Social Connections within Executive Teams and Management Forecasts
Management Science (2019) 65: 439–457;
45 Pages Posted: 21 Aug 2017 Last revised: 16 Dec 2022
Date Written: August 15, 2017
We examine the role of teamwork within the top executive teams in generating management forecasts. Using social connections within the executive team to capture the team’s interaction, cooperation, and teamwork, we find that social connections among team members are associated with higher management forecast accuracy, consistent with economic theories that information is dispersed within a firm and with sociology insights that social connections facilitate information sharing. Further analyses show that the association between social connections and forecast accuracy is stronger when the teams are just beginning to work together, when their firms face more uncertainty or adversity, and when the CEOs are less powerful. Our results hold for a subsample of executive teams that experience pseudo exogenous shocks to their social connectedness. Taken together, our results underscore the importance of teamwork among executives in the forecast generation process.
Keywords: social connection, executive team, management forecast
JEL Classification: M41
Suggested Citation: Suggested Citation