Professional Networks and Their Coevolution with Executives' Careers: Evidence from Europe and the US
Banque de France - Economic Study and Research Division
University of Toulouse I - Industrial Economic Institute (IDEI); Centre for Economic Policy Research (CEPR)
October 24, 2012
This paper examines how networks of professional contacts contribute to the development of the careers of executives of European and US companies. We build a dynamic model of career progression in which career moves both depend upon existing networks and contribute to the development of future networks.
We test the theory on an original dataset of nearly 6000 executives in over 3000 firms. We find evidence that professional networks are relevant both because valuable for the employer and because they facilitate job mobility. Our estimates of the elasticity of executives' salaries with respect to the size of their professional networks vary between around 6% and around 26% depending on the specification, with a point estimate under our preferred specification of 7.6%.
Number of Pages in PDF File: 40
Keywords: social network, labor mobility, top management compensation
JEL Classification: D85, J31, J62
Date posted: October 25, 2012