Title: Social Networks The Basic Network Arguments U. Matzat
1Social NetworksThe Basic Network ArgumentsU.
Matzat
2The setup in some more detail
- Network theory and background
- Introduction what are they, why important
- Four basic network arguments
- Kinds of network data (collection)
- Small world networks
- Business networks
3Today
- Its not what you, but whom you know!
- Arguments of classical social network theories
that make clear - 1. why
- 2. which network characteristics
- 3. have what effect?
4What you have learned already the last
time.....what is a network?
- Network A set of ties among a set of actors (or
nodes) - Actors persons, organizations, business-units,
- countries
- Ties Any instance of connection of interest
- between the actors
5What you have learned already the last time.....
Example relations among organizations
- Firms as actors
- Buys from, sells to, outsources to
- Owns shares of, is part of
- Has a joint venture or alliance with, has sales
agreements with - Has had quarrels with
6What you have learned already the last time.....
Why networks innovation?
- Classical innovation studies characteristics of
individuals or firms - firm size
- However, innovation social in nature
- firms have relations with other firms
- networks
- important in explaining innovation
- and innovation changes networks as well
7Today
- Arguments of classical social network theories
that make clear - 1. why
- 2. which network characteristics
- 3. have what effect?
8Outlooking Example Innovation Success
Network closure high
low
?trust, safeguard against opportunism
9Outlooking Example Innovation Success
Network diversity (of a single company)
high low
?brokerage benefits, diverse resources,
innovative ideas
10Outlooking Example Innovation Success
Contingency H Alternative networks for different
objectives (1) Close-knit networks optimize
benefits from collaboration (2) Diverse
networks optimize competitive benefits
114 Basic Social Network Arguments
- Mark Granovetter The strength of weak ties
- James Coleman Network closure as social capital
- Ron Burt Structural holes
- J. Coleman/R. Burt Diffusion of innovation
cohesion versus structural equivalence - All good theories are portable. Take them to your
problem.
12Argument 1 Mark GranovetterThe strength of
weak ties
13Mark Granovetter The strength of weak ties
- Dept of Sociology, Harvard, The strength of weak
ties (1973) - strong vs. weak ties
- - frequency of interaction
- - emotional closeness
- - duration of contact
- interviewed 100 people who had changed jobs in
the Boston area. - More than half found job through personal
contacts (at odds with standard economics).
14M. Granovetter The strength of weak ties (2)
- Many contacts rather indirect (a weak tie)
- surprising, strong ties usually more willing
to help you out - Granovetters conjecture strong ties are more
likely to contain information you already know - According to Granovetter you need a network that
is low on transitivity
15M. Granovetter The strength of weak ties (3)
- weak ties better access to information
- Coser (1975) bridging weak ties connections to
groups outside own clique ( cognitive
flexibility, cope with heterogeneity of ties) - Empirical evidence
- Granovetter (1974) 28 found job through weak
ties - 17 found job through strong ties
- Langlois (1977) result depends on kind of job
- Blau added arguments about high status people
connecting to a more diverse set of people than
low status people
16Example acquisition of diverse information
through weak ties
- Assume manager C has to to eliminate some
contacts and he has the opportunity to get rid of
T or D - Whom should he dump?
X
X
- Get rid of T and the tie to T!
17Social Networking in plain English
- http//www.youtube.com/watch?v6a_KF7TYKVc
18Argument 2 James ColemanSocial Capital and
network closure
19Coleman Social capital in the creation of human
capital
- Social capital vs human capital
Dep. of Sociology, University of Chicago, died
1995
20Coleman Social capital in the creation of human
capital (2) some (vague) definitions
- SEVERAL DEFINITIONS OF SOCIAL CAPITAL
- OF AN ACTOR (person/organisation)
- The resources you can mobilize through others
- The value of social networks that actors can draw
on to solve common problems. The benefits of
social capital flow from the trust, reciprocity,
information, and cooperation associated with
social networks. - OF A SOCIETY
- The attitude, spirit and willingness of people to
engage in collective, civic activities the
social infrastructure - The collective value of all social networks
21Coleman Social capital in the creation of human
capital (3)
- Human capital the competencies and resources
you have available yourself (e.g., intelligence,
education, experience, ) - Social capital the resources you can mobilize
through others the way in which your
connections to others facilitate achieving ones
goals - Note
- Social capital need not be social. For
instance mafia family ties
22Coleman Social capital in the creation of human
capital (4)
- One of Colemans social capital examples
- The diamond merchants
- Compare
- Diego Gambettas 1996 The sicilian mafia
- (? social capital need not be good for society)
- Putnams Bowling alone Social capital is
- declining in the US (and according to him, this
has - something do do with privatization and
television) -
- At the same time new social networking sites
- for professionals (LinkedIn..)
