nanotubes. Analytically, I focus on the system of technology categories used by the United States Patent and Trademark Office to group nanotube inventions according to their primary attributes and functions. My first paper explores mechanisms through which technology categories became linked together, giving structure to the category system. Adapting insights from complexity theory, I show how the activities of diverse and distributed inventors cohered into a dynamically evolving structure which shaped subsequent innovation trajectories. My second and third papers show that the evolution of this structure created temporal variance in the types of category effects observed in the field. Specifically, I find that as categories became similar to each other, innovation opportunities opened for the actors within them. Inventors in these categories were more likely to innovate across multiple categories, while those in more distinctive categories pursued narrower lines of innovation. I also show that startup ventures with patent portfolios crossing multiple categories were highly valued by investors, but only when specific categories were spanned at specific times. As such, my approach adds considerable nuance to the literatures on categories, innovation, and entrepreneurship by showing that category systems can shape outcomes of interest beyond the influence of the individual categories which comprise them.