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The grounded theory method (GT) remains elusive and misunderstood by many—even those who advocate its use. In practice, many research studies cite the use of GT but merely apply certain a la carte aspects or jargon of the method while not actually incorporating the fundamental principles of the methodology. Consequently, the purpose of this article is fourfold: (a) to demystify the key tenets of GT, (b) to discuss the problematic impacts of adopting an a la carte approach to GT, (c) to draw attention to GT as a rigorous method for business research, and (d) to advocate for the increased use of GT by more researchers where appropriate. Throughout the article, the authors use the example of a recently completed GT study by the lead author to highlight the multiple dimensions of GT and how they all work together.

PurposeA paucity of literature considers a growing trend within the retail space whereby franchise companies and their franchisees market and sell products and services across multiple channels, including company‐owned retail stores. This case study aims to explore the processes used to support the customer experience, the control mechanisms that are in place, and the channels by which these customer‐company interactions occur.Design/methodology/approachA qualitative approach employing an adaptation of the grounded theory method for data collection, coding, and analysis was used and this study specifically focused on an international van‐based service franchise during the integration of the franchise company's service into the retail brick‐and‐mortar locations of the parent company. Participants included retail employees of the parent company, franchise company support staff, franchisees, and third‐party call center agents working for the parent company.FindingsFindings suggest a relationship exists between the alignment of the internal factors of the customer relationship management (CRM) experience (e.g. people, processes, and technology) and the relative strength or weakness of each external factor (e.g. customer, company, and competition). Moreover, it is postulated that weaker customer‐centric service results in greater misalignment of internal factors and leads to larger service variability, or sub‐optimized CRM.Originality/valueThe unique contribution of this research is the juxtaposition of the disparate marketing approaches of the parent company and franchisees and the subsequent impact on CRM efforts of the company. A conceptual model of internal and external factors of the CRM experience is presented.

The case study describes a small travel company that conducts business exclusively on the Internet. The case elucidates the many problems that the company faced as it tried to survive in a turbulent environment. Survival hinged on the company’s ability to strategically and tactically execute a business plan based on the technical acumen, loyalty, and hard work of its small group of talented people. The technical alternatives are described and explained within the context of a travel company seeking to use and develop new technology to improve productivity and increase profits. Additionally, the strategic need for market flexibility, adaptability, and diversification, especially in times of unexpected events and or problems, are examined. Finally, the company’s process for controlling costs are identified and explored.

Voice recognition technology-enabled devices possess extraordinary growth potential, yet some research indicates that organizations and consumers are resisting their adoption. This study investigates the implementation of a voice recognition device in the United States Navy. Grounded in the social psychology and information systems literature, the researchers adapted instruments and developed a tool to explain technology adoption in this environment. Using factor analysis and structural equation modeling, analysis of data from the 270 participants explained almost 90% of the variance in the model. This research adapts the technology acceptance model by adding elements of the theory of planned behavior, providing researchers and practitioners with a valuable instrument to predict technology adoption.

This case study documents an organizational change intervention concerning the implementation of a novel information technology at a university-owned research foundation (URF). It evidences the disparate expectations and reactions by key actors toward the change event, marking a mismatch between a new paradigm required by the new technology and existing information technology practices. Drawing upon change management and management information systems (MIS) literature, we discuss the perceived change management issues hindering the change process at URF. Our discussion is tempered by a theoretical lens that attempts to integrate the literature bases drawn upon in this research. In particular, resistance from in-house IT specialists was observed as the strongest force obstructing the novel IT implementation. This study offers a forum to stimulate both researchers and practitioners to rethink the necessary elements required to enact change, especially with respect to novel IT implementations.

