The Categorical Imperative and Structural Reproduction: Dynamics of Technological Entry in the Semiconductor Industry

Abstract

Extant organizational literature argues that straddling institutionalized categories begets an illegitimacy discount, leading organizations to reproduce established categorical boundaries. If gaining legitimacy requires compliance with this “categorical imperative,” why do we frequently observe categorical straddling even in uncontested and fully institutionalized categorical structures? To address this question, we propose that de novo (i.e., newly founded) and de alio (i.e., diversifying) organizations respond differently to the categorical imperative. Specifically, de novo organizations are more likely to enter and fit in high-contrast categories than in low-contrast ones, whereas the opposite is true for de alio entrants. To test these hypotheses, we follow technological entry dynamics within the semiconductor industry between 1976 and 2002. Using patent information, we examine how category contrast affects which technological categories de novo and de alio organizations enter, and the performance associated with those entry events. A comprehensive set of empirical analyses lend support to our hypotheses. Besides clarifying the link between the categorical imperative and structural reproduction, this study bears implications for entrepreneurship and strategy research on entry dynamics.