Transcript Slide 1
Personal and Business Networks Gerrit Rooks The meeting of two personalities is like the contact of two chemical substances: if there is any reaction, both are transformed. ― C.G. Jung “Never eat alone” Keith Ferrazzi (2005) “no man is an island, entire of itself…” (Donne 1624). This lecture • A few tidbits about personal networks – How many close friends do people have? How many acquaintances? – Which persons have what kinds of networks? • The evolution of business-networks from entrepreneurial networks • Intentionally managed networks Questions you should be able to answer after this lecture • • • • • • • • • • What is the social brain hypothesis? What is Dunbars number Is Dunbars number still valid? What is a triad census? Is Granovetters assumption of “forbidden triads” valid? Which phases does an entrepreurial network go through? Why were the Medici family so powerful? How did Toyota create and manage a knowledge sharing network? What knowledge dilemmas were solved by Toyota, how? What are the benefits of direct and indirect ties in an alliance network? How do they interact? Social Brain Hypothesis Ronald Dunbar is famous for the social brain hypothesis: “human intelligence is the evolutionary result of the need for social coordination and cooperation” Ronald Dunbar (1947), anthropologist and evolutionary biologist, University of Oxford Personal network size • the number of social group members a primate can track, appears to be limited by the volume of the neocortex region of their brain. Dunbar, R.I.M. (1993), Coevolution of neocortical size, group size and language in humans, Behavioral and Brain Sciences 16 (4): 681-735. Dunbars number: 150 “Social units” • Support clique: people who we seek personal advice from • Sympathy group: special ties, frequent contact • Band: acquaintances, less frequent contact • Clan: all current contacts Increased emotional closeness Increased frequencty of interaction • Megaband + Tribe: larger social units Any group greater than 150 will become disfunctional 50,000 + 20,000 to 45,000 10,000 to 15,000 20,000 to 45,000 475-1000 75-200 Company size = 75-200 Organizations > 150 need bureaucracy… Facebook friendships Is Dunbars number still valid in this new media age? • “We find that the data are in agreement with Dunbar’s result; users can entertain a maximum of 100–200 stable relationships. Thus, the ‘economy of attention’ is limited in the online world by cognitive and biological constraints as predicted by Dunbar’s theory”. • Note: Dunbars theory is about maintaining relationships, not remembering faces (on average 1500) (Explaining) variation in networks Kalish & Robbish: Ego networks and triad census Strong tie Weak tie Kalish&Robbish describe and explain the triad census ego Strong tie Weak tie Transitivity: “the forbidden triad” = strong tie = weak tie Chris Gerrit Chris Uwe Gerrit Uwe The forbidden triad is a building block in Granovetters strength of weak ties theory Reasons for transitivity = strong tie • Frequent interaction Chris • Similarity Gerrit Uwe • Structural balance / cognitive dissonance reduction Only weak ties are bridges = strong tie Rudi Chris Gerrit Uwe Bert Önder Kalish & Robbish try to explain network differences The evolution of entrepreneurial networks The organizational life cycle Hite & Hesterly. The Evolution of Firm Networks: From Emergence to Early Growth of the Firm Strategic Management Journal, Vol. 22, No. 3 (Mar., 2001), pp. 275-286 Social network entrepreneur = firm network `identity’ based networks high proportion of ties with some type of personal or social identification Pre-existing ties, strong embedded network high in closure and cohesion Early / Later growth Calculative networks Ties are primarily motivated by expected economic benefits Weak ties that are more market like, less redundant (Partly) result of pro-actively managing networks Intentionally managed networks • Firms and individuals can learn to create network value – Medici – Toyata – Alliance networks Padgett, John F.; Ansell, Christopher K. (May 1993). "Robust Action and the Rise of the Medici, 1400–1434". The American Journal of Sociology 98 (6): 1259–1319. The Toyata supplier network The problem Dyer and Nobeoka adressed: Japanese automobile makers are more and more productive, US is lagging The answer of Dyer and Nobeoka: Toyota created and managing a high performance knowledgesharing network Knowledge sharing routines • Dilemmas associated with knowledge sharing 1. how can self-interested network members openly share valuable knowledge? 2. how to prevent free-rider problems? 3. how to maximize the efficiency of knowledge transfers? Overcoming knowledge sharing dilemmas 1. how can self-interested network members openly share valuable knowledge? – Create a network 'identity' through network-level knowledge-sharing routines 2. how to prevent free-rider problems? – Network `rules' for knowledge protection and value appropriation 3. how to maximize the efficiency of knowledge transfers? – Creating multiple knowledge-sharing processes and subnetworks in the larger network Why create an identity? • Many experiments demonstrate the powerfull effects of social identity, f.i. – Randomly assign individuals to a blue and a green group – Individuals were unknown to each other and were told that they would not meet again – Group members evaluated each other more positively and were more willing to cooperate with each other than non group members How did Toyata create a network 'identity'? • Toyota's network is known (labeled) as the `Toyota group'. –philosophy within the Toyota Group called ‘coexistence and coprosperity’ • Toyota creates a shared network identity by developing multiple groups, and “knowledge sharing routines” Knowledge sharing routines • Kyohokai: Toyota's supplier association was established in 1943 – Information exchange – Socializing events • Supplier association has regular meetings, fi – Quality committees. – Visit `best practice' plants – Quality management conference held once a year Knowledge sharing routines • Toyota's operations management consulting division – Direct free `on-site' assistance for suppliers • Voluntary small group learning teams (jishuken) – Each group consists of roughly 5-8 suppliers – The group visits each member to develop suggestions – Groups are frequently rearranged Network rules for knowledge protection • Creating an identity isn't enough to solve sharing and free riding problems • Toyota sets a norm/rule by sharing its own knowledge – eliminating the notion that there is `proprietary knowledge' • Suppliers must be willing to open their plants to other network members to other network members – reciprocal obligations: We will help you, but in return, you must agree to help the network. – reciprocity norm is enforced by implicit threat of withdrawal of business Creating multiple knowledge sharing processes Alliance networks: Ahuja Indirect tie Direct tie 37 • Two types of ties • Direct ties – knowledge sharing – complementary skills – scale economies • Indirect ties – knowledge spillovers Effects of direct ties Many direct ties Knowledge sharing Complementarity Economies of scale 38 Fewer direct ties higher innovation output Effects of indirect ties Many indirect ties Information gathering devices Screening device 39 Fewer indirect ties higher innovation output Effects of indirect ties depend on the # direct ties Many direct ties Fewer direct ties Relative addition of new resources is smaller. 40 When many partners have indirect ties, information is likely less valuable. since it will reach many others What is better for innovation output of firms: structural holes or network closure? A B What is better for innovation output of firms: structural holes or network closure? A B Ahuja finds that firms embedded in a closed / dense network outperform firms in a open network (B) in terms of patent production