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Status-Aspirational Pricing: The “Chivas Regal” Strategy in U.S. Higher Education, 2006-2012*

Posted by admin in 2013 - (Comments Off on Status-Aspirational Pricing: The “Chivas Regal” Strategy in U.S. Higher Education, 2006-2012*)

Noah Askin and Matthew S. Bothner

This paper examines the effect of status loss on organizations’ price-setting behavior. We predict, counter to current status theory and aligned with performance feedback theory, that a status decline prompts certain organizations to charge higher prices and that there are two kinds of organizations most prone to make such price increases: those with broad appeal across disconnected types of customers and those whose most strategically similar rivals have charged high prices previously. Using panel data from U.S. News & World Report’s annual rankings of private colleges and universities from 2005 to 2012, we model the effect of drops in rank that take a school below an aspiration level. We find that schools set tuition higher after a sharp decline in rank, particularly those that appeal widely to college applicants and whose rivals are relatively more expensive. This study presents a dynamic conception of status that differs from the prevailing view of status as a stable asset that yields concrete benefits. In contrast to past work that has assumed that organizations passively experience negative effects when their status falls, our results show that organizations actively respond to status loss. Status is a performance related goal for such producers, who may increase prices as they work to recover lost ground after a status decline.

Administrative Science Quarterly (61) 2016: 217–253


Emergence of Stratification in Small Groups

Posted by admin in 2013 - (Comments Off on Emergence of Stratification in Small Groups)

Noah Askin, Matthew S. Bothner, and Wonjae Lee

Stratification within small groups is virtually inevitable. Understanding the precise mechanisms by which it occurs and the nature of its consequences is an important sociological endeavor. Individuals’ pre-existing qualities, as well as advantages emerging from intra-group interactions, affect the flows of respect and deference accruing to each member of a group. Differences in these flows in turn create a hierarchy. In this article, we first discuss foundational research on the causes and consequences of stratification before turning to more current trends. We focus on the ways in which status, the primary determinant of one’s location in a group’s hierarchy, is created and maintained or lost. We discuss the Matthew Effect—a process by which high-status group members receive disproportionate credit for their contributions, and also more easily maintain their status. We also address the circumstances and activities that can curb the Matthew Effect. We then move to current research, which centers on two main concepts: first, we consider peer effects, discussing the various means by which an individual’s closest peers shape his or her status; second, we take a broader perspective by examining small groups as open systems. This section considers how a group’s external environment, including other nearby groups, affects the level and stability of within-group stratification. We emphasize key issues and implications for future research on these topics.

Emerging Trends in the Social and Behavioral Sciences (2015)

Peer Effects in Tournaments for Status: Evidence from Rank Dynamics of U.S. Colleges and Universities

Posted by admin in 2012 - (Comments Off on Peer Effects in Tournaments for Status: Evidence from Rank Dynamics of U.S. Colleges and Universities)

Noah S. Askin and Matthew S. Bothner

Individual outcomes in tournaments for status result not only from participants’ own qualities and behaviors, but also from those of their most proximate peers. In this article, we take an alter-centric view of status dynamics, examining the effect of peers’ perceived quality on future changes in a focal organization’s status. Utilizing the yearly tournaments created by U.S. News & World Report’s rankings of national colleges and universities, two competing predictions are investigated. The first is that peer’ advances in perceived quality impair the future status of a focal school, reflecting inter-school competition for finite resources and rewards. The second is that peers’ improvements incite a focal school to make cosmetic or material adjustments, leading to an increase in its status. Peers are defined in two ways: by proximity in the prior iteration of the tournament and by network-based structural equivalence. Using fixed effects models predicting future changes in annual USN ranks, we observe opposing forces at work, depending on the type of peer exerting influence. When peers identified by prior rank proximity improve in perceived quality, they exert status-eroding effects on a focal school. Conversely, when structurally equivalent peers in the college-applicant market show improvement, the focal school subsequently increases in status. We examine the mechanisms responsible for this divergence by focusing on the bases of each type of peer-affiliation, presenting interaction effects that highlight the contextual conditions that shape the influence of peers on status change. Future directions for research on peer effects and status are discussed.

