The dynamics of organizational reputation and status: momentum and volatility

What is it about?

Organizational reputation and status are similar yet distinct constructs, serving as signals conveying information about an organization and its products and thus constituting audiences’ perceptions about the organization. However, compared to status, reputation tends to change more dynamically over time. In this study, we argue that the dynamic traits of reputation—particularly, its momentum and volatility—may serve as additional signals and/or noises, influencing potential exchange partners’ perception about the organization and thereby determining its status. We test our hypotheses in the context of the U.S. venture capital firms between 1990 and 2010. Our findings show that reputation momentum has a positive effect on status and that reputation volatility has indirect effects, weakening the positive effects of reputation and its momentum on status. The result implies the importance of managing the momentum and volatility as well as the level of reputation, which can help improve organizational status.

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