Contrasting alternative explanations for the consequences of category spanning: A study of restaurant reviews and menus in San Francisco

Abstract

Recent literature on organizational category spanning demonstrates that organizations that span multiple categories on average suffer social and economic disadvantages in markets. While multiple mechanisms have been proposed to explain this finding, most studies do not test directly nor contrast these mechanisms. In this article, we contrast two of the main mechanisms proposed in the literature: the audience-side typicality-based explanation (category spanners are atypical of each categories spanned) and the producer-side quality-based explanation (category spanners produce lower quality output because they cannot develop expertise in any of the categories spanned). We find evidence for both mechanisms. Furthermore, we argue that quality and typicality interact such that high-quality organizations can benefit from being atypical. Finally, we contrast two kinds of spanning, “fusion” and “food court,” and argue that their effects are different depending on the overall quality of the organization. Our empirical setting is the restaurant domain, and we analyze menus and reviews of 474 restaurants located in San Francisco.