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The Double-Edged Sword of Exemplar Similarity

Author

Listed:
  • Majid Majzoubi

    (Schulich School of Business, York University, Toronto, Ontario M3J 1P3, Canada)

  • Eric Yanfei Zhao

    (Saïd Business School and St Hugh’s College, University of Oxford, Oxford OX1 1HP, United Kingdom)

  • Tiona Zuzul

    (Harvard Business School, Harvard University, Boston, Massachusetts 02163)

  • Greg Fisher

    (Kelley School of Business, Indiana University, Bloomington, Indiana 47405)

Abstract

We investigate how a firm’s positioning relative to category exemplars shapes security analysts’ evaluations. Using a two-stage model of evaluation (initial screening and subsequent assessment), we propose that exemplar similarity enhances a firm’s recognizability and legitimacy, increasing the likelihood that it passes the initial screening stage and attracts analyst coverage. However, exemplar similarity may also prompt unfavorable comparisons with exemplar firms, leading to lower analyst recommendations in the assessment stage. We further argue that category coherence, distinctiveness, and exemplar typicality influence the impact of exemplar similarity on firm evaluation. Leveraging natural language processing (NLP) techniques to analyze a sample of 7,603 U.S. public firms from 1997 to 2022, we find robust support for our predictions. By highlighting the intricate role of strategic positioning vis-à-vis category exemplars in shaping audience evaluations, our findings have important implications for research on positioning relative to category exemplars, category viability, optimal distinctiveness, and security analysts.

Suggested Citation

  • Majid Majzoubi & Eric Yanfei Zhao & Tiona Zuzul & Greg Fisher, 2025. "The Double-Edged Sword of Exemplar Similarity," Organization Science, INFORMS, vol. 36(1), pages 121-144, January.
    • Handle: RePEc:inm:ororsc:v:36:y:2025:i:1:p:121-144
    DOI: 10.1287/orsc.2022.16855
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