Identity Co‐Formation in an Emerging Industry: Forging Organizational Distinctiveness and Industry Coherence Through Sensemaking and Sensegiving

• Published date: 01 December 2018
• Author: Kimberly D. Elsbach,Ileana Stigliani
• DOI: http://doi.org/10.1111/joms.12403
• Date: 01 December 2018

© 2018 John Wiley & Sons Lt d and Society for the Adva ncement of Management Stud ies

Identity Co-Formation in an Emerging Industry:

Forging Organizational Distinctiveness and Industry

Coherence Through Sensemaking and Sensegiving

Ileana Stigliani and Kimberly D. Elsbach

Imperial Coll ege Busine ss School; Universit y of California Davis

ABST RACT We inductively studied the sens emaking and sensegivi ng processes used by industry

founders in the co-format ion of organizat ional and industry identities in the emerg ing industry

of Service Desi gn. Our findings i llustrate how the sensemakin g and sensegiving processes that

revolved around the new ‘Ser vice Design’ label allowed the two set s of industry founders to

forge both disti nctive organizational identities a nd a coherent industry identit y. The new label

was, thus, used a s a central ‘car rier’ for both holding meanings (in ter ms of distinctive princi-

ples and common practices) developed th rough sensemaking, and for transferr ing these

meanings res pectively to organizational a nd industry identities through senseg iving. These

insights il luminate how indust ry founders can address the tension between org anizational

distinct iveness and industry coherence in emerging i ndustries, and have important implica -

tions for theory and fut ure research on identity co-formation and its underly ing sensemaking

and sensegiving processes.

Keywo rds: identity format ion, industry emer gence, industry identity, labels, organiz ational

identity, sensegiving, sensemaking

INTRODUCTION

The identity of an organizat ion comprises central principles and pract ices denoting re-

spectively ‘who we are’ and ‘what we do’ as an organi zation’ (Nag et al., 2007; Navis

and Glynn, 2011), and helps disting uish one organization from another w ithin a given

industry. Relatedly, the collective identity of an industr y (to which organizations belong)

comprises central principles and pract ices denoting ‘who we are’ and ‘what we do’ as an

industry, thus, ref lecting commonalities across organizations that belong to that indus-

try (Mer vis and Rosch, 1981). During the critica l phase of industry emergence, industry

Journal of Manageme nt Studies 55:8 December 2018

doi : 10.1111/jom s.1240 3

Address for re prints: Ilean a Stigliani, Imper ial College Business S chool, London, United Kingdom

(i.stigliani@imperia l.ac.uk).

1324 I. Stiglian i and K. D. Elsbach

© 2018 John Wiley & Sons Lt d and Society for the Adva ncement of Management Stud ies

founders (who are also founders of the pioneering firms of such industry) play a key role

not only in shaping their own organ izational identities, but also in defin ing the collective

identity of the nascent industry (Gusta fsson et al., 2016). Consequently, in the formative

years of an industry, the defining principles and pract ices of individual organizational

identities and those of the collective industr y identity are often interconnected (Santos

and Eisen hardt, 20 09).

In recent years, researchers have started investigating how such identities form and

acquire meaning (Gioia et al., 2010; Navis and Glynn, 2010; Tripsas, 2009; Weber et al.,

2008; Wry et al., 2011). This interest reflects an increasing awareness of the ‘stickiness’

of initial meanings attributed to identities (Scott and Lane, 2000) and the presence of

strong institutional pressures that accompany the establishment of initial identity mean-

ings (Benner, 2007). These studies have illuminated how initial organizational identities

may support and constrain subsequent technological advances (Tripsas, 2009); how the

level of meaning coherence arrived at in initial collective industry identities (i.e., is the

identity meaning widely agreed upon and simple vs. contested and complex?) might en-

able or constrain adaptation to the environment (Jones et al., 2012); how the similarity

of a newly formed organizational identity to established and legitimate identities in the

same competitive environment may affect long-term survival (Czarniawska and Wolff,

1998), and how forging multiple meanings for new collective industry identities may be

beneficial for the long-term viability of those collectives (e.g., Jones et al., 2012; Khaire

and Wadhwani, 2010).

