Productivity, Managers’ Social Connections and the Great Recession
62 Pages Posted: 19 Feb 2021
Date Written: December 5, 2020
This paper investigates whether managers’ personal connections help corporations to escape the productivity trap. Leveraging the heterogeneity in the severity of the GreatRecession across different sectors, the paper reports that (i) the Great Recession has a negative effect on corporate productivity, (ii) the effect is long-lasting and persistent, supporting a productivity-hysteresis hypothesis, (iii) the value of managers’ personal connections are counter-cyclical and indeed allow corporations to escape the productivity trap primarily via favorable credit conditions, in periods of high information asymmetries and tight credit constraints.
Keywords: Social networks, Great Recession, Productivity
JEL Classification: D85, G30, D24
Suggested Citation: Suggested Citation