Transcript Document 7334603

Innovation in networks and
alliance management
An introduction to the course
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www.tue-tm.org/INAM

All course info,
literature, slides,
and messages can
be found here.
Check regularly!
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Today
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Course design and content

Introduction to network analysis and concepts
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Lecturers
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Chris Snijders
[email protected]
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Uwe Matzat
[email protected]
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Mila Davids
[email protected]
http://www.tue-tm.org/snijders/home
http://www.tue-tm-soc.nl/~matzat
(+ two guest speakers)
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The course: organization
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
Two courses: 0ZM05 (5 ects) and 0EM15 (6 ects)
Lectures every week on Tuesdays, hour ? and ??. Later in
the program less lecture time, more "assignment time" (see
the course website).
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Several guest lectures  attendance is mandatory!
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0EM15 participants have a higher lecture and exam load
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Course requirements
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Two (group) assignments + written exam.
Grade = 50% assignments + 50% exam.
Both assignments and the exam should be at least
a 4.0. Final grade should be at least 5.5.
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To do: register in Studyweb
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Course design
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1.
2.
3.
4.
5.
Aim: knowledge about concepts in network
theory, and being able to apply them, in
particular in a context of innovation and alliances
Network theory and background
Business alliances as one example of network
strategy
Assignment 1: business networks
Assignment 2: <to be decided>
Exam: content of lectures and slides plus
literature online
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The setup in some more detail
1. Network theory and background
Introduction: what are they, why important …
Four basic network arguments
Kinds of network data (collection)
Typical network concepts
Visualization and analysis
2. Business alliances as one example of network
strategy
- Kinds of alliances, reasons to ally
- A networked economy
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(social) Networks – an introduction
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We live in a connected world
“To speak of social life is to speak of the
association between people – their
associating in work and in play, in love and
in war, to trade or to worship, to help or to
hinder. It is in the social relations men
establish that their interests find
expression and their desires become
realized.”
Peter M. Blau
Exchange and Power in Social
Life, 1964
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Make our 'social space' visible
"If we ever get to the point of charting a
whole city or a whole nation, we would have
… a picture of a vast solar system of
intangible structures, powerfully influencing
conduct, as gravitation does in space.
Such an invisible structure underlies society
and has its influence in determining the
conduct of society as a whole."
Jacob L. Moreno
New York Times, April 13, 1933
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Why do networks matter?
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Why do networks matter?
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Social network analysis – it's core
An interdisciplinary perspective emphasizing structural
relationships as key explanatory concepts and principles:
• Structural properties of social formations are contexts
that shape the perceptions, beliefs, attitudes, and
actions of individuals and collectivities
• Social influence and collective action may be facilitated
and/or constrained by direct and indirect exchanges
(transactions) among social actors possessing
differential resources (e.g., information)
• Actors and transactions/interactions between actors
are embedded, i.e. located within actual situational
contexts
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The network perspective
Two firms in the same market.
Which firm performs better (say, is more innovative): A or B?
A
B
This depends on:
•Cost effectiveness
•Organizational structure
•Corporate culture
•Flexibility
•Supply chain management
•…
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The network perspective
Two firms in the same market.
Which firm performs better (say, is more innovative): A or B?
A
B
Note
and ... on the structure of the network
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Networks are
one way of
dealing with
“market
imperfection”
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Multi-level and interdisciplinary
Network applications appear in diverse substantive fields of
mostly social sciences – anthropology, management, political
science, public health, sociology (and recently also in
economics)
Studies span micro- meso- & macro-levels of analysis:
• personal social & health support systems
• children’s play groups, high school cliques
• employee performance
• neighboring behavior, community participation
• work teams, voluntary associations, social movements
• military combat platoons, terrorist cells
• corporate strategic alliances, board interlocks
• international relations: trade, aid, war & peace
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It's a science ...
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Example: crime research
Example topics
-"Cold case" research
- forensic psychiatry
-(youth) crime
-...
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Articles with Network* Keyword
5000
4000
3000
SocAbs
2000
EconLit
1000
0
1965-70
1970-75
1975-80
1980-84
1985-89
YEAR
5/23/2016
SOURCES: Sociological Abstracts, EconLit
1990-94
1995-99
2000-04
Network analysis: origins
Started in 1920s, Jacob L. Moreno
pioneered social network analysis for his
“psychodrama” therapy. He used
sociomatrices and hand-drawn sociograms
to display children’s likes and dislikes of
classmates as directed graphs (digraphs).
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Moreno’s socio-matrix
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… displayed as a sociogram
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Modern computing makes a big difference
“Visualization has been a key
component of social network
analyses from the beginning,
proliferating into today’s
dazzling computer-based
multidimensional displays”
(Freeman 2001)
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Social network basics

