Abstract
We study the effects of organizational code-preserving and code-violating changes on external evaluations by third parties - an essential but under-studied strategic outcome. We define code-preserving changes as a variation in the firm's product range that preserves the social code within which the firm positions its offering. By contrast, a code-violating change corresponds to a variation in the product range that breaks with past codes and embraces another social code. Our analyses of french haute cuisine restaurants show that code-preserving changes and code-violating changes have positive effects on external evaluations. Both effects decline with prior evaluations received by the organization, but only the effect of code-violating changes is reduced with age. Moreover, external evaluations improve when restaurants undertake more code-preserving changes than their direct competitors but decline when they make more code-violating changes than competitors. These results enable us to derive implications for research on strategic change, strategic groups, and strategic social positioning.