Tiered status hierarchies and competitive actions

Abstract Research Summary Rankings often create tiered status hierarchies—for example, top, middle, and lower status tiers—of the ranked organizations. We study how an organization's position within a tier, particularly near tier boundaries, influences its competitive behavior. We propose a tier‐aspiration effect , where those at the top of a lower tier pursue more and riskier competitive actions to advance to the higher tier, and a tier‐maintenance effect , where those at the bottom a tier engage in more and riskier competitive actions to maintain their position when there is a greater threat from competitors at the top of the neighboring lower tier. Empirical analyses of Korean business groups' rankings and acquisitions between 2001 and 2018 support these predictions, revealing how positional differences shape competitive actions within tiered status hierarchies. Managerial Summary Rankings often group organizations into tiers—like top, middle, and lower tiers—but not all companies within a tier behave the same. We analyze acquisitions of Korean business groups ranked in an asset‐based ranking and find that firms near the top or bottom of a tier act more competitively than those in the middle. More specifically, those at the top of a lower tier tend to engage in greater and more unrelated acquisitions to move up to a higher tier. Meanwhile, those just above a tier cut‐off engage in greater and more unrelated acquisitions to retain their tier position, especially if they face strong competition from below. These insights can help managers better understand how rankings drive competitive behavior, beyond economic motivations.