Directed by Words: How Entrepreneurs Rely on Salient Frames to Devise a Market Entry Strategy

Language is powerful; scholars have shown that organizations rely on language to guide stakeholder interpretations to create value for the focal firm. For example, entrepreneurial firms can use language to access resources and to generate other support from stakeholders. But language also has the power to direct the actions of firms. Shon Hiatt and W. Chad Carlos in their recent SMJ publication entitled, From farms to fuel tanks: Stakeholder framing contests and entrepreneurship in the emergent U.S. biodiesel market, examined how the saliency of frames in an emerging market governed the decision-making of entrepreneurs. More specifically, they used the biodiesel industry as a context to explore how various frames, sometimes compatible and sometimes not, impacted how entrepreneurs chose to enter the market. They found that when frames are similar and compatible, entrepreneurs were more likely to found specialist firms that were aligned with those frames. When frames were dissimilar but compatible, entrepreneurs gravitated towards hybrid forms that appealed to broader audiences and accommodated multiple frames. However, when there was market contestation, visible through the multiple incompatible frames in use by the media, entrepreneurs founded specialist firms that aligned with the generally accepted more dominant frame.

Amongst its contributions, this paper shifts the lens from how firms use language intended to influence others to how firms are influenced by stakeholder discourse. In this case, entrepreneurs are relying on salient frames to guide their actions and are to an extent, unable or unmotivated to meaningfully counter those frames with frames of their own. This makes me curious about the conditions under which entrepreneurs will linguistically contribute to the framing contests that define market categories.

Hiatt and Carlos presented a thought-provoking observation. They discussed the dangers of engaging too many stakeholders with diverse perspectives during the early stages of a market. They posit that these stakeholders can fundamentally alter the meanings associated with the category. This raises the question of what the appropriate metrics are for calculating whether these framing contests were worthwhile. In other words, are “we” better off for at the end of a contentious framing process? Undoubtedly, some actors will lose and some will win. Whose wins should we prioritize? Is it the market pioneers, or society, or do we measure success based on the total number of stakeholders that win? As the authors point out, this truly is a “grand challenge”.

Reference: Hiatt, S. R., & Carlos, W. C. (2019). From farms to fuel tanks: Stakeholder framing contests and entrepreneurship in the emergent US biodiesel market. Strategic Management Journal, 40(6), 865-893.


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