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Demise from Success? the Emergence of Hybrids Between Nascent and Established Products and the Subsequent Revival of the Once-Nascent Products

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DEMISE FROM SUCCESS? THE EMERGENCE OF HYBRIDS BETWEEN NASCENT AND ESTABLISHED PRODUCTS AND THE SUBSEQUENT REVIVAL OF THE ONCE-NASCENT PRODUCTS Jaemin Lee Entrepreneurship and Family Enterprise INSEAD [email protected] October 2015 * Job market paper 1 Jaemin Lee – Sample Work Demise from Success Demise from Success? The Emergence of Hybrids between Nascent and Established Products and the Subsequent Revival of the Once-Nascent Products ABSTRACT This paper argues that the success of a hybrid between an established and a nascent product can ultimately cause the nascent product to become popular at the expense of the hybrid. By invoking familiarity with the established product, the hybrid is more easily understood and accepted. It also contributes to the legitimization of the nascent product over time, given the nascent product’s elements included in the hybrid. However, once the nascent product is better understood, the hybrid’s limitations may become apparent if it fails to incorporate the key elements of the once-nascent product that are crucial to positive evaluation and integral to the appeal of the once-nascent. Thus, unless the hybrid offers the unique value, it may gradually become less appreciated than the once-nascent product. I test this theory in the context of the emergence of hybrid jazz—a combination of original jazz and classical music that was popular during the 1920s and 1930s—and the subsequent popularity of traditional jazz during the 1940s and 1950s in the United States. This paper extends research on entrepreneurship, innovation, and market categories by emphasizing that the appeal of a hybrid is dynamic. It also responds to recent research on institutional legacies in communities by suggesting a new type of institutional imprinting—the legacy of early popularity of a specific product type. Keywords: hybrid; evolution of markets and organizational forms; entrepreneurial legitimacy; cultural revivalism 2 Jaemin Lee – Sample Work Demise from Success The importance of achieving acceptance is a fundamental issue in entrepreneurship research. By definition, new markets form around products that do not fit established products and thus are without acceptance. Yet such new products often replace dominant products and drive industry evolutions (Schumpeter, 1942; Anderson and Tushman, 1990), suggesting an importance of understanding how entrepreneurs obtain acceptance of the innovations and themselves (Schoonhoven and Romanelli, 2001). Among the strategies that entrepreneurs can use to this purpose (e.g., Zott and Huy, 2007), the notion of hybridity is regarded as central (Tripsas, 1997; Hargadon and Douglas, 2001; Jensen, 2010). Hybridity that combines elements of an established product with those of a new product is an effective way to attain visibility and acceptance by invoking preexisting understanding and knowledge (Hargadon and Douglas, 2001: 488), providing a cognitive template (Santos and Eisenhardt, 2009), creating socially acceptable identities or images (Glynn, 2008), and lowering emotional and normative barriers (Zelizer, 1978; Jensen, 2010). Despite this large body of research, organizational research provides little guidance as to how the hybrid can influence the evolution of the new and established products over time, a glaring absence given the many potential outcomes. For example, the hybrid could eventually redefine the nascent product (Negro, Hannan, and Rao, 2011) and replace it. Or, the hybrid could become dominant and subsume nascent product, but eventually be incorporated into the established one if it borrow heavily from the established (Kennedy, Lo, and Lounsbury, 2010). Alternatively, the nascent product could obtain certain market space and remain independent from the hybrid as well as the established product (Adner and Snow, 2010). Understanding which of these scenarios is 3 Jaemin Lee – Sample Work Demise from Success more likely to occur is important, given the prevalence of this type of hybrid in both literature and practice. To advance theory on this issue, I develop a framework whereby the nascent product not only remains independent but also eventually becomes more popular than the hybrid. Drawing upon research on the cultural and sociological view of markets (e.g., Rosa et al., 1999; Lounsbury and Rao, 2004; Kennedy, Lo, and Lounsbury, 2010), I argue that a hybrid integrating elements of an established product into a new product can secure acceptance because of its familiarity to key stakeholders—who become more comfortable with the hybrid than with a nascent product. However, the success of the hybrid can unwittingly increase the appeal of the nascent product, as the hybrid