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Status Inconsistency and Product Valuation in the California Wine Market

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  • Wei Zhao

    (Department of Sociology, University of North Carolina at Charlotte, Charlotte, North Carolina 28269)

  • Xueguang Zhou

    (Department of Sociology, Stanford University, Stanford, California 94305)

Abstract

This study develops a theoretical model on the role of multidimensional status and status inconsistency in market evaluation processes. A product or an organization may acquire multiple status indicators in association with a multitude of market institutions. We argue that when status indicators are consistently positive, each exerts a greater positive effect on the valuation of a product or an organization; conversely, inconsistency among multiple indicators undermines the status claim. We test this theoretical proposition by examining patterns of product valuation in the California premium wine market. Our findings show that when an individual wine's tasting score rated by critics and another more general status indicator---classified appellation affiliation, extra designation on the label, or a winery's organizational status---are consistently positive, each makes a greater contribution to wine price. In contrast, when status indicators are inconsistent, the value of the positive status indicator is reduced. Our study explicates the scope conditions under which market status may yield different outcomes and sheds light on the interplay among status indicators in market valuation.

Suggested Citation

  • Wei Zhao & Xueguang Zhou, 2011. "Status Inconsistency and Product Valuation in the California Wine Market," Organization Science, INFORMS, vol. 22(6), pages 1435-1448, December.
    • Handle: RePEc:inm:ororsc:v:22:y:2011:i:6:p:1435-1448
    DOI: 10.1287/orsc.1100.0597
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    References listed on IDEAS

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    5. Başak Topaler & Eyüp Tolunay Küp, 2020. "Judgments of Capability and Conformity as Distinct Forms of Social Judgments, and the Way They Interact to Shape Evaluator Decisions," Social Science Quarterly, Southwestern Social Science Association, vol. 101(4), pages 1634-1641, July.
    6. Orlikowski, Wanda J. & Scott, Susan V., 2014. "What happens when evaluation goes online? Exploring apparatuses of valuation in the travel sector," LSE Research Online Documents on Economics 57602, London School of Economics and Political Science, LSE Library.
    7. Kashyap Ravi, 2020. "The Economics of Enlightenment: Time Value of Knowledge and the Net Present Value (NPV) of Knowledge Machines, A Proposed Approach Adapted from Finance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(2), pages 1-23, April.
    8. Pengfei Wang & Michael Jensen, 2019. "A Bridge Too Far: Divestiture as a Strategic Reaction to Status Inconsistency," Management Science, INFORMS, vol. 65(2), pages 859-878, February.
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    10. Heeyon Kim & Bo Kyung Kim, 2022. "To be in Vogue: How mere proximity to high‐status neighbors affects aspirational pricing in the U.S. fashion industry," Strategic Management Journal, Wiley Blackwell, vol. 43(6), pages 1208-1230, June.
    11. Eric Yanfei Zhao & P. Devereaux Jennings & Masakazu Ishihara & Michael Lounsbury, 2018. "Optimal Distinctiveness in the Console Video Game Industry: An Exemplar-Based Model of Proto-Category Evolution," Organization Science, INFORMS, vol. 29(4), pages 588-611, August.
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