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The Role of Third-Party Rankings in Status Dynamics: How Does the Stability of Rankings Induce Status Changes?

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  • Anne Bowers

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 1A1, Canada)

  • Matteo Prato

    (Università della Svizzera Italiana, 6900 Lugano, Svizzera, Italy: Esade Business School, Ramon Llull University, 08022 Barcelona, Spain)

Abstract

Most explanations of status dynamics rely on market actor behavior or affiliation to other actors as the primary drivers of change. Yet status is increasingly mediated by third-party intermediaries, which impart status through their ordering of actors. Prior literature suggests that these rankers can affect status orders via changes in the underlying ranking methodology but offers little insight as to whether such changes reflect existing field beliefs or are self-interested. We advance a theory of ranker self-interest, whereby rankers adopt specific behavior to maintain audience attention and increase their chance for survival. We hypothesize that, by threatening audience attention, temporal stability in rankings (an endogenous property of many status systems) induces rankers to self-generate changes in the ranking. We examine the role of stability of rankings in promoting structural changes by rankers using Institutional Investor magazine’s All-America Research Team (all-stars), a widely studied and eminently impactful ranking of equity analysts.

Suggested Citation

  • Anne Bowers & Matteo Prato, 2019. "The Role of Third-Party Rankings in Status Dynamics: How Does the Stability of Rankings Induce Status Changes?," Organization Science, INFORMS, vol. 30(6), pages 1146-1164, November.
    • Handle: RePEc:inm:ororsc:v:30:y:2019:i:6:p:1146-1164
    DOI: 10.1287/orsc.2019.1316
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    References listed on IDEAS

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    Cited by:

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    2. Majid Majzoubi & Eric Yanfei Zhao, 2023. "Going beyond optimal distinctiveness: Strategic positioning for gaining an audience composition premium," Strategic Management Journal, Wiley Blackwell, vol. 44(3), pages 737-777, March.

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