School of Economics and Management Tsinghua U., China
We highlight the distinct implications of social capital possessed by newly listed firms’ executives and directors for corporate value through an agent-based framework of network embeddedness. Given their distinct roles and responsibilities, embeddedness benefits and costs derived from social capital reflect differently on executives and directors. Consequently, these two types of upper-echelon social capital exert varying influences on corporate value. Furthermore, the environmental dynamism of the firm, which affects the job demands of executives and directors, is likely to modify the effects of executive social capital and director social capital. Empirical evidence obtained from Chinese newly listed firms largely supports our theoretical hypotheses. Our research makes valuable contributions to the literature on interorganizational networks, strategic leadership, and newly listed firms.