The Social Construction of Market Categories: How Proximate Social Space Creates Strategic Incentives to Be Early Claimants of the Fiscal Sponsor Label

Studies of the social construction of markets have not determined which social environments, which we refer to as proximate social space, are most likely to trigger social construction processes. We find that U.S. nonprofit fiscal sponsors respond to greater potential for category emergence when proximate social space is defined by geography but not by market segment. Further, in addition to responding to potential claimants based on geographic peers, organizations also respond to actual claimants based on peers in the market segment. The pattern suggests that geographic social proximity triggers initial label claiming, which in turn triggers responses from market segment peers.