Hedging Your Bets: Explaining Executives' Market Labeling Strategies in Nanotechnology

Executives use market labels to position their firms within market categories. Yet this activity has been given scarce attention in the extant literature that widely assumes that market labels are simple, prescribed classification brackets that accurately represent firms' characteristics. By ex...

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Bibliographic Details
Published in:Organization science (Providence, R.I.) R.I.), 2013-03, Vol.24 (2), p.395-413
Main Authors: Granqvist, Nina, Grodal, Stine, Woolley, Jennifer L.
Format: Article
Language:English
Subjects:
Ambiguity
ambiguous contexts
Analysis
Biotechnology
Business management
Business structures
Chief executive officers
claiming
disassociating
Executives
Financial management
Hedging
Industrial management
Labeling
Labeling theory
labels
market categorization
Market positioning
Nanotechnology
nascent technology
Perceptions
Product labeling
Signals
Studies
symbolic management
symbolic resources
Technology application
Trade names
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Summary:Executives use market labels to position their firms within market categories. Yet this activity has been given scarce attention in the extant literature that widely assumes that market labels are simple, prescribed classification brackets that accurately represent firms' characteristics. By examining how and why executives use the nanotechnology label, we uncover three strategies: claiming, disassociating, and hedging. Comparing these strategies to firms' technological capabilities, we find that capabilities alone do not explain executives' label use. Instead, the data show that these strategies are driven by executives' aspiration to symbolically influence their firms' market categorization. In particular, executives' perception of the label's ambiguity, their avoidance of perceived credibility gaps, and their assessment of the label's signaling value shape their labeling strategies. In contrast to extant research, which suggests that executives should aim for coherence, we find that many executives hedge their affiliation with a nascent market label. Thus, our study shows that in ambiguous contexts, noncommitment to a market category may be a particularly prevalent strategy.
ISSN:1047-7039
1526-5455
DOI:10.1287/orsc.1120.0748