Spillover Effects of Peripheral Activity Visibility: Tests of the Reputation Development Process

Abstract

Despite increased interest in organizational reputation, there is a lack of research on the reputation development process. We test a model in which the visibility of organizations’ peripheral activities spills over into the perceived quality of organizations’ core activities which, in turn, positively influences the economic outcome of price premiums. Moreover, we test whether the visibility of organizations’ peripheral activities positive influence on the perceived quality of organizations’ core activities comes at the cost of decreasing organizational access among key stakeholders, and whether decreased access among these stakeholders also influences price premiums. Using institutional-level time-lagged data from NCAA Division I institutions, we conducted growth modeling and bootstrap mediation analyses to test the effects of college athletics revenue (peripheral activity visibility) on admission rates (core activity perceived quality) and Black student enrollment (key stakeholder access) the following academic year, and student cohort mean earnings (economic outcome) six years after that. Results show that, over time, Black students have been displaced from institutions generating more athletic revenue to institutions generating less athletic revenue. Mediation results show a direct positive effect for college athletics revenue (Time 0) on mean earnings among cohorts of former students (Time 2) and indirect effects through higher admission standards and smaller proportions of Black students in those same cohorts of students when they were admitted at Time 1.