The Paradox of Awards: How Status Ripples Affect Who Benefits from CEO Awards

Distinguishing between status spillovers and status ripples, we argue that sudden positive status shifts create status ripples when the social actors experiencing the status shifts are more constrained from exploiting their higher status than the social actors to whom they are affiliated. Specifically, we examine the status ripple paradox that the status effects experienced by the affiliated actors sometimes are as strong, or even stronger, as the direct status effects experienced by the ascending actors themselves. Focusing empirically on prestigious CEO awards from U.S. news magazines, we examine the consequences of positive status shifts for the awarded CEOs and the CEOs who are on the boards of directors of the awarded CEOs’ firms. We find evidence of status ripples in CEO compensation by showing that awarded CEOs have relatively greater immediate but smaller subsequent increases in compensation, which results in lower overall compensation effects for the awarded CEOs. Moreover, we provide empirical evidence of the theoretical mechanisms behind the status ripple paradox by showing that external constraints in the form of increased media and analyst attention and increased expectations affect the status ripple effect.

How the Basis for Status Perceptions Varies with Perceiver Status

We posit a novel mechanism—socially endogenous calibration—whereby the tendency to align with others’ perceptions of organizational status varies systematically with the status of a perceiver’s own organization. We specifically theorize that members of higher-status organizations perceive larger and more correlated status differences among other organizations than members of lower-status organizations do. Using a simulation, we demonstrate how socially endogenous calibration yields these predictions even when quality is uniform across organizations. We further present empirical support for our arguments by analyzing data on individual-level prestige ratings of U.S. law firms. Integrating socially endogenous calibration with prevailing status perspectives based on quality uncertainty, we conclude by elaborating a novel research agenda on stability and instability in organizational status hierarchies.

Stepping into Ill-Fitting Shoes: Local Status Contrasts and Acquisitiveness of New CEOs

This paper asks what motivates new chief executive officers (CEOs) to engage in an acquisition spree despite the considerable risk it entails to themselves and their firms. Building on status theory and performance feedback theory, we theorized that status distance between new CEOs and their predecessors explains the empire-building behavior of new CEOs early in their tenure. Because of the uncertainty surrounding a CEO’s quality early in the individual’s tenure, status serves as a signal of quality for the new CEO. Hence, CEOs had to rely on status signals to maintain or close the status gap between them and their predecessors. Drawing on performance feedback theory, we theorized that new CEOs’ status contrast relative to their predecessor influences their acquisitive behavior. Our examination of the acquisition behavior of 429 new CEOs of S&P 500 firms in the United States revealed that relatively low-status CEOs engaged in risk-taking to improve their status, but relatively high-status new CEOs engaged in risk-taking to maintain their lead. It also revealed that new CEOs changed their risk-taking behavior when direct evidence of their quality or that of their predecessors deviated from the underlying quality expectations indicated by their relative status position.

A Star Is Born: The Relationship Between Performance and Achieving Status Through Certification Contests in the Context of Equity Analysts

We investigate how the relationship between status and performance decouples over time by addressing two questions: (1) how performance affects the likelihood that an actor achieves high status and (2) how achieving high status affects the actor’s subsequent performance. In doing so, we focus on the role repeated certification contests play, where evaluators assess actors’ performance along particular dimensions and confer high status on the contest winners. Using the context of sell-side (brokerage) equity analysts and the “All-Star” list from Institutional Investor magazine, we first investigate whether analysts who make the All-Star list are more likely to produce accurate and/or independent forecasts. Then, we investigate analyst performance after recent and multiple wins. Our results demonstrate the decoupling of status and performance over time and the roles played by both the high-status actor and the social evaluators conferring their status. Whereas analyst performance increases the likelihood of being designated an All-Star, recent and multiple All-Star designations differentially affect both how subsequent performance is assessed, and how the All-Star analysts subsequently perform. In the short term, achieving high status can increase performance and solidify an analyst’s status position; however, in the long term, it can lead to lower performance and eventually result in status loss, which further erodes performance.

A Tale of Two Hierarchies: Interactive Effects of Power Differentiation and Status Differentiation on Team Performance

Scholars have long wrestled with whether hierarchical differentiation is functional or dysfunctional for teams. Building on emerging research that emphasizes the distinction between power (i.e., control over resources) and status (i.e., respect from others), we aim to help reconcile the functional and dysfunctional accounts of hierarchy by examining the effects of power differentiation on team performance, contingent on status differentiation. We theorize that power differentiation is dysfunctional for teams with high status differentiation by increasing knowledge hiding, which undermines team performance. In contrast, we predict that power differentiation is functional for teams with low status differentiation by decreasing knowledge hiding, which improves team performance. In a field study, we found that power differentiation harmed team performance via knowledge hiding in teams with high status differentiation, but power differentiation had no effect on knowledge hiding or performance in teams with low status differentiation. In an experiment, we again found that power differentiation harmed team performance by increasing knowledge hiding in teams with high status differentiation. However, power differentiation improved team performance by decreasing knowledge hiding in teams with status equality. Finally, in a third study, we confirm the role of status differentiation in making team climates more competitive and examine the effect of power-status alignment within teams, finding that misalignment exacerbates the dysfunctional effects of power differentiation in teams with high status differentiation. By examining how power and status hierarchies operate in tandem, this work underscores the need to take a more nuanced approach to studying hierarchy in teams.

Celebrity Couples as Business Families: A Social Network Perspective

We depict Hollywood celebrity couples as business families who participate in the project-based movie production industry, which is a temporary and disaggregated form of organization where skilled individuals are linked to one another through contractual and social relationships. Appearing in Hollywood movies generates celebrity capital, which can be converted into economic capital through involvement in endorsements and other rent-generating activities. Finding projects is facilitated by membership in high-quality social networks, and we consider celebrity marriage as a means of merging two individuals' social networks, which can be mutually beneficial for both parties. We develop and test three hypotheses about the quality of social networks prior to and after marriage and analyze their impact upon celebrities' postmarriage career performance. We contribute to the family business literature by exploring hybridized and adaptive forms of business family in contemporary project industries, which has the potential to enlarge family business scholars' research horizons.

Using Stretch Goals for Idea Generation Among Employees: One Size Does Not Fit All!

This study explores heterogeneity in the efficacy of stretch goals for engaging employees in innovation, as stretch goals may both boost norm-breaking creativity and hamper fruitful ideation by overwhelming employees. Through a multilevel perspective, we demonstrate that stretch goals motivate more capable employees (successful, experienced, senior) to submit useful innovative ideas by combining the motivation of stretch goals with these employees' ability to discern fruitful from futile ideas. Other employees, meanwhile, may “spin their wheels” and submit lower-quality ideas based on their inability to apply useful knowledge. Empirically, we leverage idea generation data from a Fortune 500 firm. We contribute to stretch goals research by demonstrating both the intended and the unintended consequences that shape employee behavior and to the innovation literature by articulating when stretch goals can and cannot motivate valuable innovation from employees.

Older, but Wiser? “The Matthew Effect” at 50: Introduction to the Dialog

Merton’s famous essay on recognition and rewards in scientific careers, “The Matthew Effect in Science”, has reached middle age. This Dialog reflects on established research that separates the origins and the consequences of status, and recent contributions regarding the constraints of status advantages. In doing so, this collection responds to a growing scholarly debate about the returns to high status. The authors engage with Merton’s cumulative status advantage, and go further to identify downsides of increased recognition both for individuals and for the status system itself. The six articles in this Dialog evaluate the progress made towards Merton’s proposed research agenda and highlight opportunities for its extension.