Changing focus: How status affects reputation-based comparisons in the evaluation of organizations

Abstract

Status and reputation both play important roles in the evaluation and choice of organizations. Status is used as a heuristic in the first stage of a two-stage process when decision-makers select a subset of status-proximate organizations, and cognitively costlier reputation-based comparisons take place in the second stage within this subset. Existing status research assumes that the relative importance of different dimensions of reputation in the second stage is not contingent on the status of the organization that is being evaluated. We argue that this assumption is not warranted. Evidence suggests that high status is associated with a focus on gains and opportunities while low status is associated with a focus on downside risks. Similarly, some dimensions of reputation are associated more with upside opportunities while other dimensions of reputation are associated more with downside risks. Consequently, we argue that the emphasis on reputation dimensions associated with upside opportunities relative to dimensions of reputation associated with downside risks is contingent on status, which provides the evaluation frame. We test our hypothesis and provide empirical evidence consistent with our predictions using a sample of 411,530 US applicants to Master of Business Administration programs.