• 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.)

Ubiquity of CertificationsSuch certifications are common in many

domains

2

Utility of Certifications

Are appealing because certifications:

Cut through equivocality of performance metrics

Provide clear relative rankings

Can reduce search costs

3

Impact of Certifications

2012-08-04Pecha Kucha Presentation4

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)

Impact of Certifications (cont.)

2012-08-04Pecha Kucha Presentation5

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)

Assumed Causal Mechanism of Certifications

2012-08-04Pecha Kucha Presentation6

There is uncertainty regarding the quality of an actor under consideration

Certifications reduce observer’s evaluative uncertainty regarding an actor’s overall quality

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.

An empirical test of my talk with my mom

a.k.a. (Graffin & Ward, 2010)

2012-08-04Pecha Kucha Presentation8

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

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

Certifications:Nomological Musings &

Conflations

2012-08-04Pecha Kucha Presentation10

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

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

Certifications future research (continued)

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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