The effects of firm reputation and status on interorganizational network structure

In this article, we explore the differential effects of a firm’s reputation and status on its interorganizational network. We hypothesize that due to its stable, unitary, and relational characteristics, status has a stronger influence on partner selection than reputation, which is less stable, multidimensional, and based more on perceptions of product quality and financial performance. Results from our analyses of the director networks of the 300 largest US firms from 1985 to 1993 confirm that across multiple measures of network characteristics, it is status that is the stronger predictor. In particular, high-status firms have networks that are higher in partner quality but are less diverse and contain fewer opportunities to bridge structural holes than the networks of high-reputation firms. These results contribute to our understanding of the different effects of reputation and status on firm behavior by emphasizing the importance of studying both together in order to understand the effects of either. They also contribute to work on interorganizational networks by demonstrating how structure emerges primarily as a function of focal firm status.