Social Structure and Exchange: Self-confirming Dynamics in Hollywood

Abstract

This study uses data on the U.S. film industry from 1982 to 2001 to analyze the effects on box office performance of prior relationships between film producers and distributors. In contrast to prior studies, which have appeared to find performance benefits to both buyers and sellers when exchange occurs embedded within existing social relations, we propose that the apparent mutual advantages of embedded exchange can also emerge from endogenous behavior that benefits one party at the expense of the other: actors offer better terms of trade and allocate more resources to transactions embedded within existing social relations, thereby contributing to the ostensible advantages of such exchange patterns. Findings show that not only do distributors exhibit a preference for carrying films involving key personnel with whom they had prior exchange relations, but also they tend to favor these films when allocating scarce resources (opening dates and promotion effort). After controlling for the effects of these decisions, films with deeper prior relations to the distributor perform worse at the box office. The results suggest that, rather than benefiting from repeated exchange, distributors overallocate scarce resources to these prior exchange partners, enacting a self-confirming dynamic.

Temporary organizational forms and coopetition in cycling

“…as having a deadline. These elements are consistent with those already developed above for a breakaway in cycling, as is the fact that when the task is completed, the temporary system disbands (Baker & Faulkner, 1991;DeFillippi, 2002;Sorenson & Waguespack, 2006). As such, it runs the risk of knowledge dispersing (Grabher, 2002(Grabher, , 2004Sydow et al, 2004).…”

Seeing through the network: Competitive advantage in the digital economy

“…Organizations attempting to adopt their social capital due to environmental changes or endogenous forces are limited in their actions by previous established ties (e.g. Gargiulo and Benassi 1999;Sorensen and Waguespack 2006;Rowley et al 2000). Ties with alters -especially when they have been considered as successful in the past -have been proven difficult to untighten since actors may feel a social obligation to preserve them (Coleman 1988, p. 98;Uzzi 1997, p. 36).…”

Tackling the "Galacticos" effect: team familiarity and the performance of star-studded projects

“…This finding seems particularly intriguing as it suggests a possibility that Sorenson and Waguespack (2006) already hinted at, i.e., the extra costs production companies are willing to incur in order to retain teams who performed well in the past (significant and positive effect of familiarity on movie budget) more than offset the revenues generated by such teams (significant and positive effect of familiarity on movie revenues), thus resulting in no impact on the bottom line (lack of significant effect on movie profitability). These are the effects of team familiarity when there are no stars in the team.…”