How New Market Categories Emerge: Temporal Dynamics of Legitimacy, Identity, and Entrepreneurship in Satellite Radio, 1990–2005

We theorize how new market categories emerge and are legitimated through a confluence of factors internal to the category (entrepreneurial ventures) and external to the category (interested audiences). Using qualitative and quantitative analyses and multiple data sources overtime, we study the evolution of the U.S. satellite radio market over its initial sixteen years. We offer convergent evidence to show that the legitimation of a new market category precipitates shifts in the focus of market actors’ attention from the category as a whole to the differentiation of firms within. This effect was demonstrated for entrepreneurial identity claims, linguistic frames, and announcements of interorganizational affiliations and endorsements, as well as in the focal attention of media and financial audiences. We synthesize these findings to offer an integrated theoretical framework on new market category emergence and legitimation.