The Co-Evolution of Technologies and Categories During Industry Emergence

Abstract

Scholars have long studied technology evolution. More recently, organizational theorists have begun to explore the role of categories and their associated labels in industry dynamics. Yet, little is known about how technological designs and categories co-evolve. We build upon these two literatures to propose an integrative model of how industries emerge and evolve. We propose that the evolution of both technological designs and categories follows a similar pattern, characterized by an early period of divergence followed by a period of convergence, and we identify the mechanisms that account for this co-evolutionary process. We add to the literature on technology evolution by explicating the mechanisms through which designs evolve and by identifying how different stakeholders’ categorical understandings shape design competition. Our model also augments the categorization literature by detailing category evolution as a contested process of category creation and selection, which in turn is influenced by the designs that the categories are trying to group. Our model creates a much-needed bridge between two bodies of literature that, while addressing similar topics, have evolved largely separately.

Keywords: categories, industry evolution, dominant designs, dominant category, industry lifecycle, labels, industry emergence, nascent industries, economic sociology, co-evolution

JEL Classification: M1, M10, M13, M3, L00