My friend and co-author Henrich Greve recently made a blog
post regarding the advantages of high status. He was wondering why every little
bit of news about Sony or Apple made big waves in the media space and his
conclusion was that this happened because both were high status companies. High
status essentially means that the companies are thought of as leaders in their
industries and whatever they do attracts a lot of attention. High status brings
lots of positive things: customers buy your products and they think your products are
of high quality, even if this is not always the case.
Status has a dark side too. Remember the discussions
about student labor in the assembly plants of Apple's supplier Foxconn? That
generated a lot of negative publicity not only for Apple but also for Foxconn.
When French Tax Collector-In Chief—Jerome Cahuzac—was caught with undeclared Swiss
bank account, everyone took notice and even the approval of his close ally—French President
Francois Hollade took a dive. Essentially, high status means that
falls from grace will be observed by a lot of people.
In a recent study Jonathan Bundy, Joseph F. Porac, James B.
Wade and Dennis P. Quinn found that high status British MPs were not more
likely than low status MPs to cheat in their expense claims. However,
high status MPs were more likely to be targeted by media and other stakeholders
with shaming after the false claims were discovered. Thus, more high status MPs had to quit parliament as compared to
lower status MPs.
What lessons does this study have for high status firms like Apple or Sony? You
are being watched, so don’t slip, because if you do, you will crash spectacularly.
