Labeling key to success of software company innovations
`Category Innovation' a strategy

Date:
March 10, 2022
Source:
University of California - Davis
Summary:
Companies in the software industry, where novel ideas are prized,
use linguistic tactics to develop new labels for their innovations
to stay ahead of competitors.



FULL STORY ========================================================================== Companies in the software industry, where novel ideas are prized, use linguistic tactics to develop new labels for their innovations to stay
ahead of competitors. Using language to signal that something is "new and different" is an important tool for success, University of California,
Davis, research suggests.


========================================================================== Category innovation during a study period from 1990 to 2002 included
words and phrases such as "platform" and "supply chain management" --
market categories that are now established.

"There is an association between companies that use category innovation
and their likelihood to IPO, suggesting category innovation is part of successful firm strategies," said Elizabeth George Pontikes of the UC
Davis Graduate School of Management who is the author of the study.

The article, "Category Innovation in the Software Industry, 1990-2002,"
was published in Strategic Management Journalin January. Pontikes
looked at more than 400 labels used in news releases about innovations
by more than 4,000 different software firms over 12 years. Researchers
also interviewed 12 executives and venture capitalists in the software industry.

Category innovation, as defined in the study, is a practice that involves
firms claiming a new category label to describe the market they are in. A
firm may do this to differentiate from rivals, or to try to become a
market leader or even a "category king." One executive interviewed for
the study described the "tag management" label, for example, as something
that "wasn't super innovative, but it was labeling it ... so it was
strategic the way we were thinking about it." The research found that
75% of the labels analyzed when they were new only had one or two firms
using them in the first two years, when it is traditionally difficult to determine if innovations even have a nascent market. Those labels don't
gain traction until the second year of innovation, the research showed.

Firms sometimes engage in category innovation by borrowing and recasting
a little-known term or are unaware another firm had claimed the label,
Pontikes said.


========================================================================== Story Source: Materials provided by
University_of_California_-_Davis. Original written by Karen Michele
Nikos-Rose. Note: Content may be edited for style and length.


========================================================================== Journal Reference:
1. Elizabeth George Pontikes. Category innovation in the software
industry:
1990-2002. Strategic Management Journal, 2022; DOI: 10.1002/smj.3383 ==========================================================================

Link to news story: https://www.sciencedaily.com/releases/2022/03/220310151925.htm

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