Social Networks and Job Referrals in Recruitment

Marie Lalanne

No 652, Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: This paper investigates whether using recommendations for recruitment reduce information asymmetries or allow the exchange of favors in the labor market of board directors. I use data on all directors of large listed US companies between 2004 and 2008. These are linked with extensive information on their social networks and detailed information on the referrals underpinning new independent board appointments. Compared to non-connected new directors, connected directors are 14% more likely to be referred by current board members with whom they share employment history. Predictions of a theoretical model allow me to further discriminate between information provision and favoritism in the use of such referrals for recruitment. Results show that referrals help select directors with higher ability, in particular the type of ability that is partially observed at the time of hiring.

Keywords: social networks; job referrals; recruitment; board appointments; asymmetric information. (search for similar items in EconPapers)
JEL-codes: D82 J44 M51 (search for similar items in EconPapers)
Pages: pages 60
Date: 2021
New Economics Papers: this item is included in nep-net and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:652

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