| This dissertation combines sociological and behavioral decision-making perspectives to advance a singular theoretical concept: organizational identity functions like a lens. As a metaphor, identity-as-a-lens is employed in varying ways in each of the three substantive chapters. First, the lens is with respect to the organization itself: How do organizations strategically manage and manipulate their identities in order to appear a certain way on the market? Second, consumers utilize the lens: How does organizational identity alter the way investors respond to market information such as performance? In other words, what happens to market information when it passes through the lens of organizational identity? Third, the lens is for the researcher: How can we, as organizational scholars, use constructs like identity to recognize and track macro-level changes in a market or industry?;Using the context of the hedge fund industry and a measure of organizational identity as categorical conformity or "typicality"---that is, how similar a fund's composition of trading strategies and asset focuses is to other funds in a specified reference group, at a given point in time---I investigate fund naming patterns, investor capital allocation behavior, and fund birth and failure rates to address each of the three questions posed above. I thus advance three distinct, but related theoretical models for analyzing organizational identity and demonstrating its relevance for (1) organizational strategy, (2) investor behavior, and (3) market change.;In the first substantive chapter I find that atypical or non-conforming hedge funds choose "deliberate names"---i.e., names that include the style category moniker to which the fund claims membership---more often than typical funds. Given a negative main association between typicality and both capital flows and survival, this effect is interpreted as strategic behavior on behalf of atypical funds to appear like something they are not. Moreover, the behavior appears to be successful: having a deliberate name significantly reduced the odds of liquidation among atypical hedge funds during the high-failure-rate years of 2008 and 2009.;Next, I take a deeper look at the typicality-capital flow relationship. Although prior work has demonstrated that organizations failing to conform to prevailing categorical logics garner less attention and perform poorly, evidence also suggests that some non-conforming actors can elicit considerable attention and thrive. The case of hedge funds brings some relief to this incongruity. In spite of the negative main effects of atypicality noted above, I find that atypical funds also benefit from a unique performance-capital flow association. Specifically, investors allocate capital more readily to atypical funds following short-term positive performance and redeem it less often following short-term negative performance. I offer two explanations for why atypical funds are buffered following poor performance. First, investors in atypical funds incur greater tangible (e.g., search) and intangible (e.g., trust) costs of investing and demonstrate greater commitment to the fund as a result. Second, atypical funds benefit by the inherent difficulties of evaluating unique entities in a relative way. I use information on relative returns to test the second mechanism and find support for it.;Finally, I track changes in aggregate levels of fund typicality over time and find that homogeneity among hedge funds was high through much of the 1990s but then dropped dramatically beginning in 1999. I propose an explanation for this trend: although "codes of conduct" or expectations (held by investors) structure markets by constraining organizations, they may be applied differentially as a function of the way they are circulated through the market. Two kinds of brokers---intermediaries and the mediators---are responsible for the difference in circulation. Whereas both types help facilitate markets by transferring material resources like capital from one party to another, they differ is in their capacity to transmit expectations between transacting parties. Intermediaries are forced to transfer expectations intact but mediators may opt not to. The rapid shift from increasing homogeneity to large-scale heterogeneity among fund products was facilitated in part by a contemporaneous role-shift of a set of market brokers---funds of funds---from intermediaries to mediators. As mediators, funds of funds were effective in attenuating the constraining effects posed by investor expectations and, in turn, enhanced the agency of individual fund managers. |
