Monday, March 22, 2010

Reading :: Neighbor Networks

Neighbor Networks: Competitive Advantage Local and Personal
By Ronald S. Burt

I admit it: The math associated with social network analysis (SNA) confuses me. I don't have the background to follow it. But at the same time, I'm glad that someone does. SNA may lose some details and textures compared to qualitative research, but it scales more easily and provides better points of comparison. So, although I picked up Burt's Neighbor Networks with trepidation and skipped through some of the more involved analysis (even when "the math involved is modest," as Burt assures us at one point (p.227)), I'm still glad I read it.

Burt asks a simple question: "Is there advantage to affiliation with the well connected?" (p.1). Or in other words: do your neighbors and their networks matter? "The common-sense answer is yes," Burt says (p.1), but he wants to study the issue systematically. He begins the task by defining "structural holes," which are "mission relations that inhibit information flow between people" (p.4) - holes that happen when explicit knowledge is converted into local, tacit knowledge (p.3). These holes serve as "boundary markers in the division of labor" (p.4). (Longtime readers of this blog might think in terms of horizontal learning.)

Burt distinguishes between two sources of advantage in networks: brokerage and closure. "Closure is about staying on your side of the structural hole," while "Brokerage is about the benefits and exposure to variation in opinion and behavior provided by building connections across structural holes" (p.4). And in this book, Burt focuses on "network brokerage, measured in terms of opportunities to coordinate across structural holes" (p.4). After undertaking various studies, Burt concludes that "Despite technological advance, social capital remains a phenomenon local and personal" (p.14).

To make his case, Burt leads us through a number of analyses, methodically building a case for how brokerage works in different cases: with network spillover, in balkanized and in highly connected networks, in industry networks and financial services.

Overall, I'm glad I read Neighbor Networks. I have a better handle on SNA concepts now, and I also have a better idea of how SNA argument works. The math is still beyond me, I'm afraid, but the careful argument development was a pleasure to read.

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