Status volatility and organizational growth in the U.S. venture capital industry

Matthew S. Bothner, Jeong Han Kang, Wonjae Lee

Research output: Contribution to conferencePaperpeer-review

2 Citations (Scopus)

Abstract

This article develops a model of the performance-related consequences of volatility in status. Although many prior studies have traced economic outcomes to actors?status, virtually all such investigations have limited their theoretical and empirical scope to the level of status that a focal actor occupies at a chosen time point-not taking into account as well the variability of that actor's earlier locations in the evolving status hierarchy to which it belongs. Taking as given the premise from earlier research that the current level of status positively affects future economic performance, in this article we bring into focus the consequences of an actor's earlier series of status positions in an evolving social hierarchy. We develop the dual claim that status volatility acts as a signal of an actor's underlying lack of quality and that it also degrades the signal strength of that actor's current status. We thus view a sequence of erratic movements in status as both a signal in its own right and as noise-not only indicating a lack of underlying quality but also muffling the quality-related message otherwise transmitted by an actor'scurrent standing in a status ordering. Using a twenty-year panel of data on the growth rates of firms in the venture capital industry, where size is measured as the number of target companies funded per year, we find support for our dual characterization of status volatility.

Original languageEnglish
Publication statusPublished - 2006
Event66th Annual Meeting of the Academy of Management, AOM 2006 - Atlanta, GA, United States
Duration: 2006 Aug 112006 Aug 16

Other

Other66th Annual Meeting of the Academy of Management, AOM 2006
CountryUnited States
CityAtlanta, GA
Period06/8/1106/8/16

All Science Journal Classification (ASJC) codes

  • Management Information Systems
  • Management of Technology and Innovation

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