Business Networks and Crisis Performance: Professional, Political, and Family Ties

Abstract

Do political ties, family-business group affiliation, and professional connections collectively matter for firm performance? By exploiting a new dataset for 1,290 large East Asian firms during the 2008 financial crisis, we offer a holistic comparison of these different networks. We find that professional networks buoyed performance; political and family networks did not. This suggests information access is a key benefit of business networks. A one standard deviation improvement to a firm's professional network position cushioned quarterly ROA by 2/5 of a percentage point during the crisis.

Keywords: Networks; Political Connections; Interlocking Directorates; Family Ownership; Corporate Governance

JEL Classification: G3, G14, L14