Pride cometh before a fall: The incongruence of status and resource commitment signals in the video game industry

Abstract

This study extends the burgeoning literature on social evaluations by investigating the incongruence between two quality signals in the video game industry: resource commitment and organizational status. It is hypothesized that while having one of the signals leads to higher product recognition and, hence, allows firms to capture more value from a product and its demonstrated quality, having both signals can be problematic due to the incongruence of these signals. This is because, in creative industry settings, the occurrence of both signals might send an incongruent message to external audiences (i.e., consumers and industry experts), leading to lower than expected results. My empirical analysis using historical data from the video game industry showed that organizations which featured a status a resource commitment signal were able to capture more value from their product quality than organizations that feature of these signals. In an additional survey study, I found tentative evidence for my theoretical explanations of these findings.