Socially Advantaged? How Social Affiliations Influence Access to Valuable Service Professional Transactions

Abstract

This paper theorizes that social capital produced by social affiliations allows service professionals to gain access to higher-value transactions through increased reputation for trustworthiness, which then aids them in further building reputation and engaging in entrepreneurship. Using a unique approach that pairs Utah residential real estate data with church congregation boundaries, we find that affiliations enable real estate agents to list 14 percent more expensive homes, and to consequently build reputation useful for future non-affiliated transactions. We observe large reputation-building benefits for early-career agents, particularly for agents in low-reputation firms. Strikingly, we find this lowers entrepreneurship entry by 6 percent. These results imply that social affiliations can substitute for reputation in selection, enabling professionals to build reputation, which then has important career implications.

Keywords: social capital, relational capital, human capital, professional services, entrepreneurship, social embeddedness, real estate