Category Archives: 2014

Valuation, categories and attributes

Inna Galperin and Olav Sorenson

Existing research on categories has only examined indirectly the value associated with being a member of a category relative to the value of the set of attributes that determine membership in that category. This study uses survey data to analyze consumers’ preferences for the “organic” label versus for the attributes underlying that label. We found that consumers generally preferred products with the category label to those with the attributes required for the organic label but without the label. We also found that the value accorded to the organic label increased with the number of attributes that an individual associated with the category. Category membership nevertheless still had greater value than even that of the sum of the attributes associated with it.

PLoS One, 9 (2014): e103002 (OPEN ACCESS)

(When) do organizations have social capital?

Olav Sorenson and Michelle Rogan

Interorganizational relationships connect people affiliated with organizations rather than corporate actors themselves. The managers and owners of organizations therefore do not always control these connections and consequently often cannot profit from them. We discuss the circumstances under which individuals (versus organizations) “own” these relationships (and therefore also the social capital generated by them). Three factors increase the odds of individual ownership: (i) the extent to which the resources valued by alters belong to the individual (rather than the organization), (ii) the degree to which alters feel greater indebtedness to the individual than the organization, and (iii) the extent to which relationships involve emotional attachment. We discuss the implications of the locus of ownership, argue that these distinctions can help to explain many results that appear inconsistent on the surface, and call for future research to pay closer attention to these issues.

Annual Review of Sociology, 40 (2014): 261-280

The who, why and how of spinoffs

Michael S. Dahl and Olav Sorenson

Studies have consistently found that entrepreneurs who enter industries in which they have prior experience as employees perform better than others. We nevertheless know relatively little about what accounts for these differences. The presumed explanation has generally been that these entrepreneurs benefit from the knowledge that they gained in their former jobs. But they might also differ from other entrepreneurs on a variety of other dimensions: Preferential access to resources or differing motivations, for example, may account for their decisions to enter known industries instead of new ones. Combining novel data from a representative survey of entrepreneurs in Denmark with a matched employer-employee database of all residents in Denmark, we examined how entrepreneurs with prior industry experience differed from those without and the extent to which these differences could account for the performance premium associated with prior industry experience. We found that those with industry experience came from younger, smaller and more profitable firms, and that they recruited more experienced employees, worked harder and placed less value on having flexible hours. The recruitment of more experienced employees and the greater effort exerted appeared to account for at least some of the performance advantage associated with prior industry experience.

Industrial and Corporate Change, 23 (2014): 661-688

Picking a (poor) partner: A relational perspective of acquisitions

Michelle Rogan and Olav Sorenson

Numerous studies have found that mergers and acquisitions destroy value. What might account for these poor decisions? Using comprehensive data from the advertising industry, we found that the probability of being acquired rose but that the performance of merged entities declined – both losing clients and selling less to the clients retained – with the number of common clients (indirect ties) connecting the target to the acquirer. Two potential mechanisms could account for this pattern of results. Either managers hold (positively) biased beliefs about those connected to them through common clients, or they restrict their searches for potential acquisition partners to those they already know, despite the disadvantages of doing so.

Administrative Science Quarterly, 59 (2014): 301-329

Status and reputation: Synonyms or separate concepts?

Olav Sorenson

Status and reputation have often been treated as synonyms. These concepts, however, arise from disconnected literatures in which they had quite distinct connotations. This article explores the similarities and differences between these theoretical constructs, discusses the extent to which research in the management literature has captured one versus the other, and proposes a path for moving forward our understanding of these concepts.

Strategic Organization, 12 (2014): 62-69