Primary Status, Complementary Status, and Organizational Survival in the U.S. Venture Capital Industry

Posted by admin in 2013 - (Comments Off on Primary Status, Complementary Status, and Organizational Survival in the U.S. Venture Capital Industry)

Matthew S. Bothner, Young-Kyu Kim, and Wonjae Lee

We introduce a distinction between two kinds of status and examine their effects on the exit rates of organizations investing in the U.S. venture capital industry. Extending past work on status-based competition, we start with a simple baseline: we describe primary status as a network-related signal of an organization’s quality in a leadership role, capturing primary status as a function of the degree to which an organization leads others that are themselves well regarded as lead-organizations in the context of investment syndicates. Combining Harary’s (1959) image of the elite consultant with Goffman’s (1956) concept of “capacity-esteem,” we then discuss complementary status as an affiliation-based signal of an organization’s quality in a supporting role. We measure complementary status as a function of the extent to which an organization is invited into syndicates by well-regarded lead-organizations—that is, by those possessing high levels of primary status. Findings show that, conditioning on primary status, complementary status reduces the rate at which venture capital organizations exit the industry. Consistent with the premise that these kinds of status correspond to different roles and market identities, we also find that complementary status attenuates (and ultimately reverses) the otherwise favorable effect of primary status on an organization’s life chances. Theoretically and methodologically oriented scope conditions, as well as implications for future research, are discussed.

Social Science Research 52 (2015) 588–601


How does status affect performance? Status as a liability versus status as an asset in the PGA and NASCAR

Posted by admin in 2012 - (Comments Off on How does status affect performance? Status as a liability versus status as an asset in the PGA and NASCAR)

Matthew S. Bothner, Young-Kyu Kim, and Edward Bishop Smith

Two competing predictions about the effect of status on performance appear in the organizational theory and sociological literatures. On one hand, various researchers have asserted that status improves performance. This line of work emphasizes tangible and intangible resources that accrue to occupants of high-status positions and therefore pictures status as an asset. On the other hand, a second stream of research argues that status instead diminishes performance. This alternative line of work emphasizes complacency and distraction as deleterious processes that plague occupants of high-status positions and thus portrays status as a liability. Which of these two perspectives best characterizes the actual performance of individuals in a competitive setting? And are they in any way reconcilable? In this paper, we summarize these two perspectives and test them in two empirical settings: the Professional Golf Association (PGA) and the National Association for Stock Car Auto Racing (NASCAR). Using panel data on the PGA Tour, we model golfers’ strokes from par in each competition as a function of their status in the sport. Using similar data on NASCAR’s Winston Cup Series, we model drivers’ speed in the qualifying round as a function of their status in the sport. We find curvilinear effects of status in both contexts. Performance improves with status until a very high level of status is reached, after which performance wanes. This result not only concurs with the view that status brings tangible and intangible resources but also provides empirical support for the contention that status fosters dispositions and behaviors that ultimately erode performance.

Organization Science, 23 (2012): 416-433

Matthew S. Bothner, Joel M. Podolny, and Edward Bishop Smith

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.

Management Science, 57 (2011): 439-457

A Model of Robust Positions in Social Networks

Posted by admin in 2010 - (Comments Off on A Model of Robust Positions in Social Networks)

Matthew S. Bothner, Edward Bishop Smith, and Harrison C. White

What makes an actor’s position in social structure robust rather than fragile? This article introduces a network model that pictures occupants of robust positions as recipients of diversified support from durably located others, and portrays occupants of fragile positions as dependents on tenuously situated others. The model builds from Herfindahl’s measure of concentration and Bonacich’s (1987) measure of status. Using Newcomb’s panel study of status-conferring flows among members of a college fraternity, we find empirical support for the contention that fragility reduces future growth in status. Extensions of the model both to input-output networks among industries in the U.S. economy and to hiring networks among academic departments are presented. Implications for future research are discussed.

American Journal of Sociology, 116 (2010): 943-992

When Do Matthew Effects Occur?

Posted by admin in 2010 - (Comments Off on When Do Matthew Effects Occur?)

