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Dispersion: a Trendsetting Heuristic Effect of Perceived Dispersion of Distribution Channels on Assessments of Trendiness and Organizational Prestige

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Dispersion: a Trendsetting Heuristic Effect of Perceived Dispersion of Distribution Channels on Assessments of Trendiness and Organizational Prestige Dispersion: A Trendsetting Heuristic Effect of Perceived Dispersion of Distribution Channels on Assessments of Trendiness and Organizational Prestige Becky Bereswill Advised by Professor Stephen Garcia Senior Honors Organizational Studies University of Michigan November 14, 2016 Acknowledgements I am tremendously grateful to the Organizational Studies Program at the University of Michigan for supporting and inspiring my undergraduate education and for creating a community of compassionate students and faculty, who encourage academic curiosity, creativity, and critical thinking. My warmest thanks to Professor Stephen Garcia for sharing your exceptional knowledge on social comparison theory and decision-making and expertise with academic research. Thank you for your faithful guidance and inspiration. With Professor Garcia, I had the honor to work with psychology and management scholar, Kathrin Hanek. Thank you Kathrin for sharing your compelling ideas and foundation of research that were instrumental to this project. I am honored to submit this thesis for review to the team of Dr. Marjorie Fisher, Dr. Stephen Garcia, and Dr. Mark Mizruchi. Thank you for your support and engaging academic conversations over the years. I truly admire your impactful contributions as professors, scholars, and mentors. Thank you to Catherine Philbin for your support as an academic advisor and friend. OS students are truly blessed to have you on their team. Thank you also to Kristin Edison, for your incredible support of all OS programs and students. 2 Abstract With respect to distribution, organizations are traditionally motivated to expand their channels to reach new markets, gain access to new customers, and diversify their operational risk (Gluck et. al, 1980). While current Marketing research on dispersion emphasizes its functional ​ ​ ​ value, a closer look at the psychological value signaled to consumers reveals opportunities for more effective brand management, rapid organizational growth, and innovative cost savings. This exploratory research will look at dispersion, not in terms of people or people’s connections, but rather as a way for emerging organizations and individuals to create a broader psychological presence that signals prestige and trendiness. Three studies will examine various dimensions of dispersion and the effect each has on separate evaluations of trendiness for up-and-coming people and organizations. Implications for leveraging dispersion as a trendsetting heuristic to more effectively understand stakeholder motivation and judgement will be discussed. Keywords: dispersion, prestige, trendiness, social proof, structural holes 3 Contents I. Introduction: Dispersion as a Trendsetting Heuristic........................................5 II. Prestige & Trendiness………..............................................................................6 Prestige............................................................................................................6 Trendiness.......................................................................................................7 III. Dispersion & Influence .....................................................................................8 Social Proof Theory........................................................................................8 Structural Holes Theory ...............................................................................10 IV. Hypothesis…………………………….............................................................12 V. Methods & Results ............................................................................................13 Study 1: Global vs. Local Dispersion- Fashion Boutiques...........................13 Study 2: Concentrated vs. Coverage - Designer Fragrances.........................15 Study 3: Dispersion Spectrum - Coffee Shops..............................................18 VI. Discussion..........................................................................................................21 Limitations ..................................................................................................21 Implications...................................................................................................22 VII. Conclusion........................................................................................................23 VIII. References.......................................................................................................30 4 Introduction Imagine you are an up-and-coming accredited scholar. You have one book published under the Harvard University Press but want to know if broadening your publication base, by submitting your newest piece to Oxford University Press and perhaps your next one to Cambridge University Press, would signal increased credibility and scholarly prowess more than just publishing your next book under Harvard University Press again. You are the designer and owner of a small women’s and men’s apparel boutique in Los Angeles, California wanting to create a trendy, new brand. You are currently considering opening an additional location in either Chicago, IL or Barcelona, Spain, and contemplate what effect each location has on your current and future customers’ assessment of your brand. While Chicago is an attractive, cosmopolitan city, you wonder if introducing a new store in Spain, would seem more prestigious and trendy. In these studies, we question whether having dispersed distribution channels projects a wider breadth of prestige, that psychologically signals trendiness and increases brand equity for an individual or organization. Innate human behavior motivates us to give more credence to ​ ideas that are stated by multiple sources; a phenomenon heavily studied and regarded in the field of psychology as “Social Proof” (Cialdini, 2001). By this theory, having an organization or product that is perceived as more dispersed, has the potential to suggest the entity is widely valued across cultures. Delivering and defining competitive edge is critical for success in today’s competitive business and academic environments (Gluck et. al, 1980). As the world becomes increasingly ​ ​ smaller with improved technology, extended infrastructure and instant communication, 5 organizations are forced to rethink current processes and strategically manage their legitimacy, reputation and status (Bitektine, 2009). ​ Today, marketing scholars believe organizations should consider dispersion as a vital ​ ​ brand management metric that should be included in all performance assessments (Luo et al., ​ ​ 2013, p. 399-415). For corporations, product dispersion and physical expansion are typically ​ driven by objectives to increase market share and sales (Gluck et. al, 1980). With respect to ​ ​ ​ ​ distribution, organizations are traditionally motivated to expand their channels to reach new markets, gain access to new customers, and diversify their operational risk (Gluck et. al, 1980). ​ ​ ​ ​ While current Marketing research on dispersion emphasizes the functional value of dispersion, a closer look at the psychological value to outsiders and consumers could reveal opportunities for rapid organizational growth, more effective brand management, and innovative cost savings. This exploratory research aims to provide further clarification on the effect dispersion has on an individual's assessment of an organization’s level of trendiness and prestige. We posit that the perception of dispersion could also be a psychological heuristic that affects perceptions of prestige and trendiness, even when the dispersion itself is based on a psychological dispersion. Thus, this research will look at dispersion, not in terms of people or people’s connections, but rather as a way for emerging organizations to create a broader psychological presence. Three studies will examine various dimensions of dispersion and the effect each has on separate evaluations of prestige and trendiness for up-and-coming people and organizations. Prestige & Trendiness 6 Understanding key drivers of prestige is challenging, but invaluable to organizations. The value of obtaining this elusive status is underscored in English dramatist, Lewis Leopold’s journal “Prestige: A Psychological Study of Social Estimates:” “The most accurate bookkeepers are incapable of showing the items of prestige in their yearly balance-sheets. Yet, people are always alluding to it; it is feared and jealously guarded; sacrifices are made for it; it enables successes to be won, and serves as a cloak for weaknesses” (Leopold, 1913, p. 15-16). Leopold boldly suggests that prestige, if obtained, guards against potential competitive pressure and pitfalls organizations may face. Current studies believe prestige is an “important link between perceived brand globalness (PBG), perceived brand localness (PBL), and favorable [consumer] intentions” (Xie, et al., 2015, p. 50-71). While little is known on why perceived ​ ​ ​ ​ brand globalness enhances consumer loyalty and favorable evaluations, the preference for global brands seems to be because they are perceived as more prestigious (Swoboda, 2016). With a ​ growing preference among consumers for global brands, an organization’s ability to capitalize on the dispersion heuristic, by projecting a broader psychological presence around their brand or products, could impact whether or not they are perceived as exclusive and prestigious (Westjohn ​ et al., 2016). ​ ​ Trendiness is the quality of being modern and inspired by the most recent fashions
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