23Coleman Social capital in the creation of human
capital (5)
- Social capital (of a society or group) consists
of - Obligations and expectations
- Example Kahn El Khalili market in Cairo
- Channels of information
- Norms about what (not) to do
- all kinds of collective action problems can then
be solved (e.g., prevention of deviant behavior
in small cities through gossiping curious
neighbours) - For 1. and 3. you need closure (dense networks
between actors / connections between your ties)
24Coleman Social capital in the creation of human
capital (6)
- Social capital (of parents) leads to human
capital (of children) - Empirical analysis
- To explain school dropouts
- Network actors pupils and their parents
- Network ties having frequent contact with
- To do well in school, you need
- Financial capital (physical resources)
- Human capital (cognitive environment)
- AND Social capital
- Pupils whose parents spend more time on them,
drop out less often. - in Catholic schools parents know each other from
church related meetings - some parents have stayed in the same
neighborhood, parents know each other better
25Example Social capital for successful innovation
through collaboration
- Two collaborating firms anticipate opportunistic
behavior of the partner - e.g. pooling of resources for
collaborating - Standard solution contracts
- Disadvantage costly, sometimes difficult to
manage - (e.g., are the best employees given for
participation in collaborative projects?) - Alternative/additional solution implementation
of - collaboration in an organisational
environment with high network closure
26Example Social capital for successful innovation
through collaboration (2)
Market 2 with high closure
Market 1
B
B
A
A
- Assume that manager of company B has to choose
between collaboration in the two markets which
one should he choose? - Who would loose more by opportunistic behavior
partner A or partner A?
27Example Social capital for successful innovation
through collaboration (3)
- Opportunities for company B under high network
closure - -damage of reputation of A
- -collective action with other (third) parties
if A violates basic standards - A anticipates these dangers therefore special
interest in avoidance of anything that could
appear as opportunism - Network closure as safeguard against opportunism
- Network closure facilitates trust
28Argument 3 Ronald BurtStructural holes
29Ron Burt Structural holes versus network closure
as social capital
- Burts conclusion
- structural holes beat network closure
- when it comes to predicting which actor
- performs best
- Coleman says closure is good
- Because information goes around fast
- and it facilitates trust
- fear of a damaged reputation
- precludes opportunistic behavior
- Burt subsequently compares people (managers)
with dense networks with those with networks rich
in structural holes
University of Chicago, Graduate School of Business
30Ron Burt Structural holes versus network closure
as social capital (2)
A
B
1
7
3
2
James
Robert
6
4
5
9
8
C
- Roberts network is rich in structural holes
- James' network has fewer structural holes
D
31Ron Burt Structural holes versus network closure
as social capital (3)
- Robert will do better than James, because of
- informational benefits
- tertius gaudens (entrepreneur)
- autonomy
32Ron Burt Structural holes versus network closure
as social capital (4)
- It is not that clear (yet) what precisely
constitutes a structural hole, but Burt does
define two kinds of redundancy in a network - Cohesion two of your contacts have a close
connection - Structurally equivalent contacts contacts who
link to the same third parties - This more or less corresponds to the inverse of
structural holes - If two of your contacts are connected, you do not
connect a structural hole - If two of your contacts lead to the same other,
then to get to that other, you actually would
have needed only one of those contacts
33Structural holes vs network closure
- Empirical evidence on
- Dependent variable early promotion
- large bonus
- outstanding evaluation
-
- Most or all of the evidence seems to favor
Burts structural holes - Burt on Coleman
- Colemans dependent variable dropping out of
school - parents in a close network
- ? smaller probability of school dropout of
children - ? but parents may tend to earn less
- And about network closure
- Best team performance when groups are cohesive
but team - members have diverse external contacts.
