This study investigates the effects of high-status inbound mobility on the performance of incumbents. Leveraging sociological theory on status, we suggest that highstatus newcomers generate only limited knowledge spillovers compared to the resources they drain from incumbents. Building on this mechanism, we formulate our first hypothesis that hiring stars negatively affects incumbents' performance. We argue that this effect is asymmetric across incumbents. Because high-status incumbents can better cope with the shock in the internal allocation of resources produced by high-status newcomers, we expect that they will experience a lower performance decline than low-status incumbents. We test our hypotheses by studying the change in recommendation profitability of incumbent securities analysts experiencing inbound mobility events in the period 1996-2007. Our results show that the higher the status of the hired analyst, as captured by the Institutional Investor ranking history, the greater the decline in the incumbent analyst's recommendation profitability, and that this decline is moderated by the status of the incumbent analyst.

Decisions about conforming to or deviating from conventional practices in a field is an important concern of organization and management theory. The position that actors occupy in the status hierarchy has been shown to be an important determinant of these decisions. The dominant hypothesis, known as middle-status-conformity, posits that middle-status actors are more likely to conform to conventional practices than high-and low-status actors do. We challenge this hypothesis by revisiting its fundamental assumptions and developing a theory where actors' propensity to conform based on their achieved status further depends on their ascribed status that actors inherit from their social group. Specifically, we propose that middle-status conformity applies only to actors who have a sense of security, based on their high ascribed status. For actors with low ascribed status, we propose that high-and low-status actors show greater conformity than middle-status actors. We test our hypotheses using data from the U.S. symphony orchestras from 1918 to 1969.

Focusing on the categorical nature of many status orderings, we examine the relationship among status, actors’ quality, and market outcomes. As markets evolve, the number of categories that structure them can increase, creating opportunities for new actors to be bestowed status, or it can decrease, dethroning certain actors from their superior standing. In both cases, gains and losses of status may occur without changes in actors’ quality. Because audiences rely on status signals to infer the value of market actors, these exogenously generated status shifts can translate into changes in how audiences perceive actors, resulting in benefits for unearned status gains and costs for unearned status losses. We find support for our hypotheses in a sample of equity analysts at U.S. brokerage firms. Using data on the coveted Institutional Investor magazine All-Star award, we find that analysts whose status increases because of a category addition see corresponding increases in the stock market’s response to their earnings estimates, while those who lose status see corresponding reductions. Our results suggest that the greater weight accorded to high-status actors may be misguided if that status occurs for structural reasons such as category changes rather than because of an actor’s own quality.

Much of social network analysis has focused on learning in communication networks among collaborators in which actors can make direct inquiries to seek clarification about alters’ behavior or views. But such inquiries are typically not possible among rivals. Learning among rivals occurs primarily in observational networks in which actors must make inferences of the logics guiding their competitors’ behavior in markets. What promotes interpretive advantage in these networks of observation? We combine multimarket competition theory and structural-hole theory to highlight the benefits of multiple exposure to disconnected competitors. In network-analytic terms we suggest that competitors’ interpretative advantage lies in non-redundant dyadic closure, especially when dealing with uncertain market niches. Dyadic closure, measuring ego’s exposure to her direct competitors in multiple markets, increases the ability to interpret competitors’ observed behavior. Redundancy, measuring the extent to which ego’s competitors are exposed to each other, reduces the diversity of views to which ego is exposed and hence the capacity to cope with uncertainty. We test our hypothesis by analyzing the network of competition created by securities analysts and the stocks they cover. We find that estimates issued by an analyst with multiple exposures to disconnected competitors are more accurate when confronted by more challenging, high risk, high reward, volatile stocks. Shifting the focus from direct social ties to the cognitive ties that link actors based on the objects, problems, or issues to which they pay attention, we develop a new approach to network analysis. Observation networks, we argue, operate neither as pipes nor as prisms but can be better conceived as scopes.

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.