Search in Networks: The Case of Board Interlocks

Mitri Kitti, Matti Pihlava and Hannu Salonen
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Mitri Kitti: University of Turku
Matti Pihlava: University of Turku
Hannu Salonen: University of Turku

No 116, Discussion Papers from Aboa Centre for Economics

Abstract: We present a model for the dynamics of networks in which edges represent positions in organizations, holders of which are connected to each other when the positions belong to the same organization. Once a vacancy is opened, the new employee can be hired from the current network. In particular, it is possible that the further away a candidate is in the network from the firm having the vacant position, the less likely it is that the candidate is chosen. The search may also involve preferential attachment in the sense that people with high numbers of positions are more likely to be chosen. Microeconomic foundations of the search process are presented. An empirical application to a board interlock network demonstrates that the model is capable of explaining how such networks are formed. It is observed that distances from firms to candidates and the candidates' numbers of positions drive the process.

Keywords: search; two-mode network; network formation; board interlock network (search for similar items in EconPapers)
JEL-codes: D83 D85 Z13 (search for similar items in EconPapers)
Pages: 37
Date: 2016-10
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