We show that social capital improves the viability of stakeholder-oriented rms operating in competitive markets. Studying exits from the population of Norwegian savings banks after deregulations, we nd that banks located in communities with high social capital have a higher probability of survival, but no similar e ect exists for commercial banks. Norwegian savings banks are collectively governed by their stakeholders and we provide evidence that social capital improves the e ciency of stakeholder governance. In high social capital areas, banks raise more deposits locally, distribute more of their surplus for altruistic purposes, and operate more locally-focused branch networks.

Østergaard, C., Schindele, I. & Vale, B. (2016). Social capital and the viability of stakeholder-oriented firms: Evidence from savings banks. Review of Finance, 20(5), 1673-1718

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