Credit and Classification: The Impact of Industry Boundaries in Nineteenth-Century America

Abstract

In this article, we examine how issues of multi-category membership (hybridity) were handled during the evolution of one of the first general systems of industrial classification in the United States, the credit rating schema of R. G. Dun and Company. Drawing on a repeated cross-sectional study of credit evaluations during the postbellum period (1870–1900), our empirical analyses suggest that organizational membership in multiple categories need not be problematic when classification systems themselves are emergent or in flux and when organizations avoid rare combinations or identities involving ambiguous components. As Dun's schema became institutionalized, boundaries between industries were more clearly defined and boundary violations became subject to increased attention and penalty by credit reporters. Our perspective highlights the utility of an evolutionary perspective and tests its implications for the salience of distinct mechanisms of hybridity.

Risky Recombinations: Institutional Gatekeeping in the Innovation Process

“…First, the positive association between recombinant breadth 1 and citation impact is one of the most frequently replicated findings in innovation research (Lerner 1994, Flem- We define institutional gatekeepers as those market institutions that filter "the flow of goods and ideas through the society" by imposing standards "that function as selection criteria" (Clayman & Reisner 1998, p. 179). We draw upon research suggesting that gatekeepers find it hard to understand, and therefore inadvertently sanction, boundary-spanning goods and ideas when trying to assess whether they meet their selection criteria (Zuckerman 1999, Zuckerman 2004, Leahey 2007, Hsu, Hannan & Koçak 2009, Ruef & Patterson 2009). We theorize that patent offices may systematically undervalue inventions that span technological boundaries, relative to those that do not.…”

Combining Logics to Transform Organizational Agency

“…An enrichment strategy instead innovates within the constraints of the incumbent logic and therefore is unlikely to violate core categorical requirements. It leads to new offerings that generally fit in a category but may invite audiences to stretch their understandings and expectations (Rindova and Petkova, 2007;Wry, Lounsbury, and Jennings, 2014 responses to experimentation based on this strategy may reveal the relative rigidity or fluidity of existing categories and the classification system as a whole (Ruef and Patterson, 2009;Hsu, Negro, and Perretti, 2012), leading to the emergence of new market segments and profitable opportunities.…”

An Ecology of Social Categories

“…Recent work on classification sidesteps this issue by assuming that category boundaries are policed by market intermediaries such as stock market analysts (Zuckerman 1999), credit agencies (Ruef and Patterson 2009), critics (Hsu 2006;Rao et al 2003;Negro et al 2010;Negro and Leung 2013), and government agencies (Ruef 2000). But what has historically interested sociologists in categorization is that macro-level structures emerge through uncoordinated individual beliefs about social meaning embedded in objects or concepts (Berger and Luckmann 1967;Durkheim 1931;Meyer and Rowan 1977).…”