A Contingency Theory of Collective Action in Market Formation

We develop a novel analytical framework to study the role of collective action in the formation of new markets. Using supply and demand uncertainty as two central dimensions underlying all market formation efforts, we theorize under what conditions collective action is necessary for the successful formation of a market and examine the role and form of coordination. To do this, we identify tactics utilized by actors seeking to form a new market and three important contingency factors that impact formation success: returns to contributions, substitutability of contributions, and interest heterogeneity. Our findings have implications for organization theory, economic sociology, and entrepreneurship