The failure of dot-coms is a staggering 75% in the first two years. Many of these failures were small and medium-sized enterprises (SMEs). One of the most commonly cited reasons for failure has been lack of a workable strategic business model to guide e-commerce (electronic commerce) efforts. We began this study because we wanted to explore if successful e-commerce SMEs use a guiding strategic process model, and if they do, ask them to articulate the model components. We chose a qualitative research method to obtain a rich description of the e-commerce process. The interview pool consisted of 15 interviews with established SME e-commerce entrepreneurs. From deep analysis of the data, a set of e-commerce process components and interrelationships between those components emerged from the data. We then synthesized (from the rich description) a model of the e-commerce process.

The business process improvement (BPI) literature is replete with advice on how to improve business processes, but what is lacking is a holistic approach that encompasses the most important facets for long-term success—methods to facilitate people, an organizational structure conducive to empowerment, and a systematic method for solving problems. The study offers an in-depth examination of the BPI methodology used by Caterpillar. The case details what Caterpillar has done to make BPI work and offers tips to help other organizations overcome obstacles to BPI success. A theoretical model is developed that offers a conceptual view of holistic BPI.

Rising health care costs and customer dissatisfaction with services has prompted many hospital administrators to begin scrutinizing their operations. The initial challenge for administrators is to identify the critical processes of the hospital. Since the main purpose of a hospital is to improve the health of its patients, one of its core processes involves the procedures of the operating room (OR). Focusing on OR processes should prove to be one important lever for improving the overall quality of hospital services.

Empowerment, creativity, and organizational memory are constructs that have been researched in MIS. While each construct has received individual attention, we have found relatively little research linking them. One of the major edicts of empowerment is delegation of decision making authority to lower-level employees. Increased authority allows employees more freedom to be creative. However, if creative thought is generated but not captured, innovative ideas may be lost. Organizational memory can capture creative ideas as they are generated so that empowered teams can draw upon positive creative experiences. We developed a theoretical model to illuminate the relationships between organizational memory, worker empowerment, and creativity. The model portrays the linkages between empowerment and creativity, creativity and organizational memory, and organizational memory and empowerment. The model was developed based on the literature in each respective area and an interview-based study concerning “empowered” systems development project teams and organizational memory. Analysis of the interview data revealed that empowered workers generate creative solutions to problems. However, creative solutions can only be used for future projects if they are somehow recorded into organizational memory. Organizations that empowered their workforce and embraced creativity reported increased customer satisfaction, waste reduction, and some quality gains. In contrast, those that did not empower reported little or no change. Organizations that recorded creative solutions to problems believe that retrieval of this information could be potentially useful for future projects. Potential challenges faced by organizations classified into each cell are also presented. This classification scheme should prove useful as a guide to organizations examining the potential benefits and pitfalls of worker empowerment and organizational memory.

The results of a field study investigating the impact of the extent of use, staff scheduling, and the adoption of quality control mechanisms (QCM) on end-user perceptions of information technology (IT) in a health care environment are presented. A multivariate model was developed and tested using multiple regression analysis on 47 hospital information system (HIS) end-users. Three specific hypotheses are proposed and tested. Data analyses indicate that end user perceptions depend on two factors: the end-user usage of IT, and the adoption of formal quality control mechanisms. Based on the research results, several suggestions are made to improve the likelihood of successful IT implementation in the health care industry.

The Total Quality Management (TQM) philosophy is rapidly being adopted by organizations that are concerned about remaining competitive in an intensely competitive global marketplace. As a result, Information Technology (IT) is being developed and deployed to foster these quality programs. However, little empirical research is available concerning implementation of technology in TQM environments. Research is needed to guide organizations toward a path of successful implementation of quality systems. The objective of this study is to devise a set of guidelines for organizations attempting to infuse total quality into their systems development efforts. The study draws upon data gathered from case studies of three organizations involved in total quality systems development. The three organizations were chosen based on their differences in size (total revenues). Contrasting the three organizations should add richness to the development of TQM guidelines. The study begins with a review of the quality research. The methodology is described in the next section. A synopsis of the case studies is then presented. Finally, a set of guidelines and theoretical implications synthesized from the literature and cases are introduced.

