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Recent research finds that producers assigned to multiple categories receive less attention and legitimacy and have lower chances of success and survival. We argue that the effect of category spanning on the reception from the audience depends on the fuzziness of the categories. When a set of categories lacks contrast (have very fuzzy boundaries), spanning them does not cause much additional confusion for the audience, thus the penalties associated with spanning ought to be slight. But, when the contrasts of the categories spanned are high, audience members will have difficulty interpreting the producer, so spanning categories will be devalued more. We study these processes using data from an online-review web site. Results show that audience members devalue organizations that span high-contrast categories more than those that span low-contrast categories. These effects are weaker for more active reviewers.

In the original history of the socialist calculation debate (e.g., Bergson, 1948), Oscar Lange proved that bureaucrats can find the equivalent of equilibrium prices through trial and error. In the revised history of this debate (e.g., Caldwell, 1997; Lavoie, 1985), Lange proposed an erroneous solution to the calculation problem. Dynamic entrepreneurial rivalry moves prices toward equilibrium. Lange and other “Market Socialists” allies thought only in terms of a static competitive market equilibrium that excludes the role entrepreneurs play in adjusting prices.

We study how tape drive producers respond to the almost continuous emergence of new drive formats across the technology's history. The analysis characterizes the technological formats of tape drives according to their degree of contrast (distinctiveness and visibility) from other formats. We also develop and test arguments about how different types of tape drive manufacturers add and drop the production of formats as a function of the producer density of formats. In the empirical analysis, we find that firms producing formats with high contrast experience a lower rate of mortality. In terms of new format adoption, we find that firms characterized by high levels of contrast are more likely to add formats. Regarding the target of adoption, tape drive producers are more likely to add higher density formats; and these producers are also less likely to drop higher density formats.

This study investigates whether exposure to a previous client’s earnings management behavior will impact experienced auditors’ judgments of the risk that a current client’s financial statements are materially misstated. Contrast theory predicts the context of previous information can have a priming effect on a current judgment scenario, where the information for the current judgment is contrasted with the previous information. Guided by contrast theory, we exposed auditors to either positive or negative client ethical earnings management behavior. We found the existence of contrast effects, with the positive (negative) context of the previous client resulting in auditors judging a higher (lower) likelihood of material misstatement in the current client’s financial statements. The results have implications for the effectiveness and efficiency of auditors’ judgments as well as provide insight into auditor training efforts.

Many companies use competition for either monetary or non-monetary rewards to induce employee effort. Pitting employees against each other in a competition could come at a thus far insufficiently considered cost of leading to lower employee cooperation. The authors examine how competition for monetary rewards in the form of tournament incentives or non-monetary rewards in the form of standing in uncompensated public rankings affects employee cooperation with former competitors in a subsequent task where the extent of the cooperation does not affect the welfare or social standing of the person deciding to cooperate. The authors hypothesize that competition in the first task negatively affects cooperation in the second task. The authors further predict that competition leads to psychological pressure, which mediates differences in cooperation. The results support the authors’ hypotheses. In addition, the authors find that the decrease in cooperation results from the behavior of low performers, whereas cooperation by high performers is not affected. The findings are important because they show that inducing effort in one dimension leads to an unintended cost in the form of lower cooperation in another dimension. This cost occurs for both types of competition – competition for monetary payoffs and for non-monetary rewards. Ultimately, the size of this cost depends on the marginal benefit from any cooperation of low performers.

In this paper, I show how a consideration of legitimacy processes is of theoretical use in addressing two current issues in status research. First, I investigate under what conditions the contrast between the sex composition of a work group and the sex composition of an organization’s authority structure may trigger the salience of gender status in task groups. I argue that this contrast will make gender status salient when an evaluation from an authority figure outside the group creates inconsistency and uncertainty in the current status structure within the group. Delegitimation of a superior is one such process that produces this inconsistency and uncertainty. Second, I examine under what conditions status position compared to identity will more likely stimulate behavior among work group members. I argue that the legitimation of the superior and the group’s status order reduce the likelihood that group members will pursue status inconsistent, identity behaviors. Delegitimation, however, increases opportunities for acting in identity consistent ways and reduces the costs for doing so, thus enhancing the likelihood of identity-based behaviors.

This study investigates whether or not accounting and legal decision-makers at publicly traded US firms exhibit a professional affiliation bias with respect to their selection of business service providers. Executives at NYSE or NASDAQ firms who were affiliated with the accounting profession, the legal profession, or neither profession indicated their likelihood of using one of three randomly assigned types of firms (i.e., a CPA firm, a law firm, or a firm with both CPA and attorney partners) to provide five selected business services. The five business services represent the range of accounting and legal services that firms often outsource: audit, tax representation, mergers and acquisitions, trade regulation/interstate commerce, and litigation. We find that executive level decision-makers at publicly traded US firms do exhibit a professional affiliation bias in the selection of business service providers and that this professional affiliation bias is stronger in attorneys than in CPAs. The fact that all respondents were NYSE or NASDAQ executives, rather than students or another surrogate population, provides additional relevance and generalizability to our findings. Identifying this bias can help executives avoid suboptimal initial selection decisions and/or inaccurate performance evaluations of external business service providers.