How Market Category Expansion Affects Tie Dissolution between Record Labels and Artists

• In Event: 40860 - Section on Economic Sociology Roundtables
  In Refereed Roundtable (60 minute): Table 6. Atypical markets

Abstract

We investigate how changes in a firm’s market position affect the dissolution of ties with its exchange partners involved in production. We posit that changing market position through market category expansion generates incompatibility between a firm and its partners by shifting its market identity, increasing the likelihood of tie dissolution. Firms may sever relationships to free up resources necessary for engaging with new categories and signal their commitment to their new market audiences, while partners may sever ties because they perceive firms’ identity shift as a lack of commitment to their careers and to avoid ambiguous market identity. Using data on the U.S. recorded music industry between 1963 and 1999, we find that record labels adopting new music genres increased the likelihood of tie dissolution with their artists. The disruptive effects of genre adoption were amplified when the identities of record labels and artists became more distant and genres covered by artists were adopted by greater numbers of other labels, but diminished for generalist labels and for the label-artist relationships of longer duration. Our findings bridge the literatures on categories and tie dissolution by uncovering how firms’ market category expansion disrupts their relationships with key production partners.

Authors

• Joe Broschak, University of Texas at San Antonio

• Eugene Paik, University of Mississippi