Friends in High Places: The Effects of Social Networks on Discrimination in Salary Negotiations

Abstract

This article tests hypotheses about the effects of social networks on inequitable salary negotiation outcomes using a U.S. high-technology company's salary negotiation data for 1985–1995. Analyzing results of 3,062 actual salary negotiations, we found that members of racial minority groups negotiated significantly lower salary increases than majority members, but this effect was dramatically reduced when we controlled for social ties to the organization. Having a social tie to the organization significantly increased salary negotiation outcomes, and minorities were less likely than majority members to have such a social tie.