Status Asymmetry and Status Improvement

This research extends the well-established hypothesis on status endorsement in that low-status firms will improve their status by allying with high-status firms. I draw on social categorization theory to argue that a sharp contrast in status asymmetry between allying firms may initiate the social categorization process, making it harder for low-status firms to gain status improvement. Specifically, I argue that a moderate level of status asymmetry between allying firms enhances the status for low-status firms, while a large status asymmetry results in diminishing status improvement for low-status firms. I further argue that the above relationship is moderated by the degree of status inequality in the status hierarchy and the technological prestige of the low-status firms. I will examine the above hypotheses using sample firms in both biopharmaceutical and computer industries.