Sands, Daniel B;
(2024)
Double‐edged stars: Michelin stars, reactivity, and restaurant exits in New York City.
Strategic Management Journal
10.1002/smj.3651.
(In press).
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Abstract
RESEARCH SUMMARY: This article develops a theoretical framework to explicate how third parties, who are not transactionally involved in a given exchange relationship, can promote or impede the creation and capture of value by influencing market actor beliefs and behaviors. I investigate these issues empirically through an abductive mixed‐method case study of the Michelin Guide's entry into New York City. An examination of two decades of the openings and closings of New York City's elite restaurants indicates that receiving a Michelin star corresponded to an increased likelihood of restaurant exit. Michelin stars appear to have fostered disruptions at recipients' upstream and downstream interfaces, which inhibited their ability to capture value. This ultimately underscores how value network reactivity to third‐party evaluations may lead to unintended consequences for firms: MANAGERIAL SUMMARY: This article explains how third‐party evaluators' reviews, ratings, and rankings can promote or impede the creation and capture of value. This occurs because third‐party evaluations engender reactions by those being evaluated, as well as reactions by other market actors such as competitors and exchange partners. I study these issues within the context of the Michelin Guide's entry into New York City, and my findings indicate that restaurants that received a Michelin star were more likely to close in subsequent years. Evidence suggests that intensified bargaining problems with landlords, suppliers, and employees, along with heightened consumer expectations, created new challenges for these Michelin‐starred restaurants, which ultimately made it more difficult for them to stay in business.
| Type: | Article |
|---|---|
| Title: | Double‐edged stars: Michelin stars, reactivity, and restaurant exits in New York City |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1002/smj.3651 |
| Publisher version: | http://dx.doi.org/10.1002/smj.3651 |
| Language: | English |
| Additional information: | © 2024 The Author(s). Strategic Management Journal published by John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/). |
| Keywords: | evaluations, ratings and rankings, reactivity, restaurant industry, status, third parties, value creation and capture |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10195583 |
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