TY - JOUR
T1 - The ties that bind
T2 - Social capital and perceived competition during financial crisis
AU - Bolor-Erdene, Batjargal
AU - Jung, Sun Moon
AU - Park, Sohee
N1 - Publisher Copyright:
© 2023
PY - 2023/5
Y1 - 2023/5
N2 - Social capital provides various benefits for organizations. However, it may serve as constraints when strong networks prevent managers from making a timely response to emerging risks. Using a sample of U.S. listed firms around the financial crisis period, we predict and find that social capital reduces a level of perceived competition by managers. Additional analyses suggest that the incomplete perception of competition leads to low investment efficiency and poor firm performance during the crisis. Collectively, our study shows that over-embedded CEOs in social relationships may fail to take proper actions against signals of market downturns, leading to poor future performance.
AB - Social capital provides various benefits for organizations. However, it may serve as constraints when strong networks prevent managers from making a timely response to emerging risks. Using a sample of U.S. listed firms around the financial crisis period, we predict and find that social capital reduces a level of perceived competition by managers. Additional analyses suggest that the incomplete perception of competition leads to low investment efficiency and poor firm performance during the crisis. Collectively, our study shows that over-embedded CEOs in social relationships may fail to take proper actions against signals of market downturns, leading to poor future performance.
KW - Firm performance
KW - Investment efficiency
KW - Perceived competition
KW - Social capital
UR - http://www.scopus.com/inward/record.url?scp=85147282192&partnerID=8YFLogxK
U2 - 10.1016/j.frl.2023.103667
DO - 10.1016/j.frl.2023.103667
M3 - Article
AN - SCOPUS:85147282192
SN - 1544-6123
VL - 53
JO - Finance Research Letters
JF - Finance Research Letters
M1 - 103667
ER -