From Farms to Fuel Tanks: Differential Effects of Collective Action on Firm Entry in the Emergent U.S. Biodiesel Sector

Abstract

We expand understanding of category evolution by exploring how the compatibility of different category expectations advanced by multiple industry stakeholders can shape category meaning and influence the types of firms that enter new markets. Using in-depth qualitative and quantitative data on all ventures founded in the U.S. biodiesel industry from 1990 to 2008, we examine how stakeholders espousing compatible and incompatible category expectations led to definitional changes in the central identifying features of the category. The findings show that compatible and incompatible expectations exert disparate impacts on category meaning and in turn differentially influence consumer demand and entry of focused and hybrid firms. The unintended consequences of attracting audiences with divergent goals on control of desired category definitions and product demand are also discussed.