What Do Managers Do? Exploring Persistent Performance Differences among Seemingly Similar Enterprises

Social networks and social groups have both been seen as important to discouraging malfeasance and supporting the global pro-social norms that underlie social order, but have typically been treated either as pure substitutes or as having completely independent effects. In this paper, I propose that interpersonal relationships between individuals with different social identities play a key role in linking local and global norms, and in supporting social order. Specifically, I show that social identity derived from group memberships moderates the effects of social relationships on pro-social norm observance. I test my predictions using a novel empirical setting consisting of a large online virtual environment. I show that the number of within-group relationships increases and the number of an individual's across-group relationships reduces the prevalence of anti-normative behavior. Furthermore, I show that network closure has a qualitatively different effect between within-group ties and across-group ties. The effects of within-group and across-group ties are moderated by both group characteristics and actor experience, providing boundary conditions on the mechanisms presented here. My findings illustrate the need for a more nuanced view of the complex interrelations between institutions, identity, and networks.