Becoming a Cognitive Referent: Market Creation and Cultural Strategy

Abstract

Research has examined firms’ use of rhetoric and symbolic activities in the process of creating new markets. This study analyzes how entrepreneurial firms use these cultural strategies to position themselves in a nascent market category they are creating. Using an inductive multiple case study of five entrepreneurial firms in an emergent online investing market, we construct a theory to explain how a firm becomes a cognitive referent in a nascent market and other firms’ failure to do so. Successful firms conceptualize market creation as problem solving; they pursue a sequence that begins with targeted rhetorical attacks on existing solutions, proceeds to dissemination of founding stories that can shift with a change in logics, and culminates in rejection of the labels that audiences try to apply to their activities and products. By contrast, unsuccessful firms conceptualize market creation as evangelizing for a new cultural model, and undermine their own positions with inappropriate use of symbolic market-creation actions.