Code and Conduct in French Cuisine: Impact of Code Changes on External Evaluations

Abstract

We study the effects of organizational code-preserving and code-violating changes on external evaluations by third parties – an essential but under-studied strategic outcome. We define codepreserving changes as a variation in the firm’s product range that preserves the social code within which the firm positions its offering. By contrast, a code-violating change corresponds to a variation in the product range that breaks with past codes and embraces another social code. Our analyses of French haute cuisine restaurants show that code-preserving changes and code-violating changes have positive effects on external evaluations. Both effects decline with prior evaluations received by the organization, but only the effect of code-violating changes is reduced with age. Moreover, external evaluations improve when restaurants undertake more code-preserving changes than their direct competitors but decline when they make more codeviolating changes than competitors. These results enable us to derive implications for research on strategic change, strategic groups, and strategic social positioning.