Blurred maps and sirens' calls: Category recombination and entrepreneurial inertia in the market for electronic music, 1978-2011

Abstract

In this paper we discuss how the distance between an ideal map of a market and its actual counterpart is a source of uncertainty that leads to entrepreneurial inertia. The categories that structure the market provide potential entrants with a neat map to interpret the target environment. However, the incumbents who recombine categories to hedge and innovate incessantly alter this ideal map of the market. The greater the alteration and the more complex the interpretation of the environment becomes, the less committed to action potential entrants will be. We introduce the extent and the mode of category recombination as two mechanisms that elicit the market uncertainty conducive to entrepreneurial inertia, here captured by a decrease in the observed number of entries into a market category. We further show how entrepreneurial inertia is moderated by the status of that category. Preliminary evidence from the market for electronic music analyzed along three decades supports our arguments.