Pre-existing Social Ties Research Articles

Dynamics between the Executive Suite and Board Independence

The executive suite and the board are closely bound to each other through their fiduciary responsibility to same shareholders. With CEOs’ prominent role in both governing bodies, their independence from CEOs’ self-serving behavior might be related to each other. We explore the interdependence using an external shock increasing board independence. The shock weakens executive suite independence by increasing CEO connectedness within executive suites through appointments and pre-existing social ties. We also uncover interesting dynamics between the two governing bodies: (1) the spillover does not occur when treated firms increase CEO-independent director social ties, suggesting CEO-executive connections and CEO-director connections are substitutes; (2) consistent with theories of board independence, when information environment calls for dependent boards, increasing CEO-executive connections, which helps negate the shock effect on the board, has positive marginal effects on firm performance. Our findings are not driven by the Sarbanes-Oxley Act and are robust to a battery of other tests. We conclude that independence in the board and executive suite are inversely related; inferring the overall independence from board independence alone can be highly misleading.

Co-Opting Social Ties: How the Taiwanese Petrochemical Industry Neutralized Environmental Opposition

This article seeks to understand how social ties can be manipulated by industrial producers in such a way that local opposition to pollution is neutralized. Social movement researchers argue that mobilization cannot proceed without pre-existing social ties, and further reflection suggests the nature of social ties is tremendously consequential. Clientelist ties are characterized by mass dependence and cooperation as beneficiaries expect favors from above. Thus, when clientelist leaders are politically excluded, a strong community-based protest is likely to take place under their leadership. However, if clientelist leaders are incorporated to share the benefits of industrial development, the result is likely to be community acquiescence even though popular grievances are endemic. This paper analyzes Taiwan's environmental politics since the late-1980s by focusing on how material compensations incorporated the previously excluded politicians. Elites thus played the role of redistributors and brokers, rather than protest leaders, and consequently, popular discontent over pollution was contained.

Trust formation in Korean new product alliances: How important are pre-existing social ties?

The focus of this study is on the nature and influence of social connections versus other relational mechanisms on trust formation in an emerging Asian economy. We examine the role of communication quality, perceived fairness, and pre-existing social relationships for the formation of trust in 47 vertical new product development alliances in South Korea. The empirical results indicate a relatively minor importance of pre-existing social ties vis-a-vis communication quality and fairness for the development of trust. Contrary to widespread perceptions, pre-existing social ties do not appear to directly contribute to establishing trust with external alliance partners in Korea. Multiple explanations are offered for this unexpected finding. Instead, existing social relationships moderate the importance of fairness for trust formation. When conducting partnerships with Korean firms, managers should focus more on a quality communication and fair behavior when trust formation is the objective, than on social connections.

Transnational ties and intra-immigrant group settlement experiences: A case study of Indian Bengalis and Bangladeshis in Toronto

Transnational theories have established that, after migrating to a new country, migrants often maintain their pre-existing social, economic, and political ties to their home country. The extent to which however, transnational institutional and social connections may affect the residential location and housing experiences of immigrant and refugee groups, and why and how these experiences differ within broadly defined immigrant groups such as the ‘South Asians’ remains unexplored. Building on transnational theory and previous research on the housing trajectories of new Canadians, this paper examines the housing experiences of two recently arrived ‘South Asian’ subgroups in Toronto–Indian Bengalis and Bangladeshis. By highlighting important intra-immigrant group differences, the study reveals how diverse transnational ties affect their neighbourhood choice and the type, tenure, and quality of housing when they first arrived in Toronto.

Determinants of Intra-Group Insurance in Microfinance: Evidence from Joint Liability Lending Programs in Malawi

The success of group lending with joint liability has been partly attributed to its ability to induce group members to provide mutual insurance when a member fails to repay. Although theorists have proposed conditions under which group lending with joint liability encourages group members to provide mutual insurance once some group members fail to repay their loan, very little empirical research has been conducted to test the validity of such theories. The objective of this study was, therefore, to examine the extent to which intra-group insurance occurs and to investigate the underlying determinants of the willingness of group members to offer mutual insurance. The data used in the study is from Malawi, collected by the International Food Policy Research Institute (IFPRI) in collaboration with the Rural Development Department (RDD) of Bunda College of Agriculture. The data is from 99 farm and non-farm credit groups of the Malawi Rural Finance Company (MRFC). Results revealed that although 90 percent of the borrowers accepted that they understood that they were supposed to contribute to repay loans for defaulting members in the group, only 48 percent expressed full willingness to offer that support. An analysis on factors influencing the willingness of members to provide mutual insurance revealed that factors of production as well as pre-existing social ties, dynamic incentives and risk pooling factors increased the likelihood that group members would be willing to support each other. The presence of new members in the group, which potentially introduces a matching problem, works against mutual insurance. The cost of insurance, captured by the variation in loan size among group members, reduces the willingness of peers to contribute to repay defaulted loans of their peers. Groups composed of members that are related to a village chief, and those that that were formed by the village chief are more likely to be willing to help each other when there is a repayment problem. In contrast, members in groups composed of members that were related to some politicians were unwilling to help each other in the event of a repayment problem.

