The Dynamics of Organizational Status

This paper examines the growth (and decline) of organizationalstatus. It is argued that an organization's status is determinedby two factors: past performance outcomes and the status ofthe organization's affiliates. The better the past performanceoutcomes and the higher the status of the affiliates, the greaterthe organization's growth in status. This basic propositionis tested in an examination of status changes among investmentbanks in the non-investment grade market between 1981 and 1987.Implications and extensions are discussed in the conclusion.