integrates its elements. With more knowledge of the nascent product, market participants may identify its key elements that are not included in the hybrid and may perceive the hybrid as inferior, satisfying only part of the appeal of the nascent. Therefore, they may gradually return to the once-nascent product in search of a more authentic, superior experience (Peterson, 2005). I apply my framework to a context in which a hybrid played a crucial role in the evolution of a new market—the emergence of hybrid jazz in the U.S., sometimes referred to as symphonic jazz. This setting is ideal to test my framework because the popularity of hybrid jazz was so enormous that many contemporaries considered it to be a standard of jazz forever (Stringham, 1926; Spaeth, 1928). A fusion of symphonic instrumentation with jazz, the hybrid form emerged around the late 1910s when jazz was still poorly accepted (Peretti, 1997; Phillips and Kim, 2009). In this era, European classical music was considered a more prestigious and widely appreciated music genre. Exploiting that 4 Jaemin Lee – Sample Work Demise from Success legitimacy gap, a group of entrepreneurial musicians and companies adopted symphonic instrumentation and pre-arranged compositions to establish a hybrid form. Exemplified by Rhapsody in Blue, hybrid jazz achieved enormous commercial success in the 1920s and 1930s. Indeed, many jazz historians and musicologists believe that the success of this hybrid contributed to the legitimization of the entire jazz domain (e.g., Leonard, 1962). Interestingly, however, hybrid jazz’s popularity began to wane with the revival of the original jazz form beginning in the late 1930s. By the mid-1940s, the hybrid form was no longer in the “forefront of jazz” (Kernfeld, 2002: 125). Although still a sub-genre or style, it never regained its dominance in the jazz field (Kernfeld, 2002; Shipton, 2008). This paper examines how the early popularity of hybrid jazz caused the subsequent reemergence of original jazz. In doing so, I follow recent research suggesting that local communities constitute the distinct institutional environments (e.g., Marquis, Glynn, and Davis, 2007; Marquis and Battilana, 2009; Greve and Rao, 2012) and consider the relationship in individual communities. The stream of research closest to mine is that related to resource partitioning theory, which has reported cases in which the anti-commercial sentiment against the dominant products engendered the rise of an original product type (e.g., Carroll and Swaminathan, 2000; Greve, Pozner, and Rao, 2006; See also Raffaelli, 2013). Although the dominant products in these studies were hybrids of multiple product types in the same product category, my focus is on a hybrid of an established and a nascent product that are otherwise independent. The framework of this paper has some similarity to the theory of fashion cycles (e.g., Lieberson, 2000). Whereas this theory predicts a periodic change in dominance between styles, also my theory predicts the persistent dominance of the 5 Jaemin Lee – Sample Work Demise from Success original form once regained. This paper makes three important contributions. First, it extends research on entrepreneurship (e.g., Aldrich and Fiol, 1994; Hargadon and Douglas, 2001) by suggesting that although entrepreneurial firms may rely on a hybrid to achieve legitimacy, they need to change the focus of business activities to the once-nascent product as the hybrid (and thus the once-nascent) becomes increasingly accepted. Second, this work helps to explain why a hybrid can be a source of penalization as well as value creation, and thus provides new insights into the central research debates on whether spanning of market categories is penalized or not (e.g., Kennedy, Lo, and Lounsbury, 2010; Zuckerman, 2015). Finally, this study contributes to recent research on institutional legacies of communities (e.g., Marquis and Battilana, 2009; Greve and Rao, 2012) by suggesting that the enduring heterogeneity of institutional environment across communities can arise from the early popularity of specific products. HYBRID, MARKET EVOLUTION, AND MARKET ACCEPTANCE The notion that a hybrid or blend of artifacts is important for market evolution is well established in the canons of management and sociological research. Schumpeter’s (1934) concept of entrepreneurial innovation as resulting from a new combination of existing products is a core tenet of research on new market creation and innovation (Henderson and Clark, 1990; Hargadon and Sutton, 1997). Hybrids have also been regarded as a source of change. For example, Zelizer (1978) observed that the adoption of more accepted and legitimated product’s elements into the illegitimate market of life insurance contributed to a rise in the popularity of the life insurance. Rao et al. (2005) similarly showed that a combination
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