Changing the Narrative: The Behavioral Effects of Social Evaluations on the Decision Making of Organizations Defended on Thursday, 17 September 2020

In this dissertation, I intend to make crucial implications to both theory and practice by extending and combining theories from literature on corporate reputation, status shifts, celebrity, performance feedback and expectations of market analysts, and exploration/exploitation.

Study 1 is a conceptual work that lays the foundation for the second study of my dissertation. The main premise of this study is that due to its path-dependent nature, corporate reputation may be a promoter of stability initiatives and at the same time a demoter of change initiatives. Building upon previous literature, I propose that reputable firms are expected to stick to more familiar initiates over time in order to maintain stability and the trust of their stakeholders. I then look into the contingencies that may affect this main relationship.

In study 2, I investigated how corporate reputation may have a significant effect on the investment decisions of the firm. Using a panel dataset of 128 firms from various industries, our results from this study show that higher levels of reputation encourage the firm to embark upon more low-risk investments and less high-risk investments. Furthermore, I looked into the contingency role of securities analysts' recommendations in moderating the main effect of reputation on the investment decisions of the firm. In that regard, I found evidence on the strengthening effect of negative recommendations on the main relationship between reputation and investment decisions.

Finally, in study 3, I examined the effect of status loss on the exploration/exploitation behavior of the organization to shed some light on the effect of another type of social approval assets and its dynamics on the behavior of the organization related to stability/change dichotomy that I started in the first study and continued in the second one. Using data on soccer teams in the English context in a 10 year period, I found evidence on the positive effect of status loss on the exploration behavior of the organization relative to its exploitative behavior. I further examined the contingency role of celebrity and performance expectations of market analysts in moderating the main effect of status loss and found out that higher levels of both contingencies weaken the main effect of status loss on exploration vs. exploitation behavior of the organization.

Keywords

Reputation, self-regulatory focus, analysts' recommendations, status loss, self-enhancement theory, behavioral theory of the firm, exploration, exploitation, celebrity, performance expectations