Abstract:Research Summary
New entrants often face uncertainty regarding how to optimally position themselves within product markets. We suggest that new entrants can use two important schemas to strategically categorize themselves to gain a competitive advantage in platform markets: category exemplars and category prototypes. Using a unique dataset of more than 83,000 new Google Play developers and more than 139,000 apps, we find that the optimally distinct entry point is at a high level of exemplar similarity and a lo… Show more
“…Our theoretical propositions extend cultural entrepreneurship theory (Lounsbury & Glynn, 2001;Navis & Glynn, 2011), and also contribute to the broader discussion on optimal distinctiveness in strategic management and organization theory (Barlow, Verhaal, & Angus, 2019;Deephouse, 1999;Haans, 2019;Zhao, Fisher, Lounsbury, & Miller, 2017;Zhao, Ishihara, Jennings, & Lounsbury, 2018;Zuckerman, 2016). First, we disentangle the normatively and cognitively legitimating effect of entrepreneurial stories.…”
supporting
confidence: 57%
“…Second, we uncover audiences' novelty expectations as an important boundary condition for the optimal distinctiveness trade-off. This boundary condition can explain seemingly contradictory findings about the effect of distinctiveness on demand-side performance outcomes (Barlow et al, 2019;Haans, 2019). Third, we demonstrate that the optimal degree of distinctiveness is substantially contingent on the presence of legitimating claims in entrepreneurial stories and the general public's familiarity with a market category.…”
We are very grateful to Zeki Simsek and three anonymous reviewers for their support and many insightful suggestions that have substantively improved our article throughout the review process. We also thank Jeff Covin, Mark Healey, Joseph Lampel, and Silvia Massini for their insights and helpful comments on earlier drafts of this article.
“…Our theoretical propositions extend cultural entrepreneurship theory (Lounsbury & Glynn, 2001;Navis & Glynn, 2011), and also contribute to the broader discussion on optimal distinctiveness in strategic management and organization theory (Barlow, Verhaal, & Angus, 2019;Deephouse, 1999;Haans, 2019;Zhao, Fisher, Lounsbury, & Miller, 2017;Zhao, Ishihara, Jennings, & Lounsbury, 2018;Zuckerman, 2016). First, we disentangle the normatively and cognitively legitimating effect of entrepreneurial stories.…”
supporting
confidence: 57%
“…Second, we uncover audiences' novelty expectations as an important boundary condition for the optimal distinctiveness trade-off. This boundary condition can explain seemingly contradictory findings about the effect of distinctiveness on demand-side performance outcomes (Barlow et al, 2019;Haans, 2019). Third, we demonstrate that the optimal degree of distinctiveness is substantially contingent on the presence of legitimating claims in entrepreneurial stories and the general public's familiarity with a market category.…”
We are very grateful to Zeki Simsek and three anonymous reviewers for their support and many insightful suggestions that have substantively improved our article throughout the review process. We also thank Jeff Covin, Mark Healey, Joseph Lampel, and Silvia Massini for their insights and helpful comments on earlier drafts of this article.
“…These findings strongly suggest that access to even one alternative source of legitimacy-high-status complementors-can provide a buffer against an immediate loss in legitimacy, and such legitimacy buffers increase-to a certain degree-the optimal level and performance benefits of distinctiveness. These findings have important implications for research on optimal distinctiveness (Barlow et al, 2019;Haans, 2019;Taeuscher, Bouncken, & Pesch, 2020;Zhao et al, 2018) because they draw attention to intra-market heterogeneity in firms' optimal distinctiveness-highlighting firms' legitimacy buffers as an important contingency for the theorized trade-off between differentiation and conformity.…”
Research summary
Optimal distinctiveness theory highlights that firms need to balance opposing pressures for differentiation (to gain competitive benefits) and conformity (to gain legitimacy). Yet, extant optimal distinctiveness research rarely considers that the pressure for conformity can substantially vary between competing firms. Studying the positioning and growth performance of competing platforms in the market for Massive Open Online Courses (MOOCs), we find that platforms' access to high‐status complementors—a common source of legitimacy in platform markets—substantially shapes the relationship between platforms' distinctiveness and user growth. Our longitudinal models show that platforms only benefit from a (moderately) distinctive positioning once they have buffered a certain amount of legitimacy. Our findings strongly suggest that firms can alleviate conformity pressures by accessing alternative sources of legitimacy.
Managerial summary
When does differentiation pay off? We study this question in the increasingly important context of platform markets to explain differences in platforms' user growth. Our longitudinal study of competition in the market for Massive Open Online Courses (MOOCs)—in which platforms like Coursera and Udacity compete for online learners as users—shows that the performance implications of a distinctive positioning substantially depend on the legitimacy that a platform has gained from attracting high‐status organizations as complementors. Platforms only benefit from differentiation once they surpass a certain legitimacy threshold, and the legitimacy they gain beyond this threshold accelerates the benefits of a (moderately) distinctive positioning.
“…In summary, products that balance new and familiar attributes tend to perform better (Barlow, Verhaal, and Angus, 2019; Zhao, Ishihara, Jennings, and Lounsbury, 2018). Hence, based on existing research on the relationship between change in product attributes and new product performance, we advance the following baseline hypothesis: H1: Product attribute change has an inverted U‐shaped relationship with new product performance such that moderate levels of change will perform better than low or high levels of change.…”
Product development teams often face the challenge of designing radically new products that cater at the same time to the revealed tastes and expectations of existing customers. In new product development projects, this tension guides critical choices about continuity or change concerning product attributes and team composition. Research suggests these choices interact, but it is not clear whether they are complements or substitutes and if the level of change in one should match or not the level of change in the other. In this article, we examine the interaction between product attribute change, team change, and a new team-level factor, which we term stream concentration, as it captures differences among team members in terms of familiarity with the knowledge domain of the new product being developed. We measure stream concentration as team members' prior NPD experience within a given set of products and assess its impacts on the management of change in new product development projects using longitudinal data from the music industry. We analyze 2621 new product development projects between 1962 show that stream concentration is a critical factor in new product development projects that, together with product attributes and team composition, affects new product performance. We discuss implications for research and practice.
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