Certification – a third-party quality signal generated by reputable observers that provides an...
Transcript of Certification – a third-party quality signal generated by reputable observers that provides an...
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• Certification – a third-party quality signal generated by reputable observers that provides an endorsement or repudiation of an actor within a given domain (Rao, 1994; Wade, et al., 2006; Graffin & Ward, 2010)
2012-08-04Pecha Kucha Presentation1
Scott Graffin, University of Georgia
Certifications**(As an aside, I’d like to thank David for putting this
together, but, due to time constraints, I cannot take the time to do so. I hope this note will suffice, but not
distract from my presentation.)
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Ubiquity of CertificationsSuch certifications are common in many
domains
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Utility of Certifications
Are appealing because certifications:
Cut through equivocality of performance metrics
Provide clear relative rankings
Can reduce search costs
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Impact of Certifications
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Positive impact at the organization level:Access to resources (Wiley & Zald, 1968)Lower cost of capital (Wilson, 1985)Organizational survival (Baum & Oliver; 1991; Rao,
1994)Executing a strategic plan (Sine et al., 2007)Reduced uncertainty in the supply-chain (King et al.,
2005)
Negative impact at the organization level:Reduced holdings by institutional investors (Ward,
Brown & Graffin, 2010)
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Impact of Certifications (cont.)
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At the individual level:Positively impact CEO pay (Malmendier
& Tate, 2009; Wade et al., 2006)Increase CEO-TMT pay gap (Graffin et
al., 2008; Malmendier & Tate, 2009;)Higher CEO pay sensitivities (Wade et
al., 2006)Lead to higher TMT pay and promotion
to CEO (Graffin et al., 2008)
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Assumed Causal Mechanism of Certifications
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There is uncertainty regarding the quality of an actor under consideration
Certifications reduce observer’s evaluative uncertainty regarding an actor’s overall quality
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Certifications reconsidered
2012-08-04Pecha Kucha Presentation7
me Scott’s Mom
Today I found out I was admitted to the Ph.D. program at the University of Wisconsin!
Wow, I didn’t realize you were that smart.
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An empirical test of my talk with my mom
a.k.a. (Graffin & Ward, 2010)
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Examined the role of certifications in a context where performance is easily and comprehensively measured:Major League Baseball career performance & Hall
of Fame voting
Even after controlling for 22 performance variables, certifications influence HoF voting
Certifications continue to influence voting after multiple rounds
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Certifications unbounded
2012-08-04Pecha Kucha Presentation9
Graffin & Ward (2010) - certifications may not be bound to simply reducing evaluative uncertainty
May instead relate to performance standard uncertainty
(15)
(10)
(5)
-
5
10
15
20
25
Performance Points (Bill James Statistic)
Infl
uen
ce o
n 1
st R
ou
nd
Vo
tin
g P
erce
nta
ge
Certif ications +1 sd (6.6) (3.7) (1.1) 1.2 3.2 4.9 6.4 7.5 8.4 9.0 9.3 9.3 9.0 8.5 7.6
Certif ications +2 sd (13.2) (7.5) (2.3) 2.3 6.4 9.8 12.7 15.0 16.8 18.0 18.6 18.6 18.0 16.9 15.2
10 15 20 25 30 35 40 45 50 55 60 65 70 75 80
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Certifications:Nomological Musings &
Conflations
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Reputation – may be positively impacted
Legitimacy – may be enhanced
Status – enhanced through affiliations with certified others
Celebrity – a common precursor
Stigma - negative certifications may lead to
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Certifications future research
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Given ubiquity of such rankings and awards, there are many opportunities for impactful research
International contextsShort-term vs. longer-term reactionInteractions across levels
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Certifications future research (continued)
2012-08-04Pecha Kucha Presentation12
Future research continuedNegative returnsDifferential reaction of various
stakeholders
Many opportunities for future researchFee free to contact me about studies
Thank you for your time & attention!
Most IntelligentAudience