Status is of great interest to economic and organizational sociologists to the extent that it is conceived to cause inequality to amplify as unearned benefits accrue to those who occupy prominent status positions. Implementing a novel regression discontinuity design, this paper explicitly examines the underlying assumption that status, independent of innate quality, causes performance outcomes to differ in the context of market competition. Specifically, this paper invokes the Fortune 500/1000 ranking as the strategic empirical context, and finds that status elevation improves companies' ROA by 1.7 percentage points as their rank positions cross the Fortune 500 threshold from below, substantively significant as compared to the average ROA of 3.8% in the full Fortune 1000 sample....[ Read more ]

Status is of great interest to economic and organizational sociologists to the extent that it is conceived to cause inequality to amplify as unearned benefits accrue to those who occupy prominent status positions. Implementing a novel regression discontinuity design, this paper explicitly examines the underlying assumption that status, independent of innate quality, causes performance outcomes to differ in the context of market competition. Specifically, this paper invokes the Fortune 500/1000 ranking as the strategic empirical context, and finds that status elevation improves companies' ROA by 1.7 percentage points as their rank positions cross the Fortune 500 threshold from below, substantively significant as compared to the average ROA of 3.8% in the full Fortune 1000 sample. This paper further provides suggestive evidence that high-status companies enjoy more pricing or lower production costs. Theoretically, this paper suggests that status effect in market competition can be extended beyond the categorical boundaries of industries where most of previous organizational status research is confined.

Keywords: Organizational Status, Regression Discontinuity, Profitability