Talk of Interest to COR community:
“Shifting Levels of Abstraction: How Faceted Category Systems Influence Market Valuation Processes”
Friday December 11th, 2015
Professor Peer Fiss
Associate Professor of Management and Organization
University of Southern California: Marshall School of Business
SB2 306 Executive Conference Room
While prior work on the relationship between categories and valuation assumes that product category systems are structured according to a uni-dimensional hierarchy, modern product markets increasingly rely on faceted category systems that classify products according to multiple dimensions. We investigate the relationship between faceted category systems and valuation by conducting an inductive, qualitative study of the online advertising industry. We find that market actors deal with the challenge of categorizing products in a faceted category system by shifting their perspective on categorical abstraction: at a high level of abstraction, they use broad, aggregated, averaged categories with few facets; at a low level of abstraction, they use granular, de-aggregated, de-averaged categories with numerous facets. We also find that conceptions of valuation differ depending on the level of categorical abstraction: at a high level, buyers rely on deductive theories of value and sellers construct custom solutions for buyers that promote these theories; while at a low level, buyers and sellers conduct inductive experiments to clarify and realize value by adding or reducing categorical facets. We contribute to the theoretical understanding of categories and valuation by showing how market actors dynamically shift levels of categorical abstraction to agree on value.