Category Spanning, Evaluation, and Performance: Revised Theory and Test on the Corporate Law Market

Studies suggest that category-spanning organizations receive lower evaluation and perform worse than organizations focused on a single category. We propose that (a) these effects are contingent on clients’ theory of value, and that, as clients expect more sophisticated services, they tend to value category spanners more positively, and (b) the evaluation of producers mediates the relationship between category spanning and performance. We test our hypotheses using original data on corporate legal services in three markets (London, New York City, and Paris) over the decade 2000–2010. We find that (a) category spanners receive a better evaluation, and more so when their categorical combination is more inclusive, and (b) evaluation mediates significantly the relationship between category spanning and performance. This study enriches our understanding of how audiences apprehend a whole market category system and why organizations span categories.