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Does Social Capital Affect Asymmetric Cost Behaviour? Evidence from U.S. Counties

41 Pages Posted: 7 Aug 2017 Last revised: 9 Aug 2017

Sven Hartlieb

University of Bamberg

Brigitte Eierle

University of Bamberg

Thomas R. Loy

University of Bayreuth - Business Administration

Date Written: August 8, 2017


In this study, we examine the impact of social capital on asymmetric cost behaviour. Social capital captures the strength of civic norms and the density of social networks in a region. As such, it is a socio-economic factor that might affect managerial resource adjustment decisions via different channels. Social capital contributes to stable employment relationships and optimistic behaviour, but restrains managers from acting opportunistically. Using a sample of 65,148 firm-year observations across 788 U.S. counties, we find that firms headquartered in U.S. counties with high social capital exhibit significantly less asymmetric cost behaviour. Apparently, social capital restrains managers from taking self-centred resource adjustment decisions that would induce cost stickiness. This is in line with our additional finding, that altruistic norms to act in an ethical manner are the dominant channel for our setting, by which social capital affects cost behaviour. Our results corroborate the important role of managerial discretion in cost behaviour and make a significant contribution in understanding how environmental, local factors explain differences in sticky cost behaviour across firms within the same jurisdiction and the same cultural framework.

Keywords: Cost Behaviour, Cost Stickiness, Social Capital, Norms, Managerial Opportunism

JEL Classification: A13, M14, M40, M41

Suggested Citation

Hartlieb, Sven and Eierle, Brigitte and Loy, Thomas R., Does Social Capital Affect Asymmetric Cost Behaviour? Evidence from U.S. Counties (August 8, 2017). Available at SSRN:

Sven Hartlieb (Contact Author)

University of Bamberg ( email )

Kirschaeckerstrasse 39
Bamberg, 96045

Brigitte Eierle

University of Bamberg ( email )

Feldkirchenstra├če 21
Bamberg, 96052
00499518632545 (Phone)


Thomas Loy

University of Bayreuth - Business Administration ( email )

Universit├Ątsstr. 30
Bayreuth, 95447


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