This paper investigates whether managers' personal connections help corporations to escape the productivity trap. Leveraging the heterogeneity in the severity of the Great Recession across different sectors, the paper reports that (i) the Great Recession had a negative effect on corporate productivity, (ii) the effect was long-lasting and persistent, supporting a productivity-hysteresis hypothesis, (iii) managers' personal connections are counter-cyclical and indeed allowed corporations to escape the productivity trap primarily via favorable credit conditions, in periods of high information asymmetries and tight credit constraints.
 

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