34Structural holes vs network closure (2)
- Coleman
- closure can overcome trust and cooperation
problems - (empirical evidence from data on school
dropouts) - Burt
- Structural holes give entrepreneurial
possibilities - (empirical evidence from data on US managers)
- Perhaps this is not so much a controversy after
all ? - There is a problem though, when it comes to
innovation. For successful innovation one needs
both to overcome trust and cooperation problems
and entrepreneurial possibilities.
35Argument 4 James Coleman vs Ronald BurtThe
diffusion of innovation Cohesion vs.
structural equivalence
36J. Coleman/R. Burt Diffusion of Innovations
- What happens with innovations?a) How and when do
they spread (adoption)? b) How and when are
they used? - 2 theories (network theories of social influence)
- A Coleman Diffusion by cohesion
- B Burt Diffusion by structural equivalence
- Both theories predict which individuals of a
social system are similar with regard to
behavior, evaluation of some phenomena, and
attitudes. - Both theories make predictions about who adopts
an innovation.
37Diffusion via social networks
- effects of individual differences in receptivity
(k)
dy/dt k(1-y)t
- effects of social contagion (influences via
social networks) The Snowball Effect
dy/dt ky(1-y)t
38Which situations?
- social influences of cost-benefit evaluation do
not always take place - important for social influences
- uncertainty of results of actions (often when
actors are confronted with innovations) - no scarcity of information, sometimes even
information overload - problem finding trustworthy information
- individuals rely on others
- both models (cohesion, structural equivalence)
argue that the decisions of actors are influenced
by "other actors" in the social network - they make different predictions about who these
"others" are
39J. Coleman Diffusion of Innovation by cohesion
- two actors share same understanding of costs and
benefits (shared attitudes) of an innovation when
they socialize with each other - shared understanding of costs and benefits
(shared attitudes) leads to similar behavior - if alter adopts the innovation then ego will
follow soon - who are the relevant alters?
- the less indirect and the stronger the
relationship between ego and alter the more
likely that social influences take place - the stronger the relationship with alter the more
likely that the adoption of alter will trigger
the adoption of ego
40J. Coleman Diffusion of Innovation by cohesion
(2)
A
B
1
7
Peter
3
2
James
Robert
6
C
4
5
Tom
assume Peter adopts the innovation who would be
the next to adopt? who would follow
thereafter who would never adopt?
Frank
41R. Burt Diffusion by structural equivalence
- What is structural equivalence? - An example
- 1 2
- 3 4
-
- 5
- 3 classes of equivalent actors
- class A 1 2
- class B 3 4
- class C 5
42R. Burt Diffusion by structural equivalence (2)
- two actors in structurally equivalent positions
act in the same way because their positions imply
that they act under the same structural
conditions - individuals take others as a frame of reference
for judging whether their decisions are correct - theory offers a different answer to the question
"Who are the relevant others that are taken as a
frame of reference?" - structural equivalence emphasizes the competitive
character of many situations that lead to social
comparisons
43R. Burt Diffusion by structural equivalence (3)
- the more similar the relationships of ego and
alter are to other (third) individuals the more
likely that ego takes alter as a frame of
reference for social comparisons - hypothesis the higher the degree of structural
equivalence between ego and alter the more likely
that alter's adoption will trigger ego's adoption
of an innovation
44Structural Equivalence versus Cohesion3 typical
Cases
- A Identical predictions of both models social
influence between ego alter
ego - Person 1 person 2
- alter
- B cohesion social influence between ego alter
structural equivalence no influence
ego - Person 3 Person 4
- alter
- C structural equivalence social influence
between ego alter - cohesion no influence
ego - Person 3 Person 4
- alter
45Today
- Its not what you, but whom you know!
- Arguments of classical social network theories
that make clear - 1. why
- 2. which network characteristics
- 3. have what effect?
46To Do
- Read the following articles
- Granovetter, M. S., "The Strength of Weak Ties,"
American Journal of Sociology 78 (6) 1360-1380
(1973). - Coleman, J.S. "Social Capital in the creation of
human capital" American Journal of Sociology 94
95-120 (1988). - Burt, R. (2001) "Structural Holes versus Network
Closure as Social Capital", in Social Capital.
Theory and Research, ed. by Lin, N., Cook, K.
Burt, R. - Read these papers with in the back of your head
the idea that you will have to be able to apply
similar network arguments to problems of alliance
management and innovation science.