Category Spanning, Distance, and Appeal

Balazs Kovacs and Michael T. Hannan
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Balazs Kovacs: University of Lugano
Michael T. Hannan: Stanford University

Research Papers from Stanford University, Graduate School of Business

Abstract: A general finding in economic and organizational sociology states that producers and products that span categories lose appeal to audiences. This paper argues that to assess the consequences of category spanning researchers need to take account of the relations among the categories spanned. We reason that the negative consequences of category spanning are more severe when the categories spanned are distant and have high-contrast. Because previous empirical strategies do not incorporate information on category distances, here we introduce novel measures to categorical distance and derive measures for grade-of-membership, category contrast and categorical niche width. Using the proposed measurement approach, we test our theory using data on online restaurant reviews, and find that the results confirm our predictions that organizations that span distant and high-contrast categories get lower evaluations from audiences.

Date: 2011-07
New Economics Papers: this item is included in nep-bec
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:2081

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