Organizing Contests for Status: The Matthew Effect vs. the Mark Effect

Matthew S. Bothner (), Joel M. Podolny () and Edward Bishop Smith ()
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Matthew S. Bothner: Department of Sociology, Cornell University, Ithaca, New York 14853
Joel M. Podolny: Apple, Inc., Cupertino, California 95014
Edward Bishop Smith: Stephen M. Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109

Management Science, 2011, vol. 57, issue 3, 439-457

Abstract: What is the best way to design tournaments for status, in which individuals labor primarily for the esteem of their peers? What process, in other words, should organizers of status-based contests impose upon those who covet peer recognition? We propose a formal model of status-based competition that contrasts two competing alternatives. The first, following Merton, is the "Matthew Effect," according to which a tournament's architect directs slack resources to elite actors and thus widens the distribution of rewards by favoring cumulative advantage. The second is the "Mark Effect," under which a tournament's designer instead pushes slack resources to marginal actors and thus tightens the distribution of rewards. Our results suggest that although the Mark Effect is better for the social welfare of most tournaments, the Matthew Effect is preferable in two distinct contexts: in small tournaments where variation in underlying ability translates into acute advantages for the most capable contestants; and in large tournaments whose contestants face constant, rather than rising, marginal costs--a condition we relate to contestants' perception of their work as intrinsically valuable. Our contributions are twofold: We find, counter to the thrust of Merton's work, that cumulative advantage is not invariably optimal for the functioning of status contests; and we identify circumstances in which the production of superstars is likely to make contests for status better off in aggregate. Implications for future research on status and management are discussed. This paper was accepted by Olav Sorenson, organizations and social networks.

Keywords: networks; graphs; theory; organizational studies; design; effectiveness; performance; status; leadership (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (21)

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