Social Networks and Career Outcomes

Allen N. Berger, Thomas Kick, Michael Koetter and Klaus Schaeck
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Allen N. Berger: University of SC

Working Papers from University of Pennsylvania, Wharton School, Weiss Center

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.

JEL-codes: G21 J16 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ecl:upafin:11-26

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