The increasing value of status in low-performing organizations: Evidence from the video game industry

Strategic management research generally assumes that high-status teams outperform their low-status counterparts. Indeed, status can cause decision makers to favor high-status teams, providing them with better access to resources. However, we theorize that in organizations which demonstrated high previous performance, status has a much weaker influence on decision makers. This is because in these organizations, there is no expected resource scarcity that would push decision makers to favor high-status teams. We therefore hypothesize that the difference between low- and high-status teams in terms of performance is smaller in organizations that exhibited high performance in the recent past. By analyzing a unique dataset from the video game industry, we find support for our theory. Our results confirm that the relationship between team status and performance is much stronger in organizations with low previous performance. Our study provides fresh insights about the organizational contingencies of the Matthew effect.