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Managers' external social ties at work : blessing or curse for the firm?
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Brandes, Leif, Brechot, Marc and Franck, Egon (2015) Managers' external social ties at work : blessing or curse for the firm? Journal of economic behavior and organization, Volume 109 . pp. 203-216. doi:10.1016/j.jebo.2014.11.013
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Official URL: http://dx.doi.org/10.1016/j.jebo.2014.11.013
Abstract
Existing evidence shows that decision makers’ social ties to internal co-workers can lead to reduced firm performance. In this article, we show that decision makers’ social ties to external transaction partners can also hurt firm performance. Specifically, we use 34 years of data from the National Basketball Association and study the relationship between a team's winning percentage and its use of players that the manager acquired through social ties to former employers in the industry. We find that teams with “tie-hired-players” underperform teams without tie-hired-players by 5 percent. This effect is large enough to change the composition of teams that qualify for the playoffs. Importantly, we show that adverse selection of managers and teams into the use of tie-hiring procedures cannot fully explain this finding. Additional evidence suggests instead that managers deliberately trade-off private, tie-related benefits against team performance.
| Item Type: | Journal Article | ||||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce |
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School > Marketing Group Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Employee selection, Manpower policy, Agency costs, Baseball managers -- Social networks | ||||||||||
| Journal or Publication Title: | Journal of economic behavior and organization | ||||||||||
| Publisher: | Elsevier | ||||||||||
| ISSN: | 0167-2681 | ||||||||||
| Official Date: | January 2015 | ||||||||||
| Dates: |
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| Volume: | Volume 109 | ||||||||||
| Number of Pages: | 14 | ||||||||||
| Page Range: | pp. 203-216 | ||||||||||
| DOI: | 10.1016/j.jebo.2014.11.013 | ||||||||||
| Status: | Peer Reviewed | ||||||||||
| Publication Status: | Published | ||||||||||
| Access rights to Published version: | Restricted or Subscription Access |
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