In this article is presented a brief review of the work in machine translation of languages, with the conclusion that much more research needs to be done and that it does not appear that human beings will ever be relieved of the necessity of learning languages and of knowing how to use these languages effectively.

We study the incentives of a digital business to collect and protect users’ data. The users’ data the business collects improve the service it provides to consumers, but they may also be accessed, at a cost, by strategic third parties in a way that harms users, imposing endogenous users’ privacy costs. We characterize how the revenue model of the business shapes its optimal data strategy: collection and protection of users’ data. A business with a more data-driven revenue model will collect more users’ data and provide more data protection than a similar business that is more usage driven. Consequently, if users have small direct benefit from data collection, then more usage-driven businesses generate larger consumer surplus than their more data-driven counterparts (the reverse holds if users have large direct benefit from data collection). Relative to the socially desired data strategy, the business may over- or undercollect users’ data and may over- or underprotect it. Restoring efficiency requires a two-pronged regulatory policy, covering both data collection and data protection; one such policy combines a minimal data protection requirement with a tax proportional to the amount of collected data. We finally show that existing regulation in the United States, which focuses only on data protection, may even harm consumer surplus and overall welfare. This paper was accepted by Itai Ashlagi, revenue management and market analytics.

Organizational adaptation is a ubiquitous concept in management and organization research. Discussed in many theories, sometimes under different labels, the notion of adaptation is related to organizations being congruent to the environments within which they operate. Research traditions including behavioral theory (see A Behavioral Theory of the Firm), contingency theory as explained in Differentiation and Integration in Complex Organizations, population ecology (see The Population Ecology of Organizations), institutional theory elaborated upon in both Institutionalized Organizations: Formal Structure as Myth and Ceremony and The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields, resource dependence (see The External Control of Organizations: A Resource Dependence Perspective), and evolutionary economics (see An Evolutionary Theory of Economic Change) all address organizational adaptation—though they emphasize different mechanisms. Adaptation, regarded as the strategic choice that organizations make, is often contrasted with the notion of selection driven by the determinism imposed by environments (see Organizational Adaptation: Strategic Choice and Environmental Determinism). Adaptive organizations are those able to obtain congruence both within organizations, reflected as congruence in internal functions and strategies, and across organizations, reflected as congruence with the needs of the external environment. The form of adaptation is also particularly relevant. Organizational theory has viewed adaptation as a state, an ability, and as a process. States of adaptation discuss stability and adaptation at points in time. From states of adaptation, adaptive abilities determine the impetus of adaptation and the locus of adaptation within organizations. Finally, the adaptation processes describe the means by which organizations adapt the challenges they face in negotiating new positions within environments. Research has covered each of these areas and this bibliography is organized primarily around forms of adaptation to elaborate on the ways in which it has been viewed by organizational theory and strategy scholars. The variety of research traditions examining organizational adaptation have not always aligned, however. Each research tradition seeks to explain different outcomes, from survival to performance to change. Thus, across theoretical traditions, the adaptation construct has been measured in many different ways—and often not as congruence with the external environment. In fact, this represents one of the challenges that recent research has identified as holding back progression of the adaptation research agenda. As such, this bibliography concludes with a section on issues in adaptation research in order to assist researchers in pursuing research in this area.

We measure the impact of bank capital requirements on corporate borrowing and expansion. We use French loan-level data and take advantage of the transition from Basel I to Basel II. While under Basel I the capital charge was the same for all firms, under Basel II, it depends in a predictable way on both the bank's model and the firm's risk. We exploit this two-way variation to empirically estimate the sensitivity of bank lending to capital requirement. This rich identification allows us to control for firm-level credit demand shocks and bank-level credit supply shocks. We find very large effects of capital requirements on bank lending: A 1 percentage point decrease in capital requirement leads to an increase in loan size by about 5%. At the firm level, borrowing also responds strongly although a bit less, consistent with some limited between-bank substitutability. Investment and employment also increase strongly. Overall, because the transition to Basel II led to an average reduction by 2 percentage points of capital requirements, we estimate that the new regulation led, in France, to an increase in average loan size by 10%, an increase in aggregate corporate lending by 1.5%, an increase in aggregate investment by 0.5%, and the creation or preservation of 235,000 jobs.

