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Social Networks and Job Referrals in Recruitment

Author

Listed:
  • Marie Lalanne
Abstract
This paper investigates whether using recommendations for recruitment reduce information asymmetries or allow the exchange of favors in the labor market of board directors. I use data on all directors of large listed US companies between 2004 and 2008. These are linked with extensive information on their social networks and detailed information on the referrals underpinning new independent board appointments. Compared to non-connected new directors, connected directors are 14% more likely to be referred by current board members with whom they share employment history. Predictions of a theoretical model allow me to further discriminate between information provision and favoritism in the use of such referrals for recruitment. Results show that referrals help select directors with higher ability, in particular the type of ability that is partially observed at the time of hiring.

Suggested Citation

  • Marie Lalanne, 2021. "Social Networks and Job Referrals in Recruitment," Carlo Alberto Notebooks 652, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:652
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    File URL: https://www.carloalberto.org/wp-content/uploads/2021/05/no.652.pdf
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    References listed on IDEAS

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    Cited by:

    1. Levati, Lorenzo Maria & Lalanne, Marie, 2020. "The impact of job referrals on employment outcomes in top corporate positions," SAFE Working Paper Series 268, Leibniz Institute for Financial Research SAFE.

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    More about this item

    Keywords

    social networks; job referrals; recruitment; board appointments; asymmetric information.;
    All these keywords.

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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