Professional Networks and Their Coevolution with Executives' Careers: Evidence from Europe and the US

40 Pages Posted: 25 Oct 2012  

Nicoletta Berardi

Banque de France - Economic Study and Research Division

Paul Seabright

University of Toulouse I - Industrial Economic Institute (IDEI); Centre for Economic Policy Research (CEPR)

Date Written: October 24, 2012

Abstract

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%.

Keywords: social network, labor mobility, top management compensation

JEL Classification: D85, J31, J62

Suggested Citation

Berardi, Nicoletta and Seabright, Paul, Professional Networks and Their Coevolution with Executives' Careers: Evidence from Europe and the US (October 24, 2012). Available at SSRN: https://ssrn.com/abstract=2166577 or http://dx.doi.org/10.2139/ssrn.2166577

Nicoletta Berardi (Contact Author)

Banque de France - Economic Study and Research Division ( email )

31, rue Croix des Petits Champs
75049 Paris Cedex 01
FRANCE

Paul Seabright

University of Toulouse I - Industrial Economic Institute (IDEI) ( email )

Manufacture des Tabacs
21 Allee de Brienne bat. F
Toulouse Cedex, F-31000
France
+33 5 61 12 86 17 (Phone)
+33 5 61 12 86 37 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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