On the Genesis of Organizational Forms: Evidence from the Market for Disk Arrays
Organization Science
Cluster Analysis
The Ratings Game: Asymmetry in Classification
Organization Science
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How do critics enable producers and consumers to come to mutually agreeable terms of trade? We propose that critics offer more guidance to those who set prices when their quality assessments are structured by clearer evaluative schemas. Schema clarity enables producers to accurately anticipate the quality assessments that critics will disseminate to the market. This allows their posted prices to center more faithfully on prevailing conceptions of quality. We then argue that the position of a producer within the market's social structure—in terms of its prior coverage, reputation, and niche width—influences the degree to which it is guided by clear evaluative schemas. We test these predictions in the market for U.S. wines. After elaborating a novel approach to inferring the clarity of evaluative schemas within different varietal categories, we demonstrate that list prices are less variable around expected levels when the schemas used to evaluate quality are clearer. Moreover, this effect is stronger among more relevant and more focused producers in each category.