Status in Management and Organizations

Development and Learning in Organizations

ISSN: 1477-7282

Article publication date: 4 October 2011



Pearce, J.L. (2011), "Status in Management and Organizations", Development and Learning in Organizations, Vol. 25 No. 6.



Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

Status in Management and Organizations

Article Type: Suggested readings From: Development and Learning in Organizations, Volume 25, Issue 6

Jone L. PearceCambridge University Press, New York, USA, 2011, ISBN: 978-0-521-11545-2 (hardback), 978-0-521-13286-1 (paperback), 353 pp.

Management and organizations has been treated by many authors during the last years. In the twenty-first century, the society will be a knowledge society, based on the concept of the knowledge worker (Drucker, 1957) and his status. This volume bring together the leading scholars in status from across the range of management and organization studies-those with basic disciplinary roots in economics, political science, organizational behavior, sociology, social, and other branches of psychology. The chapters are grouped into five sections along with a concluding integrative chapter.

The first part, “How status differences are legitimated,” includes two chapters that extend our knowledge of how status operates in markets and organizations. In the first chapter in this section, chapter 2, Bilian Ni Sullivan and Daniel Stewart directly confront the bias toward stable social systems in status research by addressing the persistent status variability or uncertainty of some participants in an online open source software developers’ community. In these settings expertise is critical to the community’s effectiveness, but expertise needs to be evaluated and judged in the absence of face-to-face interaction or formal hierarchy of authority. Their research questions several established theories of how individuals interact to form collective judgments. For example, much theory and scholarship predicts convergence and consensus of important social features like status, yet they find that high-status long-tenure participants grow increasingly divergent in their assessments of the performance of others in the open-source developer community. Performance-based status positions in these communities were not produced by consensus, as is so often the case in face-to-face social settings. The members of this community interact and interact frequently over long periods-of-time, but do not converge in their assessments of the status of others. Ni Sullivan and Stewart’s work in these new organizational communities helps to identify the limitations of our bureaucracy-based theorizing.

Next, in chapter 3, James O’Brien and Joerg Dietz develop insight into why there has been so little progress in understanding the persistence of racial, ethnic, and gender bias which undermines the professed concern to recognize and rewards organizational participants based on their performance. Their chapter introduces scholars in management and organization to the role that Social Dominance Theory can play in explaining the maintenance of ascriptive (class or demographic) status through self-reinforcing dynamics. They describe how social status hierarchies are legitimated and sustained even when they conflict with professed organizational merit-based status hierarchies. The authors draw on research showing that individuals vary in the extent to which they support ascriptive status hierarchies to suggest how such biases can better be attenuated in organizations.

Part II, “The influence of status on markets,” contains two chapters addressing how markets are affected by status. In chapter 4 Michael Jensen, Bo Kyung Kim, and Heeyon Kim develop a new theory to help explain which firm-strategic moves into different product or service markets will be attractive and successful. They address the widespread assumption of those who study the role of status in strategy and firm performance: that status is equivalent to firm quality. They make a persuasive case that bringing the original understanding of status as social prestige back into strategy research allows theorizing that provides fertile theory about the effectiveness of different kinds of diversification strategies. Their exciting work distinguishes between horizontal status (the status of the product or service) and vertical status (the status of a firm within a particular product or service niche or industry). By placing firms within this theoretical grid, they produce provocative and original predictions about questions such as whether it is better to pursue higher status within your own industry or move horizontally or diagonally to another product or market (Cohen and Keren, 2010; Chi, 2010; Sonfield and Lussier, 2009).

In chapter 5 Michel Nippa addresses the market for labor and how a popular economic theory of executive compensation insufficiently considers the confounding effects of status seeking. He demonstrates how the inclusion of status can extend and improve the increasingly popular tournament theory applications to managerial compensation. Tournament theory has been used to account for the extremely high levels of motivations in structures, such as competitive sports, that resemble tournaments. More recently the theory has been used to rationalize the recently rapidly increasing gap between the compensation of firms’ chief executives and other highly paid employees. Nippa systematically demonstrates that very high executive compensation cannot result from tournament compensation structures and argues for the exploitation of high status and power as a more powerful driver of high executive compensation. His chapter concludes with practical suggestions for the design of tournaments within organizations.

The next two chapters address the powerful role of status in shaping emerging innovation-based industries and firms (Part III, “The role of status in new industries and ventures”). In chapter 6 Tyler Wry, Michael Lounsbury, and Royston Greenwood directly address the lack of context in so much research on status. They note that scholars from the range of social science disciplines treat status – that most social of phenomena – as surprisingly decontextualized. In a study of innovation in the emerging nanotechnology industry they found support for the varying circumstances under which high-status star researches influence, and do not influence, the development of innovation paths. Their work contradicts the widespread assumption that relative status always drives attention in innovation-driven industries. Their chapter draws on their research to directly address one of the central problems in institutional analyses of organizations: when does social system change come from low-status central participants?

