Quo Vadis? From the Schoolyard to the Courtroom

In nascent industries―whose new technologies are often poorly understood by regulators―contending with regulatory uncertainty can be crucial to organizational survival and growth. Prior research on nonmarket strategy has largely focused on established firms in mature industries, but such strategies are apt to differ for new ventures, which generally have limited resources and market power and operate in novel domains in which the rules of the game are underdeveloped. How do new ventures navigate regulatory uncertainty? To explore this question, we conduct an inductive, multi-case research study of five ventures that pioneered the nascent personal-genomics industry. Drawing on extensive qualitative data, we develop an emergent theoretical framework that elucidates how ventures navigate evolving regulatory uncertainty. Grounded in a power versus industry-evolution logic, this framework illuminates how ventures’ strategies for doing so vary and theorizes why certain strategies appear more effective than others. In doing so, we also introduce a novel logic of interaction— regulatory co-creation—that ventures can employ to shape emerging regulations. Taken together, our theory and findings challenge existing perspectives on strategy in nascent industries, shed light on the dynamic interplay between market and nonmarket strategy, and recast the relationship between ventures and regulators during the emergence of new technology industries.

Section: Theoretical Background: Managing Uncertainty In Nascent Indu...mentioning

confidence: 99%

Shaping Nascent Industries: Innovation Strategy and Regulatory Uncertainty in Personal Genomics

Cheng

McDonald²

2022

“…Beyond studying common ownership in the media, scholars may further probe this theory by examining the channels used by other outsiders, such as judges, politicians, activists, and securities analysts. Sytch and Kim (2021) showed that companies can strategically use shared educational and professional affiliations between lawyers and judges to influence legal outcomes, alluding to biases among judges. Although U.S. federal judges are required to recuse themselves if they have a financial stake in a litigant company, they can rule on cases related to the rivals of companies in which they invest.…”

Section: Discussionmentioning

confidence: 99%

The New Invisible Hand: How Common Owners Use the Media as a Strategic Tool

DesJardine,

Shi,

Cheng

2023

While research has uncovered an array of visible competitive dynamics, a strategic world of competition lies beneath the surface that should also be theorized and empirically traced. We investigate the strategic consequences of “media–rival” common ownership, in which investors own a media company and a non-media focal firm’s rivals. We posit that focal firms receive worse coverage from media outlets when institutional investors hold substantial ownership in both a media company and the focal firm’s rivals because the investors’ common holdings provide them with incentives and power to enhance the competitiveness of their portfolio firms by tainting the focal firm’s media coverage. We account for three moderators to show that this effect amplifies when investors have stronger incentives and power to influence the media and when media executives have incentives to cater to the interests of their investors. Using a novel dataset on common ownership of rival firms and media companies, we find support for our theory. Our study reveals a new invisible hand underlying competitive markets and offers a new view of the media as a strategic tool.

“…The ability to frame a thought and present it most persuasively to an audience is an important part of the ideation process (Perry-Smith and Mannucci, 2017; Falchetti, Cattani, and Ferriani, 2022). Individuals are also more susceptible to the ideas of others who share their own perspective (Kaplan, 2008) or their language style (Ireland and Pennebaker, 2010; Kovacs and Kleinbaum, 2020; Sytch and Kim, 2021). Those with high cultural embeddedness are more likely to share perspectives and language styles with many others in the organization and, therefore, to be able to frame their novel ideas most persuasively.…”

Section: Theory and Hypothesismentioning

confidence: 99%

Cultural Breadth and Embeddedness: The Individual Adoption of Organizational Culture as a Determinant of Creativity

Choi

Ingram²,

Han

2023

We propose that individuals differ in their ability to generate creative ideas as a function of the values, beliefs, and norms of their social group’s culture they have adopted and routinely use. To generate creative ideas, an individual needs to think differently from their group to generate novel ideas that others cannot, while understanding what the group will view as appropriate and practical. We view culture as a network of cultural elements and decompose individuals’ cultural adoption into two conceptually and empirically distinct dimensions. Cultural breadth, which reflects whether individuals have adopted a broad range of values, beliefs, and norms that span the organization’s culture, contributes to the novelty required for creativity. Cultural embeddedness, which reflects whether individuals have adopted the core values, beliefs, and norms entrenched in the organization’s culture, helps an individual generate ideas that others will view as useful. We predict that individuals with both high cultural breadth and high cultural embeddedness, who we label integrated cultural brokers, will be most likely to generate creative ideas that are novel and useful. We test and find support for our theory in two contexts: an e-commerce firm in South Korea and MBA students at a U.S. university.