Social networks and loss of capital

Economic sociologists and white-collar criminologists offer competing predictions about the outcomes of socially embedded transactions. Economic sociologists stress the protective and beneficial role of social networks. Their evidence shows that social ties improve transaction outcomes. White-collar criminologists focus on the harmful and exploitative role of social networks. Their evidence shows that social ties facilitate successful economic crimes. Our case permits a critical test of the protective versus harmful effects of social ties: a business that operated as a legitimate enterprise and also engaged in ongoing financial fraud. This case is strategic because the role of social networks ex post is theoretically ambiguous for a legitimate-fraudulent business. Do social networks lower, raise, or have no effect on the probability of loss of capital, given that an investment has been made? The probability of loss of capital depends on due diligence and type of social tie. Investors who fail to conduct due diligence and do not use social ties have a 79% probability of loss of capital, controlling for other factors. Investors who conduct due diligence (and do not use social ties) have a 49% probability. Investors with preexisting social ties to the principals, sales representatives, or employees of the company (and do not conduct due diligence) have a 39% probability of loss, while those with this type of social tie who also conduct due diligence have a 14% probability. Investors with preexisting social ties to prior investors are not significantly more or less likely to lose their capital. Even in a business that was partly fraudulent, preexisting social ties to the company played a protective and beneficial role. Ironically, fraudulent behavior lowered the probability of loss for investors with this type of social tie: Illegal practices allowed the company to favor friends and acquaintances in the ex post allocation of proceeds.

Accounting for changes in social support among married older adults: Insights from the MacArthur Studies of Successful Aging.

Using longitudinal, community-based data from the MacArthur Studies of Successful Aging, the authors examined determinants of changes in social support receipt among 439 married older adults. In general, social support increased over time, especially for those with many preexisting social ties, but those experiencing more psychological distress and cognitive dysfunction reported more negative encounters with others. Gender affected social support receipt: Men received emotional support primarily from their spouses, whereas women drew more heavily on their friends and relatives and children for emotional support. Discussion centers on the importance of social support provision to those with the greatest needs.

Sifting and Sorting: Personal Contacts and Hiring in a Retail Bank

Using unique data from a large retail bank, the authors investigate the theoretical mechanisms by which preexisting social ties affect the hiring process. By focusing on a single, large employer they are able to identify the recruitment practices and hiring criteria used during screening for entry-level positions. This method allows them to assemble data for the pool of candidates at multiple phases of the hiring process and to conduct empirical tests of the various roles that personal contacts might play at each stage. Because they are able to treat hiring as a process, rather than as an event, they can also consider the possible selection biases introduced by the multistage screening process. More specifically, they study how employee referral (i.e., being recommended by a current bank employee) affects an applicant's success at multiple stages of the recruitment process, and they examine the cumulative effects of referral status on the chance of being offered a job. Results of probit models indicate that, controlling for other factors, referrals have advantages at both the interview and job-offer stages compared to external nonreferral applicants. Consistent with theoretical arguments that referrals are prescreened by current employees, their results show that referral applicants present more appropriate resumes than do nonreferral applicants. Referral applicants also are more likely than nonreferrals to apply when market conditions are more favorable. Nevertheless, resume quality and application timing cannot explain referrals' advantage at the interview and hire phases. They discuss the theoretical implications of these findings

RETIREMENT MIGRATION DECISION MAKING: LIFE COURSE MOBILITY, SEQUENCING OF EVENTS, SOCIAL TIES AND ALTERNATIVES

Post-retirement migration behavior and the decision-making process which underlies this behavior continue to attract scholarly interest. Based on a small self-selected sample of recent retiree migrants to Western North Carolina, this paper provides initial answers to the following questions: 1. Do retirement migrants exhibit high mobility throughout their life course? How are events in the retirement migration process sequenced and what is the timing between events? What, if any, pre-existing social ties did migrants have to the host community? To what degree were alternative retirement destinations considered? Approximately half (45 percent) of the respondents reported a remote daydreaming period before they started to make serious plans for their move in retirement. Comparisons of the timing of planning, retirement and move indicate much of the formal planning for the move may occur after retirement. Retirement is not simultaneous with the migration event; rather on average two years passes between retirement and the move. Two thirds of the sample had pre-existing social ties. Hence the majority of the migrants were not strangers making a "cold call" to the area. Friends in the locale were the most prevalent tie, accounting for one third of all pre-existing ties. Return migration to the native area or to a previous residence together account for more than a quarter of the ties; children or other family living in the area account for slightly less than a quarter. Prior vacation experiences account for only 14 percent of the unique ties to the region. The paper concludes with the implications of these results for those communities which have embarked on a strategy of recruiting retirement-aged migrants.