This paper studies how audience members categorize and evaluate ambiguous offerings. Depending on whether audience members categorize ambiguous offerings based on prototypes or goals, they activate two distinct cognitive mechanisms and evaluate differently ambiguous offerings. We expect that when audiences engage in goal- versus prototype-based categorization, their evaluation of ambiguous products increases. We theorize that, under goal-based categorization, the perceived utility of unclear attributes increases for audiences, which leads them to evaluate more positively ambiguous product offerings. We test and find support for these direct and mediated relationships through a series of laboratory, online, and field experiments. Overall, this study offers important implications for research on product and market categories, optimal distinctiveness, and market agents’ cognitive ascription of value.

In over-the-counter markets for assets, such as bonds and securitizations, large volumes can be split into smaller pieces and gradually sold to several final investors with the intermediation of multiple dealers. This paper proposes a model to study this process, called asset dissemination. A dealer buys several units of an asset from a customer and then sells some units to the dealer’s customers and to a second dealer, who sells to the second dealer’s customers and to a third dealer, and so on. The extent of dissemination is measured by the number of dealers involved and the total customer demand served. We show that asymmetric information on customer demand hinders both dimensions of dissemination. We also study how the quantity to disseminate and the dealers’ funding costs impact dissemination and the prices and quantities in interdealer transactions. This paper was accepted by Gustavo Manso, finance.

In this paper, we develop and test a behavioral theory of lost leadership. Using insights from the literature on goals as reference points and prospect theory, we predict that former leaders exert more effort compared to otherwise identical competitors. We test this prediction using two contexts. The first, quasi-laboratory, data comes from an educational business game. The second setting draws on field data from a two-month banking sales contest. We find that provision of effort increases following the loss of leadership. We also explore whether past leaders exert more effort in general or simply shift effort from other, potentially less-salient goals. We find evidence of both mechanisms. Finally, we investigate the temporal effects and find that having been a leader has an attenuating effect on subsequent behavior.

Problem definition: We study customer-centric privacy management in service systems. Academic/practical relevance: We explore the consequences of extended control over personal information by customers in such systems. Methodology: We adopt a stylized queueing model to capture a service environment that features a service provider and customers who are strategic in deciding whether to disclose personal information to the service provider—that is, customers’ privacy or information disclosure strategy. A customer’s service request can be one of two types, which affects service time but is unknown when customers commit to a privacy strategy. The service provider can discriminate among customers based on their disclosed information by offering different priorities. Results: Our analysis reveals that, when given control over their personal data, strategic customers do not always choose to withhold them. We find that control over information gives customers a tool they can use to hedge against the service provider’s will, which might not be aligned with the interests of customers. More importantly, we find that under certain conditions, giving customers full control over information (e.g., by introducing a privacy regulation) may not only distort already efficiently operating service system but might also backfire by leading to inferior system performance (i.e., longer average wait time), and it can hurt customers themselves. We demonstrate how a regulator can correct information disclosure inefficiencies through monetary incentives to customers and show that providing such incentives makes economic sense in some scenarios. Finally, the service provider itself can benefit from customers being in control of their personal information by enticing more customers joining the service. Managerial implications: Our findings yield insights into how customers’ individually rational actions concerning information disclosure (e.g., granted by a privacy regulation) can lead to market inefficiencies in the form of longer wait times for services. We provide actionable prescriptions, for both service providers and regulators, that can guide their choices of a privacy and information management approach based on giving customers the option of controlling their personal information.

