The Dual Structure of Network Hiring

Previous research on the value of contacts in job search and hiring considers contacts’ strategic positions in job seekers’ extra-organizational networks, but ignores their position within hiring organizations. Contacts sit in dual organizational structures - formal hierarchies and informal workplace networks - each of which shape the value of contacts. We examine whether contact networks or authority provide most utility, and if they are equivalent or complimentary structures. Drawing on eighteen years of Danish administrative data, we identify 680,000 job movers and their network of ex-coworkers in hiring organizations, to examine the effect of network reach, network closure, and connections to managers. Using matching we identify plausible counterfactual jobs to assess the utility of contact networks on two key hiring outcomes: employment and pay premia. We find that authority and network structures both influence the value of contacts independently, with contacts more useful when they are managers and more useful when they are embedded in networks that boost information flows and coordinate influence. Manager contacts are particularly useful, however, when they sit in highly interconnected networks, likely by ameliorating the problem of information redundancy and increasing the effectiveness of influence coordination.