Matthew S. Bothner, Richard Haynes, Wonjae Lee, and Edward Bishop Smith

What are the boundary conditions of the Matthew Effect? In other words, under what circumstances do initial status differences result in highly skewed reward distributions over the long run, and when, conversely, is the accumulation of status-based advantages constrained? Using a formal model, we investigate the fates of actors in a contest who start off as status-equivalents, produce at different levels of quality, and thus come to occupy distinct locations in a status ordering. We build from a set of equations in which failing to observe cumulative advantage seems implausible and then demonstrate that, despite initial conditions designed to lead inevitably to status monopolization, circumstances still exist that rein in the Matthew Effect. Our results highlight the importance of a single factor governing whether the Matthew Effect operates freely or is circumscribed. This factor is the degree to which status diffuses through social relations. When actors’ status levels are strongly influenced by the status levels of those dispensing recognition to them, then eventually the top-ranked actor is nearly matched in status by the lower-ranked actor she endorses. In contrast, when actors’ status levels are unaffected by the status levels of those giving them recognition, the top-ranked actor amasses virtually all status available in the system. Our primary contribution is the intuition that elites may unwittingly and paradoxically destroy their cumulative advantage beneath the weight of their endorsements of others. Consequently, we find that the Matthew Effect is curtailed by a process that, at least in some social settings, is a property of status itself—its propensity to diffuse through social relations. Implications for future research are discussed.

Journal of Mathematical Sociology, 34 (2010): 80-114

Modeling social interactions: Identification, empirical methods and policy implications

Posted by admin in 2008 - (Comments Off on Modeling social interactions: Identification, empirical methods and policy implications)

Wesley R. Hartmann, Puneet Manchanda, Harikesh Nair, Matthew S. Bothner, Peter Dodds, David Godes, Kartik Hosanagar, and Catherine Tucker

Social interactions occur when agents in a network affect other agents’ choices directly, as opposed to via the intermediation of markets. The study of such interactions and the resultant outcomes has long been an area of interest across a wide variety of social sciences. With the advent of electronic media that facilitate and record such interactions, this interest has grown sharply in the business world as well. In this paper, we provide a brief summary of what is known so far, discuss the main challenges for researchers interested in this area, and provide a common vocabulary that will hopefully engender future (cross disciplinary) research. The paper considers the challenges of distinguishing actual causal social interactions from other phenomena that may lead to a false inference of causality. Further, we distinguish between two broadly defined types of social interactions that relate to how strongly interactions spread through a network. We also provide a very selective review of how insights from other disciplines can improve and inform modeling choices. Finally, we discuss how models of social interaction can be used to provide guidelines for marketing policy and conclude with thoughts on future research directions.

Marketing Letters, 19 (2008): 287–304

Competitive Crowding and Risk Taking in a Tournament: Evidence from NASCAR Racing

Posted by admin in 2007 - (Comments Off on Competitive Crowding and Risk Taking in a Tournament: Evidence from NASCAR Racing)

Matthew S. Bothner, Jeong-han Kang, and Toby E. Stuart

This article uses National Association for Stock Car Auto Racing (NASCAR) races to examine how competitive crowding affects the risk-taking conduct of actors in a tournament. We develop three claims: (1) crowding from below, which measures the number of competitors capable of surpassing a given actor in a tournament-based contest, predisposes that actor to take risks; (2) as a determinant of risky conduct, crowding from below has a stronger influence than crowding from above, which captures the opportunity to advance in rank; and (3) the effect of crowding from below is strongest after the rank ordering of the actors in a tournament becomes relatively stable, which focuses contestants’ attention on proximately ranked competitors. Using panel data on NASCAR’s Winston Cup Series from 1990 through 2003, we model the probability that a driver crashes his car in a race. Findings show that drivers crash their vehicles with greater frequency when their positions are increasingly at risk of displacement by their nearby, lower-ranked counterparts; the effect of crowding from below exceeds that of crowding from above; and the effect of crowding by lower-ranked contestants is greatest when there is relatively little race-to-race change in the rank ordering of drivers.

Administrative Science Quarterly, 52 (2007): 208-247