We explore the way validity and propriety cues contribute to legitimacy judgments about a practice and explain whether the subunit of a large firm increases or decreases the implementation of this practice. Empirically, we examine the extent to which 65 subsidiaries of a multinational enterprise implemented three corporate social responsibility practices. Adopting a set-theoretic approach, we find that both validity and propriety cues are extremely relevant to the understanding of subunits’ implementation of practices over time. The endorsement of a practice in a subunit’s environment plays a particularly crucial role in the extent to which it is implemented, relative to authorization by the parent firm. Furthermore, subunits strongly rely on the active evaluation of the practice’s propriety, such that the consonance between the two propriety dimensions (strategic importance and value compatibility) is central to implementation increase, while dissonance between them can favor implementation decrease. By advancing our understanding of legitimacy judgment formation and practice implementation patterns, our study enriches explanations of organizational conformity and decoupling, and contributes to our understanding of how firms respond to multiple institutional demands.

Research Summary In this study, we replicate and expand Hawn et al.’s study (Strategic Management Journal, 2018, 39, 949–976) that used Dow Jones Sustainability World Index (DJSI) events to measure variations in firms' Corporate Social Responsibility (CSR)‐activism and examined their effect on a firm's stock price. We use DJSI events to capture variations in firms' CSR visibility, holding CSR activism constant by restricting our analyses to CSR‐equivalent firms. First, we find similar results on stock price (i.e., no impact) and on trading volumes. Second, because professional market participants pay more attention to CSR‐oriented firms and use visible cues such as DJSI events, we study and find that additions to DJSI lead to more analysts following a firm, and that continuations on the DJSI lead to an increase in equity being held by long‐term investors. Managerial Summary We replicate and complement a recent study that showed that the events of a firm's addition, continuation, or deletion in a major sustainability index (DJSI) had little impact on stock market reactions (Hawn et al. Strategic Management Journal, 2018, 39, 949–976). We redefine the comparison set that was previously used and compare across observationally equivalent firms in terms of CSR orientation in order to isolate the visibility effect of DJSI events. We find that these events do not significantly impact stock price and trading volumes. However, we expand the analysis and find that sustainability events attract more attention from financial analysts and lead to an increase in the percentage of shares held by long‐term investors indicative of a trend that professional investors pay more attention to CSR‐visible firms over time.

International audience; Parasites of the genus Leishmania infect the mammalian hosts, including mice and humans and cause cutaneous or visceral leishm aniasis depending upon the parasite species transmitted by the vector sandfly. Leishmania amazonensis is one of the Leishmania species responsible for th e cutaneous form of the disease. We have inoculated with these parasites the ear dermis of mice. RNA preparations were performed from fragmented tissues using a buffer containing guanidin isothiocynate (RLT buffer, RNeasy Mini Kit, Qiagen, SAS, France) and β mercaptoethanol. Both reagents facilitate the isolation of intact RNA from tissues and the use of the RNeasy Kits present with several advantages that facilitate the isolation of pure non degraded total RNA: i) T his method allows to avoid the presence o f phenol in the RNA extraction buffer, commonly used in alternative protocols; ii) Moreover Diethylpyrocarbonate (DEPC) treatment of glassware, to avoid RNAses contamination of the samples, is not required with this protocol; iii) F inally, it is a fast pro cedure and the isolated total RNA may be concentrated in a small volume thus facilitating its use for downstream experimental procedures.

