Generally speaking the DataSource supports flat data which is why some of the functionality such as sorting, filtering, etc. does not work with nested objects.
As a workaround I can suggest to bind the column to one of the fields of the object (CategoryName). However, since the column is bound to a property of the object it will be necessary to update the object field of the data item manually within the change event of the drop down:
Finally, in order to create the drop down filter widget follow the steps from the demo:
1. Specify which function builds the custom filter widget:
.Filterable(x=> x.UI("customFilter"))
2. Add the function that creates the filter widget:
function customFilter(element) {
element.kendoDropDownList({
dataSource: {
data: data
},
optionLabel: "--Select Value--"
});
}
For your convenience attached you will find a sample which demonstrates how to use a drop down editor and a drop down filter widget. Please examine it and let me know if it helps you.