Reintroducing public actors in entrepreneurial dynamics: A co‐evolutionary approach to categorization

• Published date: 01 March 2020
• DOI: http://doi.org/10.1002/sej.1335
• Date: 01 March 2020
• Author: Benoît Demil

SPECIAL ISSUE ARTICLE

Reintroducing public actors in entrepreneurial

dynamics: A co-evolutionary approach to

categorization

Benoît Demil

LEM (UMR CNRS 9221), IAE, University of

Lille, Lille Cedex, France

Correspondence

Benoît Demil, LEM (UMR CNRS 9221), IAE,

University of Lille, 104, Avenue du Peuple

Belge, 59043 Lille Cedex, France.

Email: benoit.demil@univ-lille.fr

Abstract

Research Summary: Categories are important cognitive and

social interfaces for entrepreneurs and new ventures. How-

ever, the categories forged by the state and public agencies

have been largely overlooked by the literature. A historical

narrative explores the categorization process to register

French mail order companies in an administrative nomencla-

ture. This categorization performs reality by providing legal-

ity to a new population and by producing enduring social

boundaries. Moreover, the historical reasoning enables to

assimilate the emergence of a new category with a co-

evolutionary process, avoiding the reification of categories

by considering multilevel interactions. Finally, our narrative

highlights the need to consider the interests of entrepre-

neurs and public actors symmetrically.

Managerial Summary: How do the state and public agencies

categorize new activities? Such categorization can have

substantial consequences for entrepreneurs in terms of sub-

sidies, regulation, or control. A historical narrative is built to

trace the emergence of the French mail order category in a

public nomenclature. This narrative suggests that the cate-

gorization results from the convergence of three evolutions

over time: a growing interest of public policy in retailing;

the development of the French statistical apparatus after

world war II (WWII); and the collective entrepreneurship of

the mail order companies. Entrepreneurs should consequently

dedicate attention to the tools for recording economic activ-

ity, be aware of windows of opportunity occurring in the

Received: 4 July 2016 Revised: 17 April 2019 Accepted: 1 July 2019 Published on: 19 August 2019

DOI: 10.1002/sej.1335

© 2019 Strategic Management Society

Strategic Entrepreneurship Journal. 2020;14:43–65. wileyonlinelibrary.com/journal/sej 43

categorization process and eventually take action to influence

the way they are categorized.

KEYWORDS

categorization, co-evolution, historical approach, industry

emergence, nomenclature

Whether Uber should be classified as a taxi service or a computer service recently emerged as a thorny legal issue. In

December 2017, the European Court of Justice (ECJ) ruled Uber to be a transport service, entailing stricter regula-

tion as it “must be regarded as being inherently linked to a transport service and, accordingly, must be classified as “a

service in the field of transport”within the meaning of EU law”(ECJ, The Guardian, December 20, 2017). This iconic

case suggests that state and public agencies impact the dynamics of entrepreneurs in emerging industries and their

capacity to exploit opportunities (Shane & Venkataraman, 2000: 218) according to the institutional framework they

build for new markets (Fligstein, 1996). More specifically, how new ventures are categorized by these public actors

may have considerable consequences, for example, for taxation, subsidies, or legal obligations.

While some researchers have highlighted the crucial role of various actors in the categorization process such as

that of sellers (Granqvist, Grodal, & Woolley, 2013) and their interactions with consumers (Rosa, Porac, Runser-

Spanjol, & Saxon, 1999), others have also highlighted the role of important intermediaries such as the media

(Kennedy, 2008), analysts and experts (Pontikes & Kim, 2017), or critics (Beckert & Musselin, 2013; Karpik, 2010;

Khaire & Wadhwani, 2010). Nevertheless, the role of public actors has been widely overlooked by entrepreneurship

literature on categorization. We find this gap surprising, given that the state and administrative agencies are large

providers and users of “administrative categories”(defined here as the categories they forge for governing societies),

notably because the legal–rational order of modern states is based on the law and its legal categories

(Kalberg, 1980).

At a theoretical level, several authors have recently argued for a better understanding of the emergence and cre-

ation processes behind categories, instead of focusing exclusively on their effects (e.g. Durand, Granqvist, &

Tyllström, 2017; Durand & Khaire, 2017; Farjoun, Ansell, & Boin, 2015; Hansen, 2018; Kennedy & Fiss, 2013;

Navis & Glynn, 2010; Rosa et al., 1999; Vergne & Wry, 2014). These authors point out that before considering the

disciplining function of categories (Zuckerman, 1999), we need to understand how new organizations or products

are recognized as elements of classifications systems (Kennedy & Fiss, 2013: 1142). In this article, we explore the

interaction between the development of a new industry and its registration by the administration with the simple

question: How does a category emerge in an administrative nomenclature to categorize a new industry? Following

Durand and Khaire (2017: 88), we opt for the term “emergence”rather than creation, as this process occurs when an

“existing classification system and categorical structure of markets do not sufficiently account for material novelties

sponsored by innovators.”

To answer this question, we study the emergence of a specific category: the codification of a new sector in a

French administrative nomenclature that is similar to the American Standard Industrial Classification (SIC) or North

American Industrial Classification System (NAICS) codes. Instead of taking industry as a reified unit of analysis, we

study how the administrative category of “mail order (MO) companies”appeared in France to classify a set of organi-

zations as a new category, that is, how it became “understood and taken for granted”(Rao, 2004: 360). The historical

approach we adopt significantly contributes to our understanding of a complex social process (Maclean, Harvey, &

Clegg, 2016). First, studying the emergence of such a category requires a focus on a sector's pre-emergence phase

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