Are Referrals More Productive or More Likeable? Social Networks and the Evaluation of Merit

Abstract

Scholars and practitioners agree that referrals provide firms with better workers. Economists and sociologists debate whether the underlying mechanism behind such relations is a better match between workers and firms or an advantage conferred by social relations. Building on insights from network theory and cognitive psychology, we offer a new approach to the debate, arguing that network relations can also create evaluative bias. We reexamine the connection between social ties and workers’ performance using unique data on the actual productivity of sales employees and their evaluations in a large global firm. Results suggest that the preexistence of ties between an incoming employee and insiders in the firm creates an evaluative advantage—an advantage that is unrelated to workers’ concrete performance. We discuss the implications of these results for a relational approach to social stratification, organizations and work, as well as social networks.