The Formation and Imprinting of Network Effects Among the Business Elite

The “business elite” constitutes a small but strikingly influential subset of the population, oftentimes affecting important societal outcomes such as the consolidation of political power [1], the adoption of corporate governance practices, and the stability of national economies more broadly. Research has shown that this exclusive community often resembles a densely structured network, where elites exchange privileged access to capital, market information, and political clout in an attempt to preserve their economic interests and maintain the status quo [2]. While there is general awareness that connections among the business elite arise because “elites attend the same schools, belong to the same clubs, and in general are in the same place at the same time”, surprisingly little is known about the network dynamics that emerge within these formative settings. Here we analyze a unique dataset of all MBA students at a top 5 MBA program. Students were randomly assigned to their first classes; friendship among students prior to coming into the program was rare; and the network data email transmissions among students were collected for the year 2006 when students almost entirely used the school’s email server to communicate, thereby providing an excellent proxy for their networks. After matching students on all available characteristics (e.g., age, grade scores, industry experience, etc.) i.e. creating “twin pairs” we find that the distinguishing characteristics between students who do well in job placement and those who do not is their network. Further, we find that the network differences between the successful and unsuccessful students develops within the first month of class and persists thereafter, suggesting a network imprinting that is persistent. Finally, we find that these effects are pronounced for students who are at the extreme ends of the distribution on other measures of success students with the best expected job placement do particularly poorly without the right network (“descenders”), whereas students with worst expected job placement pull themselves to the top of the placement hierarchy (“ascenders”) with the right network.