Management & Organization Theses and Dissertations
Permanent URI for this collectionhttp://hdl.handle.net/1903/2789
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Item Essays on the Consequences of Market Democratization for Organizations(2019) Shi, Yuan; Waguespack, David M; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)My dissertation investigates how organizations’ boundary spanning decisions are impacted by the democratization of market mediation, which is defined as a shift in the balance of power from professional intermediaries to laypeople in the market and is often induced by crowd-based technologies and institutional changes. The first study examines how democratization affects boundary spanning in creative production through a quasi-experiment in the Billboard charts that shifted the power of influence from specialized intermediaries to lay consumers. I find that after genre radio stations’ power to define market hits is diluted by average consumers, producers are more likely to introduce offerings that traverse market boundaries to appeal to a broader audience, as is captured by a measure of crossover appeal based on the objective features of song recordings. Meanwhile, the democratization effect varies by organization and is weaker for specialists and those with moderate experience. These findings suggest that intermediaries who are specialized in a market may be more protective of the market’s boundaries than lay consumers due to their greater knowledge and larger stakes in the clarified boundaries. As such, the major impediment to boundary spanning may be intermediaries, not consumers. The second study investigates how professional intermediaries, such as venture capital (VC) firms, change their boundary decisions following democratization events, such as the legalization of equity crowdfunding. VCs may be attracted to the novel opportunities identified by crowdfunding investors, and thus diversify their investments. VCs may also seek to differentiate from the crowd by positioning as dedicated experts, and thus become more specialized in their investments. I test these ideas by leveraging the legalization of equity-based crowdfunding in more than twenty states in the US during 2009-2017. I find that VCs make more specialized investments after the crowdfunding policy shocks in their home states, but the effect is attenuated when VCs and crowdfunding investors share similar investment focus. Mechanism tests indicate that specialization is driven by a crowd-out effect, whereas diversification is explained by a lead-in effect. Taken together, my dissertation documents the causal effects of the increasing influence of the crowd on organizations’ strategic decisions.Item Status Motivations: Consumer and Seeker Perspectives(2017) Vesco, Robert; Waguespack, David; Agarwal, Rajshree; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)My dissertation includes two essays which examine status motivations from different perspectives. In the first essay, I explore the motivations of actors who are seeking to increase their status. In particular, when the competitive signals become opaque, how do their behaviors change? In the second essay I look at status motivations from the perspective of the consumers. In other words, what motivates actors and audiences to reward status? Ultimately, my aim with this dissertation is to extend our understanding of status beyond whether it has an effect and into understanding what is driving those effects. I also seek to highlight the importance of heterogeneity in status motivations since populations of people are unlikely to have homogeneous reasons for pursuing status. The first essay examines how making the competitive environment opaque changes status-seekers productivity and prosocial behavior. While status competition is generally considered a positive force for increasing productivity, a growing body of research suggests it can have unintended consequences. However, the literature on status is largely divided on the motivations behind it. Management scholars tend to see status as an asset to be pursued as a means to an end while economists and psychologists focus on the ego needs associated with it. If these two groups of status-seekers react differently to changing incentives, and ex ante, we cannot identify these groups, then how can we interpret empirical results? To deal with this complexity I leverage an agent-based simulation that explores motive heterogeneity. I then exploit a natural experiment in an online community for technologists where status competition is decreased and then examine how low- versus high-status actors change their helpful behaviors and productivity. I find that productivity decreases with the less competitive (opaque) environment, but that only high-status actors decrease their helpful comments. I argue that the agent-based simulation suggests that this pattern of outcomes is likely due to the community having a heterogenous mixture of status-seekers since a homogenous community of either type of status-seeker would yield different results. The second essay turns around the motivation lens to the status-consumers rather than to the status-seekers. Why do they value status? This study examines taste-based status motives. That is, motives which are independent of quality considerations. Among this class of status audience, theory suggests that they may either be interested in status intrinsically or that they value status as a form of conspicuous consumption, but few large-scale empirical studies have addressed these different motivations. To address this challenge, I use a setting where audiences can reward high-status actors either anonymously or publicly. I find high-status actors receive a 60\% increase in deference versus their low-status counterparts. However, I find no difference between anonymous or public deference. Thus, while my findings replicate prior work on quality-based status motives, I find no evidence of taste-based status motives. One possibility for this could be that my setting does not contain sizable cohorts of people who have a taste for status. Another possibility could be that a different empirical approach is needed to tease these differing motivations apart from one another.Item Essays on high-status fallacies(2012) Malter, Daniel; Goldfarb, Brent; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation comprises three essays. Each essay challenges some of the commonly held beliefs about and provides novel insights into the role of status in markets. In essay 1, I study the causal effect of producer status on the price premiums producers are able to charge for their products, the underlying cause for this premium, and producers' incentives to invest in quality under a fixed status hierarchy. In essays 2 and 3, I investigate on the organizational and individual level, respectively, how high-status affiliations affect an audience's evaluation of a social actor's identity. The contribution of these papers lies in highlighting reasons for, mechanisms through, and conditions under which high-status affiliations become a liability. Essay 1 addresses the recent debate about the causality, cause, and consequence of returns to status on the organizational level. I exploit the \textit{grand cru} classification of chateaux of the M\'{e}doc created in 1855 as an unambiguous and exogenous status signal. I study its effect on wine prices and the incentive to invest in quality over a period of time during which information about producer and product quality has become increasingly munificent. As for the causality of status effects, I find evidence for causal returns to organizational status, but these returns are substantially overestimated if quality and reputation are not accurately controlled on the product level. As for the cause of status effects, I find that uncertainty is not a necessary condition and the taste for high-status products is a sufficient condition for returns to organizational status. As for the consequence of status effects, I find that higher-status producers' greater incentives to invest in quality are insufficient to enforce a separating equilibrium in producers' quality choices. The study cautions that causality claims in the status literature hinge upon proper identification, that returns to status can have alternative root causes, and that status hierarchies need not enshrine the quality hierarchy among producers. In essay 2, I propose that an organization's growth potential may suffer if its identity is confounded with or eclipsed by the high-status organizations with which it collaborates and competes. I devise two network measures to capture the degree to which identities are confounded or eclipsed. The theory is then tested with data on U.S. venture capital firm syndication between 1995 and 2009. The more a VC firm's identity is confounded with the identities of co-syndicating high-status firms, the smaller is the likelihood that it is able to raise a new fund. Further, the likelihood that an eclipsed identity hurts a VC firm's chances to raise a new fund increases in the firm's status. These findings suggest that in status-based market competition an organization needs to justify its identity claim by distinguishing itself from the established elite. Essay 3 picks up on anecdotal evidence that some audiences discount actors with strong high-status affiliations. This contradicts the extant literature, which in its overwhelming majority finds that an actor's chance to find audience approval for his identity increases in the strength of his high-status affiliations. In this article, I develop a unifying theoretical framework that is able to reconcile such seemingly contradictory effects. I propose that the optimal strength of high-status affiliations depends on an audience's taste for uniqueness/conformity in identity and the audience's uncertainty about the actor. An experiment shows that taste and uncertainty have interdependent effects, suggests that the extant status literature rests on implicit assumptions about audience taste, and highlights two conditions under which strong high-status affiliations are detrimental. Studies of rank mobility in academia and in a fraternity provide corroborating evidence for one of these conditions. Conformity-seeking audiences penalize too strong high-status affiliations if their uncertainty about the actor is high. The implications for identity design and social structure are discussed.