In chapter 7 M. Kim Saxton and Todd Saxton propose a conceptualization of the role of status in the external funding of emerging firms, and argue that the study of venture capital funding has been under-socialized. For emerging firms in the high-startup-cost technology and pharmaceutical industries (entrepreneurial ventures that do not yet have products or customers), important decisions to fund and provide support are made before any objective performance can be evaluated; such judgments would be expected to be influenced by the social standing of the entrepreneurial team. When the technologies and markets are unproven, and failure rates and the potential gains are high, funders cannot rely solely on conventional financial and market benchmarks in evaluating potential investments. Scholars of venture capital have noted that social information seems to play a role in these highly ambiguous circumstances. However, with a limited understanding of social processes they are reduced to labeling these ill-understood processes as reputation, or sometimes legitimacy. The authors distinguish legitimacy, reputation, and status, and theorize that their relative importance in venture funding decisions varies, based on the emerging venture’s stage of development. They draw on the popular status-producing rankings and “Best” listings in business periodicals as reflections of status-seeking to describe how and when status drives new venture funding.

In part IV, “When ascriptive status trumps achieved status in teams,” the authors theorize about how team members use cues to assess status and expertise in face-to-face teams. In chapter 8 J. Stuart Bunderson and Michelle Barton focus on the challenge of those forced to work together on interdependent tasks who face the challenge of correctly identifying who has relevant task expertise. Expertise is often difficult to assess, and so individuals rely on more visible cues, cues that may reflect the person’s expertise, but may just as well reflect non-task relevant ascriptive or other social status. They note the powerful effects of status on influence and attention, and so seek to better understand how individuals assess and combine conflicting visible cues. In their chapter, they develop an integrative typology of different status cues, based on their insight that some cues are more reliable (that is, accurately assessed) but may not validly represent expertise. Drawing on well-established research regarding our bias toward what is reliably measured, they make provocative predictions about which status cues will dominate in the absence of cues that are clearly both reliable and valid.

In chapter 9 Melissa Thomas-Hunt and Katherine Phillips address how, and when racial stereotypes are activated in teams of functionally diverse high-achieving individuals. Such teams are increasingly used with more complex technologies, rapidly changing markets, and increasingly globalized work. Here they seek to explain the conflicting research on the impact of race on the effective use of members’ expertise by teams by proposing that low-ascribed status is cued when individuals display stereotype-consistent actions, when they report activities that cue that lower ascriptive status, or when they act in ways that violate normative expectations for team behavior. By drawing on our knowledge of status-cueing, the authors help to identify actions individuals and organizations can take to reduce one of societies’ and organizations’ most persistent problems.

The two chapters in Part V, “Status in the workplace,” both draw on how status affects individuals’ self-esteem to address two of the most prominent lines of scholarship in organizational behavior: identity and justice. In chapter 10, Jerald Greenberg (1988) draw on recent research to explain how the status of individuals affects their reactions to just or unjust treatment by their organizations, offering numerous powerful new ideas. For example, they propose that both distributive injustice (getting less than you feel you deserve) and procedural injustice (the rules for reward distributions are unfair) serve as signals that the person occupies a disrespected, low status. Similarly, low-status organizational members look to just procedures as a source of security, but in contrast, high-status employees expect just treatment as a right, given their high status. Because justice theorizing forms the basis for our understanding of the effectiveness of organizational reward and incentives systems, Greenberg and Ganegoda’s propositions hold promise to move status to the center of the field of organizational behavior.

In chapter 11, Elsbach and Kramer (1996) draws on both her own work and research undertaken by others on status signaling to make innovative contributions to identity theory. She provides evidence that directly questions Turner’s (1987) assertion of functional antagonism, or that if the salience of one self-categorization increases, the salience of another decreases. She provides a persuasive argument that those doing work develop quite savvy systems to signal both high distinctiveness and high status, even when these may conflict. Individuals can deploy a varying mix of physical markers and behavioral actions to send complex and sophisticated identity signals. By building on scholarship on status, her chapter provides a powerful critique and extension of self-categorization theory.

In the final chapter, chapter 12, the editors, Jone L. Pearce et al. (2001), highlights and explores the chapter authors’ theorizing about both the role of status in better understanding management and organizations, and of possible cross-fertilizations provided by bringing these diverse scholars and their problems together here. The contributions status can make to theorizing in organizational behavior, organization theory, and strategy are noted, as well as how they have helped advance our understanding of this powerful and complex phenomenon, status.

Taken as a whole, I enjoyed reading the different chapters for two main reasons, which I also consider the major strengths of this volume: the management and organization overview of the conceptual and methodological contributions that status could make to the business science as a whole; and the discussion of a whole range of new and exciting new questions. The book can contribute to our understanding of what constitutes status in management and organizations, from a holistic perspective and methodology. Because there are few indicators of performance, the attainment and defense of status is both more important and more complex in the present ambiguous and shifting environments (Brookes and Roper, 2010; Peris-Ortiz, 2009; Shiu and Yu, 2010; Wang, 2010). In other words, status matters, and it matters more the more the situation is uncertain, ambiguous or shifting. Status cannot be reduced to money, nor is it the power to coerce others. Status matters to management and organization theorizing because it matters so much to the people acting in and for organizations.

To sum up: this is an excellent volume for all of us involved and interested in the debate on how to bring relevance to the Management and Organizations.

Reviewed by Francisco J. Lara, Universidad Católica de Valencia, Valencia, Spain.

This review was originally published in Management Decision, Vol. 49, No. 6, 2011.


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