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Social Networks and Career Outcomes

Author

Listed:
  • Berger, Allen N.

    (University of SC)

  • Kick, Thomas

    (Deutsche Bundesbank, Frankfurt)

  • Koetter, Michael

    (University of Groningen)

  • Schaeck, Klaus

    (Bangor University)

Abstract

Social capital theory predicts that individuals tend to establish social ties on the basis of homophily, i.e., affinities for similar others. In this paper, we exploit a unique dataset of biographical data for the entire population of executive appointments in German banks for the period 1993-2008, over 10,900 person-year observations, to analyze how social ties among individuals affect career outcomes. We measure social ties among executives based on similarities along four dimensions: age, education, gender, and employment history, and test three hypotheses. First, we examine if better social connectedness increases the probability of appointing outside candidates, i.e., those without a previous employment at the bank, compared to inside candidates. Our empirical results show that social ties based on age differences and gender indeed raise the chance of being appointed significantly for outsiders, whereas similar educational backgrounds serve as barrier to appointment. Second, we propose that career success, measured by the number of executive appointments over the entire career, is positively related to executives' embeddedness in the social system of executives in the industry. We find that the total number of contacts that an executive accumulated is a strong predictor for the number of repeated outside appointments. Third, we hypothesize that executive tenure increases with better social connections. The findings indeed suggest that small age differences increase tenure.

Suggested Citation

  • Berger, Allen N. & Kick, Thomas & Koetter, Michael & Schaeck, Klaus, 2011. "Social Networks and Career Outcomes," Working Papers 11-26, University of Pennsylvania, Wharton School, Weiss Center.
  • Handle: RePEc:ecl:upafin:11-26
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    File URL: http://fic.wharton.upenn.edu/fic/papers/11/11-26.pdf
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    Cited by:

    1. Dbouk, Wassim & Fang, Yiwei & Liu, Liuling & Wang, Haizhi, 2020. "Do social networks encourage risk-taking? Evidence from bank CEOs," Journal of Financial Stability, Elsevier, vol. 46(C).
    2. Yiwei Fang & Iftekhar Hasan & LiuLing Liu & Haizhi Wang, 2016. "Do Social Networks Encourage Risk-Taking? Evidence from Bank CEOs," BAFFI CAREFIN Working Papers 1641, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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