A Formal Theory of Multiple Category Memberships and Two Empirical Tests

Abstract

This paper integrates two perspectives on why producers who span categories suffer social and/or economic disadvantage. According to the audience-side perspective, audience members refer to established categories to make sense of producers; they perceive producers who incorporate features from multiple categories to be poor fits with category expectations and less appealing relative to category specialists. The producer-side view holds that producers who span categories have lower ability to target effectively each category's audience, which decreases their appeal to audience members. This paper integrates these two perspectives by developing a formal account of how penalties arise as a consequence of audience-side and producer-side processes. Rather than treating these as rival explanations, we propose that both types of processes contribute to the penalties seen for category spanning. Analysis of data on the consequences of spanning categories in two dissimilar contexts, eBay auctions and U.S. feature film projects, provides support for the formal theory.

Keywords: organization theory