Supervisors' Use of Social Connections in Promotion Decisions: Evidence from Personnel Data

Social connections are sources of favoritism as well as information. Literature suggests that incentive schemes aligning interests between individuals and an organization will contain misuse of social connections. Still, we often suspect blind favoritism even in contemporary industrial organizations with merit-based principles. To understand how supervisors use social connections in personnel decisions, I examine the effects of a current supervisor’s previous promotion award on the likelihood of the decisions, analyzing the longitudinal data in a conglomerate with strict merit-based incentive schemes. The results demonstrate that supervisors’ previous promotion awards do not improve the likelihood of promotions, and that the longer the time period since the last promotion award by the current supervisor, the greater the likelihood of both promotions and dismissals. Along with the results from additional analyses, the observations regarding personnel decisions suggest supervisors’ fair use of connections rather than favoritism.