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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

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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
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
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
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:
DateEvent
January 2015Published
26 November 2014Available
19 November 2014Accepted
22 May 2014Submitted
Date of first compliant deposit: 30 December 2015
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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