Research Summary We explore the performance consequences of the simultaneous pursuit of multiple objectives in organizations. Taking advantage of a unique dataset covering both the objectives pursued and performance outcomes, we test the hypothesis that is the cornerstone of multiple objectives theory: performance on a given metric increases when it is pursued as an objective but decreases with the number of other objectives pursued simultaneously. We find overall support for this hypothesis, which holds for most, but not all, objectives. We further unpack the link between multiplicity of objectives and performance, investigating the moderating effects of organization design choices. This study suggests that multiple objectives impose a cost on organizations, but also provide a benefit of alleviating tradeoffs in achieving higher performance in multiple dimensions. Managerial Summary Most organizations simultaneously follow multiple goals, rather than focus on a single, well‐defined objective. For example, manufacturing firms often concurrently strive to decrease costs, increase revenues, and enhance margins. We study the consequences of such pursuit for firm performance. We show that explicitly setting objectives plays an important role in driving performance improvements. We also show that performance on any given dimension decreases with the number of other, simultaneously, followed goals. This regularity holds across different types of organizations, from simple to complex. Finally, we show that setting goals in multiple dimensions can play a beneficial role in forcing firms to actively manage tradeoffs inherent in their strategic choices. Our findings point to how managers could balance the costs and benefits of multiple objectives.

Consistent with salience theories of choice, we find that managers overreact to salient risks. We study how managers respond to the occurrence of a hurricane event when their firms are located in the neighborhood of the disaster area. We find that the sudden shock to the perceived liquidity risk leads managers to increase the amount of corporate cash holdings, even though the real liquidity risk remains unchanged. Such an increase in cash holdings is only temporary. Over time, the perceived risk decreases, and the bias disappears. This bias is costly for shareholders because it leads to higher retained earnings and negatively impacts firm value by reducing the value of cash. We examine alternative explanations for our findings. In particular, we find only weak evidence that the possibility of risk learning or regional spillover effects may influence our results.

Product categories are more than classification devices that organize markets; when reflecting market actors' purposes, they are also judgment devices. Taking stock of the literature on product categories and drawing on the distinction between the faculties of knowing and judging, we elaborate a framework that accounts for how and why market actors include or exclude normative attributes in a product category definition. Based on a field study of the development of socially responsible investment (SRI) funds in France, we describe the phases and conditions of a judgment framework for category definition for both established and nascent categories. We discuss implications for research on product categories and the workings of markets more broadly.

We study retirement incentives with an augmented reduced form option value model à la Stock and Wise (1990). We propose methodological extensions to better reflect the respective incentives faced by singles and couples. Our results show that a more comprehensive modeling of couples’ incentives leads to very different patterns of retirement incentives – particularly for women. We apply the new indicators to data from the Survey of Health, Ageing and retirement in Europe in Belgium and find two key results. First, contrary to several previous studies, we obtain a positive signed income effects. Second, we find very different retirement incentives for men and women, with little flexibility in the retirement decision for men and substantially more flexibility for women as a function of financial incentive and household composition.

Do the rich always get richer by investing in a cryptocurrency for which new coins are issued according to a proof-of-stake (PoS) protocol? We answer this question in the negative: Without trading, the investor shares in the cryptocurrency are martingales that converge to a well-defined limiting distribution and, hence, are stable in the long run. This result is robust to allowing trading when investors are risk neutral. Then, investors have no incentive to accumulate coins and gamble on the PoS protocol but weakly prefer not to trade. This paper was accepted by Kay Giesecke, finance.

An important challenge for many firms is to identify the life transitions of its customers, such as job searching, expecting a child, or purchasing a home. Inferring such transitions, which are generally unobserved to the firm, can offer the firms opportunities to be more relevant to their customers. In this paper, we demonstrate how a social network platform can leverage its longitudinal user data to identify which of its users are likely to be job seekers. Identifying job seekers is at the heart of the business model of professional social network platforms. Our proposed approach builds on the hidden Markov model (HMM) framework to recover the latent state of job search from noisy signals obtained from social network activity data. Specifically, we use the latent states of the HMM to fuse cross-sectional survey responses to a job-seeking status question with longitudinal user activity data, resulting in a partially HMM. Thus, in some time periods, and for some users, we observe a direct measure of the true job-seeking status. We demonstrate that the proposed model can predict not only which users are likely to be job seeking at any point in time but also what activities on the platform are associated with job search and how long the users have been job seeking. Furthermore, we find that targeting job seekers based on our proposed approach can lead to a 29% increase in profits of a targeting campaign relative to the approach that was used by the social network platform. This paper was accepted by Juanjuan Zhang, marketing.

