Greta Hsu, Assistant Professor of Management, Graduate School of Management, University of California-Davis

Two perspectives explain 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 spanning categories reduces the ability to target effectively each category’s audience, which decreases appeal to audience members. Rather than treating these as rival explanations, we propose that both types of processes contribute to the penalties seen for category spanning. We integrate these two perspectives by developing a systematic account of how penalties arise as a consequence of audience-side and producer-side processes. 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 theory.