Label claims and category work: The appropriation of the “digital” label in the IT services industry

Abstract Research Summary New labels with symbolic value may constitute a strategic resource for firms in established market categories, but these labels must also provide audiences with classificatory utility. We explore this tension and develop a process explanation of how firms in established market categories appropriate new labels under audience scrutiny. Analyzing eleven years (2011–2022) of earnings calls transcripts of eight leading Information Technology services firms, we theorize around their interest in appropriating the label ‘digital.’ We find that such appropriation is shaped by category work – forged in the tension between contrary impulses of the firm and the audience, and enacted through their claims, probes, and claim calibrations. We also highlight the symbolic appropriation dilemma and the unintended consequences of label appropriation for incumbents in established market categories. Managerial Summary Incumbent firms in established market categories may strive to satisfy their stakeholders' demands for demonstration of both continuity and novelty by developing symbolic management strategies. In doing so, these incumbents may come to view novel category labels as valuable resources for symbolic action. However, the incumbent's pursuit of symbolic action in an established market category is often constrained by the conservative scrutiny of securities analysts. Our study of the global Information Technology services industry reveals the mechanisms of claim calibration deployed by executives to evade or blunt analyst scrutiny while appropriating the digital label. Our study also alerts leading incumbent firms to a dilemma of symbolic management that compels them to confront the trade‐off between symbolic appropriability and symbolic flexibility.