The Dynamics of Organizational Status

Abstract

This paper examines the growth (and decline) of organizational status. It is argued that an organization's status is determined by two factors: past performance outcomes and the status of the organization's affiliates. The better the past performance outcomes and the higher the status of the affiliates, the greater the organization's growth in status. This basic proposition is tested in an examination of status changes among investment banks in the non-investment grade market between 1981 and 1987. Implications and extensions are discussed in the conclusion.