Organizations need to both differentiate themselves while conforming to their audiences' expectations. To meet this demand, organizations may span different categories. However, valuing spanners is challenging for audiences. We contend that spanners' valuation depends on category nesting, as the congruence of informational cues varies between basic categories and subcategories. Furthermore, we expect that more expert audiences find spanners to be more congruent (and hence, more valuable) at a subordinate level than at a basic level of categorization. We test our hypotheses using a mixed methods design in the context of venture capital investments. We analyze observational data on more than 29,000 venture capital deals and develop two experimental studies. Our findings support our hypotheses that subcategoryspanning lowers valuation, and that this effect is attenuated as investors' expertise increases. Our experimental studies further show that congruence is a causal mechanism explaining these effects. Our findings have important implications for research on organizational conformity and optimal distinctiveness, categorization in markets from an information processing perspective, and the impact of expertise on valuation.A fundamental problem in management hinges on how favorably audiences value an organization's conformity to expectations. Organizations may present themselves to audiences as purists, clearly representative of a genre or a category; alternatively, they may combine multiple attributes belonging to a plurality of codes (Durand, Rao, & Monin, 2007; Goldberg, Hannan, & Kovacs, 2016). Valuing spanners, i.e. organizations that span categories, is challenging as well as determining whether they are worth more than purists. Indeed, not all spannings are equal as they depend on the type and characteristics of the spanned categories (Hannan et al, 2019;Wry, Lounsbury, & Jennings, 2014). At a micro-level, audience members process information (categorical attributes and cues) differently (Pontikes, 2012; Boulongne & Durand, 2021). At a macro-level, expectations change under the evolution of which attribute combinations become dominant, which reshuffles what spanning means and how for organizations to best balance conformity with differentiation (Zhao, Fisher, Lounsbury, & Miller, 2017;Taeuscher, Bouncken, & Pesch, 2020).
