Multiple Category Memberships in Markets: An Integrative Theory and Two Empirical Tests

Abstract

This article examines the effects of market specialization on economic and social outcomes. Integrating two perspectives, we explore why products that span multiple categories suffer social and economic disadvantages. According to the audience-side perspective, audience members refer to established categories to make sense of products. Products that incorporate features from multiple categories are perceived to be poor fits with category expectations and less appealing than category specialists. The producerside view holds that spanning categories reduces one's ability to effectively target each category's audience, which decreases appeal to audience members. Rather than treating these as rival explanations, we propose that both processes matter and offer a systematic, integrated account of how penalties arise as a consequence of audience-side and producer-side processes. We analyze data from two dissimilar contexts, eBay auctions and U.S. feature-film projects, to test the central implications of our theory. Together, these tests provide support for our integrated approach and suggest that both processes contribute to the penalties associated with category spanning.

Davids Against Goliath? Collective Identities and the Market Success of Peripheral Organizations During Resource Partitioning

“…This cognitive split is created by the failure of near-center producers which provides distinctiveness to the identity of peripheral producers (Pólos et al, 2010). Second, in alignment with recent research on organizational identities (Hsu et al, 2009;Hannan et al, 2007), we argue that the returns obtained by each organization from a collective identity remain contingent upon the endorsement of a target audience.…”

“…We addressed this gap by relying on recent developments in organization theory concerning the effects of matching and engagement (Hannan et al, 2007;Hsu et al, 2009). By highlighting variations in the endorsement by audience members and the engagement of producers, our paper contributes to the literature by providing a novel approach to explore differences in performance among peripheral producers during the partitioning process.…”

Beyond categorization: New directions for theory development about entrepreneurial internationalization

“…Indeed, category-based processing is the dominant way to learn about new entities (Fiske & Neuberg, 1990). For example, when someone goes to a new film, that person is likely to make sense of it by categorizing it into a familiar genre (Hsu, Hannan, & Koçak, 2009). In the same way, categorization is a basic building block of theory generation.…”

Oppositional Identities and Resource Partitioning: Distillery Ownership in Scotch Whisky, 1826–2009

“…Efforts to achieve scope economies can reduce the appeal of an offering, as when duplicate or overlapping operations or resources are sold or withdrawn, while the buying and selling of assets can disrupt operations across categories and reduce the actual appeal of a firm's offerings. Moreover, with partial memberships in different business categories, their operating units in each category would likely be perceived differently than other single-business organizations in the same category (Zuckerman 1999;Hsu, Hannan, and Koçak 2009). …”