Research Summary

STATUS

by Daniel Malter

Description

In his work on status orders, Professor Malter studies the ways in which status orders affect the returns to organizations, the incentives and opportunities in markets, social market structure, and firm decisions. Using data on a highly structured wine region of France, Professor Malter probes status benefits and incentives flowing from the status order. Analyzing the grand cru producers in the Médoc, he has shown empirically that audience taste for goods of conspicuous consumption is a sufficient condition for returns to organizational status. Further, while higher-status producers have a greater incentive to invest in quality, status differences explain little of the quality differences among classes. In another study of chateaux in two areas of Bordeaux, he found that the order of quality among producers is more flexible in the area with the more flexible status hierarchy. This difference may be driven by the stronger incentives to invest in quality and by the shorter time producers need to compensate for a lack of status through the continued demonstration of quality under the more flexible status hierarchy.