In search of value: the role of organizational status in the valuation of resources

Abstract

Purpose

All organizations have social standing, but only some seek to improve their status, despite evidence that benefits may come with status. However, research is lacking on understanding how organizations value status and whether status is valued equally across all organizations. This study aims to understand how different organizations value status and quality, as well as illustrate the impact of organizational status on these valuations.

Design/methodology/approach

Major League Baseball (MLB) free-agent market data from 2013–2017 are used to test hypotheses. Organizations and players each have a certain amount of status, and free-agent contract information is publicly available. A mixed-effect regression model was employed to account for the nested nature of the data. While MLB teams are not typical organizations, its results are relevant for many organizations operating in a socially stratified environment.

Findings

Overall, the findings suggest that status is expensive for organizations and is more expensive for high-status organizations. Specifically, high-status organizations need to increase their awareness of the costs associated with status to ensure that the benefits of status are equivalent or greater. By contrast, quality was valued practically equivalently by both low- and high-status organizations.

Originality/value

The results provide clarity regarding the valuations of quality and status. The authors find that low-status organizations can avoid status costs. The results may allow organizations the opportunity of reflection on their perceived value of status, allowing for a separation of the value of quality from status.

Citation

Nicholas, K.R. and Sproul, C.R. (2022), "In search of value: the role of organizational status in the valuation of resources", Journal of Strategy and Management, Vol. 15 No. 4, pp. 611-627. https://doi.org/10.1108/JSMA-01-2021-0015