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Category Strategy for Firm Advantage

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  • Elizabeth G. Pontikes

    (Booth School of Business, University of Chicago, Chicago, Illinois 60637)

Abstract

The decision of where to position in a market is crucial to firm success. Most strategy research focuses on either choosing an attractive industry or firm-level differences that lead to sustained advantage. In both approaches, how the industry or submarket is defined is typically taken as an exogenous constraint. But firms also can shape market categories in ways that advantage the firm. In this article, I draw on research in strategy, sociology, and cognitive science to show category strategy is foundational to strategic decisions around competitive positioning. Cognitively, the market categories people use define the playing field for firms, as they partially determine competitive sets and evaluation standards. Sociologically, definitions of market categories are subject to social influence. This means strategic decisions about how to position within the market affect how market categories are defined and evolve, which firms can (and should) use to achieve long-term value.

Suggested Citation

  • Elizabeth G. Pontikes, 2018. "Category Strategy for Firm Advantage," Strategy Science, INFORMS, vol. 3(4), pages 620-631, December.
    • Handle: RePEc:inm:orstsc:v:3:y:2018:i:4:p:620-631
    DOI: 10.1287/stsc.2018.0070
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    7. Karl Taeuscher & Eric Yanfei Zhao & Michael Lounsbury, 2022. "Categories and narratives as sources of distinctiveness: Cultural entrepreneurship within and across categories," Strategic Management Journal, Wiley Blackwell, vol. 43(10), pages 2101-2134, October.
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    9. Balázs Kovács & Gianluca Carnabuci & Filippo Carlo Wezel, 2021. "Categories, attention, and the impact of inventions," Strategic Management Journal, Wiley Blackwell, vol. 42(5), pages 992-1023, May.
    10. Elizabeth G. Pontikes & Violina P. Rindova, 2020. "Shaping Markets Through Temporal, Constructive, and Interactive Agency," Strategy Science, INFORMS, vol. 5(3), pages 149-159, September.

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