Men gain greater job benefits from professional connections than women with better education and job skills, according to INSEAD’s Lily Fang and Sterling Huang of Singapore Management University.

Fang and Huang examined U.S. equity analysts’ alumni connections with company senior officers and board members, using a methodology developed by Harvard’s Lauren Cohen, and Christopher Malloy with Andrea Frazzini, of AQR Capital Management.

They considered analysts’:

• Year-end earnings per share (EPS) forecasts,
• Buy-stock recommendations from 1993 to 2009,
• Price impact of their recommendations,
• Selection to “All America Research Team” (AA) by Institutional Investor magazine during the same period.

  Selection to AA is based on the institutional investors’ subjective evaluation of each analyst’s industry knowledge, communication, responsiveness, and written reports.

Forecast accuracy is one of the least important selection criteria.
Therefore, skillful analysts may be not be selected if they are not visible and well-regarded by decision-makers.

Connections directly contributed to male analysts’ likelihood of being named to the  “All America Research Team” (AA), but this relationship did not hold for female analysts.

This variance in connections by gender had significantly different financial consequences for male and female analysts because AA team members earned three times more than non-team analysts.

About 25% of all analysts shared a school tie with a senior officer or board member in the firms they covered, and these connections improved men’s forecast accuracy significantly more than women’s.

These connections also improved the impact of male analysts’ stock recommendations, measured by market reaction to their buy and sell calls.

Female analysts with a connection to a female executive at covered firms significantly improved their ranking accuracy, yet male analysts with a male connection improved their ranking accuracy almost twice as much.

Herminia Ibarra, then of INSEAD, also demonstrated that men in an advertising firm capitalized on network ties to improve their employment positions.

Women remain in analytical roles even if they are capable of executive roles because promotion to General Manager roles depends on subjective evaluations by current decision makers, who are usually men.

This different impact of network connections early in women’s and men’s careers could explain gender gaps that exist throughout career trajectories.

Fang and Huang concluded that men and women may be evaluated using separate subjective criteria, resulting in differential career advancement for women and men.

Career-related social connections (“social capital”) are affected by legitimacy, reputation, and network structures, argued University of Chicago’s Ronald Burt.
He suggested that “holes” in a social network are gaps in connections between two people or groups.
Anyone who builds a bridging relationship across this gap is considered a “broker.” 

This role offers “entrepreneurial opportunities” to access information and shape communications across groups.
Women who fill “network holes” increase their possibility of advancement.

Burt noted limitations to this approach for women:  “…because women are not accepted as legitimate members of the population of highly promotable candidates.”

He noted that women and minorities succeed by leveraging the network of legitimate strategic partners, suggesting the importance of sponsors for underrepresented groups. 

-How do you identify and fill “structural holes in social capital networks”?

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©Kathryn Welds