In particular, extant research has also illuminated that new identities, for both organi-

zations and industries, are developed through a series of contested and iterative collective

sensemaking and sensegiving processes by organizational and industry stakeholders, i.e., the

cognitive processes of understanding ‘what is going on here’ (Weick et al., 2005) and of

conveying this to audiences (Clegg et al., 2007; Gioia and Chittipeddi, 1991; Gioia et al.,

2013; Gioia et al., 2010), leading over time to a negotiated understanding of the iden-

tity of an organization or industry (Navis and Glynn, 2010; Wry et al., 2011). And yet,

they have not looked at how industry founders deal with the simultaneous, co-formation

of initial identities for both their pioneering organizations and their emerging industries.

Such identity co-formation represents a key aspect of industry emergence (Gustafsson

et al., 2016), and poses an important challenge to industry founders: they must deal,

concurrently, with the tension between reaching industry coherence and creating organiza-

tional distinctiveness (Clegg et al., 2007; Granqvist et al., 2013; Patvardhan et al., 2015).

This tension generates an identity dilemma and triggers sensemaking and sensegiving

processes, which remain understudied and undertheorized. A lacuna that is particularly

glaring in light of the important role that identity formation has in the growth and long-

term survival of new industries (Gustafsson et al., 2016).

Our paper, thus, seeks to address this gap through an inductive study of the sensemak-

ing and sensegiving processes that industry founders of the nascent industry of Service

Design used to address this identity dilemma. Our study revealed how the sensemaking

and sensegiving processes around the new ‘Service Design’ label allowed the two indus-

try founders to forge both distinctive organizational identities and a coherent industry

identity. In so doing, it yields theoretical insights that hold important implications for

Identity Co-Formation in an Emerging Industry 13 25

© 2018 John Wiley & Sons Lt d and Society for the Adva ncement of Management Stud ies

theory and future research on identity co-formation and its underlying sensemaking and

sensegiving processes.

Organiz ational and I ndustry Identit y Formation: Contested and Iter ative

Processes of Sensema king and Sensegivin g

Clark and Geppert (2011, p. 399) describe how members of a multi-national corporat ion

used intertwi ned sensemaking and senseg iving processes to construct the identity of a

newly-acquired subsidiary:

‘In a sense making proces s, social actors perceive, interpret, and evaluate each other’s

conduct as it impacts on their understandi ng of the subsidiary ; in a sensegiving process,

actors use power and other resources to enact their subsidia ry identity, to respond

meaningfu lly to and thereby inf luence the behaviour of others. One actor’s sensegiv-

ing prompts the other’s sensemaking responses, in t urn leading to t he latter’s sense-

giving act s and the emerging political process of [meaning] integrat ion . . .’ (emphasis

in original).

Along these lines, recent research suggests that organizational identity formation be-

gins with a sensemaking process that rejects irrelevant (and potentially mis-applied) iden-

tity claims (i.e., formal and informal statements about who they were and what they did),

followed by a negotiated and often contested sensegiving process of adopting relevant

identity claims (Gioia et al., 2013). In this vein, Gioia et al. (2010) examined the forma-

tion of organizational identity for a new college at a large U.S. university. They found

that the process began with the articulation by college founders of ‘who they were not’

(i.e., not a school of computer science). Later, founders made claims about ‘who they

were,’ focusing on desired self-categorizations (e.g., ‘interdisciplinary school’). This initial

articulation of identity, however, had to be negotiated, compared and contrasted, and

experimented with by various organizational actors until they converged on a consensual

identity definition.

Additional studies have suggested that emerging industries follow a process for identity

formation that is similar to that of new organizations. Santos and Eisenhardt (2009), for

instance, showed how some entrepreneurial firms attempted to define their new indus-

try identity through claims (e.g., disseminating symbolic stories, developing market stan-

dards, etc.) that would lead the industry identity to be a reflection of their organization’s

identity and distinguish it from the identities of other firms. Yet, these entrepreneurial

actors needed to gain allies, co-opt competitors, or block market entry for those firms

that had different visions of the market identity. The ultimate industry identity, thus, was

a reflection of the outcome of these power struggles.

Finally, in their study of the nascent academic field of Information Schools or

‘iSchools,’ Patvardhan et al. (2015) found evidence that organizational level identities

evolved during the formation of the new industr y level identity. Specifically, they found

that the new ‘iSchool’ collective (or industry) identity was initially defined via its distinc-

tion from previous collective identities (e.g., ‘not computer science schools’ or ‘not library