Automakers, including Toyota and General Motors, were recently caught by the U.S. regulator for deliberately hiding product defects in an attempt to avoid massive recalls. Interestingly, regulators in the United States and United Kingdom employ different policies in informing consumers about potential defects: the U.S. regulator publicly announces all ongoing investigations of potential defects to provide consumers with early information, whereas the UK regulator does not. To understand how these different announcement policies may affect cover-up decisions of automakers, we model the strategic interaction between a manufacturer and a regulator. We find that, under both countries’ policies, the manufacturer has an incentive to cover up a potential defect when there is a high chance that the defect indeed exists and it may inflict only moderate harm. However, if there is only a moderate chance that the defect exists, only under the U.S. policy does the manufacturer have an incentive to cover up a potential defect with significant harm. We show that the U.S. policy generates higher social welfare only for very serious issues for which both the expected harm and recall cost are very high and the defect is likely to exist. We make four policy recommendations that could help mitigate manufacturers’ cover-ups, including a hybrid policy in which the regulator conducts a confidential investigation of a potential defect only when it may inflict significant harm. This paper was accepted by Vishal Gaur, operations management.

We provide a new methodology to empirically investigate the respective roles of systematic and idiosyncratic skewness in explaining expected stock returns. Using a large number of predictors, we forecast the cross-sectional ranks of systematic and idiosyncratic skewness which are easier to predict than their actual values. Compared to other measures of ex ante systematic skewness, our forecasts create a significant spread in ex post systematic skewness. A predicted systematic skewness risk factor carries a significant risk premium that ranges from 7% to 12% per year and is robust to the inclusion of downside beta, size, value, momentum, profitability, and investment factors. In contrast to systematic skewness, the role of idiosyncratic skewness in pricing stocks is less robust. Finally, we document how the determinants of systematic and idiosyncratic skewness differ.

Research Summary: Firms and nongovernmental organizations (NGOs) often collaborate to establish new supply chains. With a formal model, we analyze how NGOs can alleviate market failures and improve supplier economic inclusion while strategically interacting with firms. We account for the specific goals of the NGO and the need to induce collaboration between firms and their suppliers. The analysis reveals a “valley of frustration,” when NGO efforts benefit all actors but only marginally the firm. We also show that more powerful firms might prefer to internalize NGO functions, while firms with lower bargaining power and higher investment requirements are better off collaborating with NGOs. Finally, we study NGOs‐firms matching patterns and find that firms with higher bargaining power match with NGOs holding stronger capabilities. Managerial Summary: This article analyzes interactions between firms and nongovernmental organizations (NGOs) aiming to improve the economic inclusion of suppliers or to promote the adoption of specific (e.g., sustainable) practices. For firm executives, this study shows the constraints and benefits associated with working with NGOs, the conditions under which integration of NGO functions is preferable as well as the types of NGOs that offer better prospects for a successful collaboration. For NGO executives, it highlights the need to provide enough economic incentives to firms and suppliers alike to ensure their collaboration and the trade‐offs associated with this constraint, in particular, if NGO capabilities are limited. Overall, the study provides a comprehensive understanding of how NGO activities can influence value creation in a vertical value chain.

This paper reviews several streams of research on market category formation. Most past research has largely focused on established category systems and the antecedents and consequences of categorical positioning (i.e., categorical purity vs. spanning; combination vs. replacement) but relatively ignored the formative processes leading to new categories. In this review, we address this lacuna to posit that scholarship would benefit from clearly disentangling category emergence from category creation. We analytically describe the differences between the two and elaborate the boundary conditions that guide and define which process is more likely to occur in a given market. Our review contributes to illuminating the role of organizational agency and strategic actions in market categories and their formation, which deserve greater attention as a result of their theoretical and practical implications.