Nevena Radoynovska, R. Ruttan
Nov 5, 2021
Category-spanning organizations have been shown to face a number of penalties compared with organizations occupying a single category. The assumption seems to be, however, that organizations spanning the same categories will be evaluated similarly. Yet, this is not always the case. We know far less about why evaluations may differ within category-spanners, largely due to existing studies’ focus on comparing single-category to category-spanning organizations in equilibrium states at a fixed point in time. Instead, this paper investigates audience judgments of organizations as they transition from single to multiple categories. We rely on the empirical setting of social-commercial hybrids—an intriguing context in which to explore category-spanning across market and nonmarket domains associated with distinct values, norms, and expectations. In a series of two experimental studies, we investigate how hybridization affects audience judgments of organizational authenticity and the ability to attract potential employees. We find that across organizational fields associated with nonprofit (communal) and for-profit (market exchange) norms, hybridization—more than hybridity itself—triggers audience cynicism and leads to decreased judgments of authenticity. However, the penalties for hybridizing are only observed when organizations also move away from field-level profit-status norms. The findings contribute to the category-spanning and authenticity literatures by integrating social psychological and organizational theory perspectives to offer a dynamic view of spanning beyond for-profit, market contexts. They also offer empirical support for the theorized multidirectionality of mission drift in hybrid organizations, while suggesting that drifting need not always be detrimental.