The Cost of Status: When Social and Economic Interests Collide

Curt B. Moore (), G. Tyge Payne (), Igor Filatotchev () and Edward J. Zajac ()
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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

Organization Science, 2019, vol. 30, issue 5, 869-884

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.

Keywords: ceremony; status; social construction; social networks; economic sociology; strategy and policy (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:30:y:2019:i:5:p:869-884

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