The basic idea we investigate in this chapter is whether the relative importance, reputation, and value of any particular individual in an organization (in the eyes of others) are affected by the company the individual is perceived to keep. The assessment of reputation, we suggest, is likely to be enhanced if the individual is perceived to have a high-status friend. Becoming the friend of a high-status person is not easy, and those who are fortunate to enjoy such access are likely to gain considerable social capital. High-status people are carefully scrutinized to see who their associates are. This is not a new insight. Shakespeare's Falstaff, an intimate acquaintance of Crown Prince Harry in the Henry IV plays, is depicted as reveling in reflected glory. Certainly, the Baron de Rothschild (according to the anecdote in Chapter 1) was in no doubt concerning the value his apparent friendship would confer in terms of tangible financial capital becoming available from those impressed with his public social endorsement of the person with whom he walked “arm-in-arm.”

How Perceptions Affect Reputation

The theoretical framework within which we investigated the determinants of reputation in organizational labor markets was balance theory (Heider, 1958). From this perspective, someone perceived to be the friend of a positively valued other is also likely to be perceived positively: There is a strain toward cognitive balance in the perceptions of observers.