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Competing for Talent: Firms, Managers, and Social Networks

Author

Listed:
  • Isaac Hacamo
  • Kristoph Kleiner

Abstract

Do social networks help firms recruit talented managers? In our setting, firms are randomly connected to prospective young managers through former employees. Under a discrete choice model, we find networks increase the likelihood firms hire high-ability managers, while having no effect on the hiring rate of low-ability managers. Effects are greatest for nonlocal firms, strong ties, and peers living in the same neighborhood. Survey evidence suggests social networks promote recruitment by providing information about firm fundamentals to potential applicants. Our results help rationalize why the majority of managers hold prior connections to the firm.

Suggested Citation

  • Isaac Hacamo & Kristoph Kleiner, 2022. "Competing for Talent: Firms, Managers, and Social Networks," The Review of Financial Studies, Society for Financial Studies, vol. 35(1), pages 207-253.
    • Handle: RePEc:oup:rfinst:v:35:y:2022:i:1:p:207-253.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhab021
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    Citations

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    Cited by:

    1. Kim, Hyemin & Fahlenbrach, Rüdiger & Low, Angie, 2023. "CEO networks and the labor market for directors," Journal of Empirical Finance, Elsevier, vol. 70(C), pages 1-21.
    2. Jaewan Bae & Jangkoo Kang, 2023. "Information of employee decisions and stock returns in the Korean stock market," International Review of Finance, International Review of Finance Ltd., vol. 23(1), pages 206-224, March.
    3. Chellman, Colin & Conger, Dylan & Turner, Lesley J., 2023. "Race and nativity earnings gaps: The role of college networks," Economics of Education Review, Elsevier, vol. 93(C).

    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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