Research Details

Abstract

This article focuses on organizational naming as a strategic choice organizations make to overcome liabilities of atypicality. We argue that in markets presenting an "illegitimacy discount," atypical organizations may use deliberate names-names that communicate the market categories to which organizations claim membership-to offset the consequences of atypicality. Using data from the global hedge fund industry, we show that atypical hedge funds are more likely than typical funds to have deliberate names. Importantly, the selection of a deliberate name is economically significant. First, funds with deliberate names grow faster than funds without deliberate names, especially among atypical funds. Second, while atypicality heightened the likelihood of failure during the recent financial crisis-even after controlling for fund performance-having a deliberate name mitigated this effect.

Type

Article

Author(s)

Edward (Ned) Smith, Heewon Chae

Date Published

2016

Citations

Smith, Edward (Ned), and Heewon Chae. 2016. "We do what we must, and call it by the best names": Can Deliberate Names Mitigate the Consequences of Organizational Nonconformity?. Strategic Management Journal.(6): 1021-1033.