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SUMMARY:Innovation\, Social Connections\, and the Boundary of the Firm - S
 udipto Dasgupta (Lancaster)
DTSTART:20160303T130000Z
DTEND:20160303T140000Z
UID:TALK57470@talks.cam.ac.uk
CONTACT:Cerf Admin
DESCRIPTION:In this paper\, we propose and provide evidence that the exist
 ence of prior social connections between managers or board members of supp
 lier (upstream) and customer (downstream) firms can encourage relation-spe
 cific investment and foster innovation by the upstream firms. We show that
  innovative activities by suppliers increase with the existence and streng
 th of their social connections with customers. To establish causality\, we
  exploit connection breaches due to manager/director retirements or deaths
  in the (much larger) customer firms and find that innovative activities d
 rop for those suppliers connected to these customer members. Our work shed
 s light on how social connections can shape the boundary of the firm by mi
 tigating contractual incompleteness and transactions costs\, thereby allow
 ing the upstream firms to remain as standalone entities instead of being v
 ertically integrated with the downstream firms.
LOCATION:Room W4.03 Judge Business School
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