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The Cost of Status: When Social and Economic Interests Collide

Author

Listed:
  • Curt B. Moore

    (Spears School of Business, Oklahoma State University, Stillwater, Oklahoma 74078)

  • G. Tyge Payne

    (Rawls College of Business, Texas Tech University, Lubbock, Texas 79424)

  • Igor Filatotchev

    (King’s Business School, King’s College London, London WC2B 4BG, United Kingdom, Vienna University of Economics and Business, 1020 Wien, Austria)

  • Edward J. Zajac

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208)

Abstract
Although researchers have devoted considerable attention to assessing how organizations benefit from ascriptions of high status, relatively little research has analyzed the financial costs that organizations may incur in actively managing such ascriptions. In this study, we analyze how and why organizations may pay a relatively steep economic price for the attainment and/or maintenance of social status. Specifically, we advance an original theoretical perspective, which suggests that firms engaged in economic competition are simultaneously engaged in social ceremony and that these dual processes can generate a combination of social gains (in terms of status) and economic losses (in terms of profitability). We theorize and test our perspective in the context of competitive bidding ceremonies using a unique, decade-long data set on repeated competitive market interactions among firms in the U.S. construction industry. We find support for our prediction that firms’ participation in bidding ceremonies can generate divergent outcomes, that is, higher social status and diminished economic performance. We discuss the implications of our theoretical and empirical analysis for the existing literature on social status, competitive bidding, and—more generally—on the role social forces play in competitive market behaviors and outcomes.

Suggested Citation

  • Curt B. Moore & G. Tyge Payne & Igor Filatotchev & Edward J. Zajac, 2019. "The Cost of Status: When Social and Economic Interests Collide," Organization Science, INFORMS, vol. 30(5), pages 869-884, September.
  • Handle: RePEc:inm:ororsc:v:30:y:2019:i:5:p:869-884
    DOI: 10.1287/orsc.2018.1247
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    References listed on IDEAS

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