Positive Effects of Arbitration on the Emergence of a New Organizational Form: Online Newspapers

Abstract

This paper examines the emergence of a new organizational form from the perspective of the indirect participants of the process who are not the two main players, that is, entrepreneurial firms and interested audiences. Specifically, we argue that negative responses from indirect existing stakeholders to a new organizational form make the differences between the current and new forms more salient to interested audiences. This increased perception of dissimilarity then positively affects the emergence of the new organizational form. Entrepreneurial firms can also exploit the contrast effect created by existing stakeholders by explicitly highlighting dissimilarity. To test our hypotheses, we focus on the South Korean newspaper industry and legal contestations between existing stakeholders, including incumbent print newspapers and government agencies, and online newspapers, members of a new organizational form in the given industry. We find support for our theoretical arguments that litigations or arbitrations positively affected the founding rate of online newspapers. Online newspapers further improved their organizational legitimation by explicitly emphasizing the distinctiveness of online journalism compared to print media, such as citizen reporters, in their mission statements.