A network (or graph)
contains a set of actors (or
nodes, objects, vertices),
and a mapping of relations
(or ties, or edges) between
the actors
1
2
For instance:
Actors: persons
Relationships: “participates in the same
course as”

Most simple network: two
actors, one relation
Social networks: actors are
people or groups of
people
Or:
Actors: organizations
Relationships: have formed an alliance
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Social network concepts: ties
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Relationships can be
directed:
1
2
For instance: person 1 likes person 2
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Symmetrical by choice:
1
2
Person 1 likes 2, 2 likes 1

Symmetrical by definition: 1
2
Person 1 is married to 2
(usually depicted as)
1
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2
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Social network concepts: weights

Relationships can carry
weights :
1
2
3
4
Actors: persons
Relationships: know each other
3 and 4 know each other better (stronger
tie)
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Actors can have a variety
of properties associated
with them:


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

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Social networks: translating arguments
Reciprocity:
whenever there is a tie from a to b, there also is a
tie from b back to a
1
2
3
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Quantifying matters through network concepts
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Actor characteristics:
 outdegree
 indegree
 betweenness
Network characteristics
 density
 segmentation
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An example of a modern network:
9-11 Hijackers Network
SOURCE: Valdis Krebs
http://www.orgnet.com/
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OECD Trade Flows 1981-1992
SOURCE: Lothar Krempel
http://www.mpi-fg-koeln.mpg.de/~lk/netvis.html
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Social network software
1)
UCINet – Many things on network analysis
Lin Freeman, Steve Borgatti, Martin Everett
2)
MultiNet – Whole Network Analysis
+ Nodal Characteristics
3)
Structure – Ron Burt – No longer maintained
4)
P*Star – Dyadic Analysis – Stan Wasserman
5)
6)
7)
Krackplot – Network Visualization (Obsolete)
David Krackhardt, Jim Blythe
Pajek – Network Visualization – Supersedes Krackplot
StocNet – Tom Snijders - collected programs for, e.g., analysis of
dynamic networks
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Internet facilitates social networking…
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… for recreational use …
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… also for business purposes …
<see “Visible path” demo>
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Organizations as networks:
org-chart shows formal ties…
SOURCE: Brandes, Raab and Wagner (2001)
<http://www.inf.uni-konstanz.de/~brandes/publications/brw-envsd-01.pdf>
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… but the graph of actual connections
is really different
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… and can be restructured to reveal the “real”
hierarchy!
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Why networks & innovation?
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Classic innovation studies focus mainly on characteristics of
individuals or firms to explain innovation
 e.g. firm size and innovativeness
However, innovation, is inherently social in nature
 e.g. firms have relations with other firms and
consequently access to additional external resources
Hence, networks of social relations between actors
 (individuals and organizations) may be important factors
in explaining innovation
 and innovation may change networks of social relations
as well
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Why networks and alliance management?
The knowledge economy is a network economy
Third Industrial Revolution
Second Industrial Revolution
CEO
Staff
Divisions
Guild
Master
Pupil
Master
Pupil
Master
Pupil
Networked model:
Economies of skill:
-access to knowledge
-co-development
-leverage knowledge
-focus on core
competences
-learn and innovate
‘Stand alone’ model:
- Economies of scale
- Optimize assets
Organizational models are transforming from “stand alone” to “networked”
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CEOs rate alliances among
the most important management tools
Bain researched the 25 most
popular management tools
in a survey among 960
international executives
• Alliances are among the 10 most
widely used tools by top
executives
• 63% of them use alliances
• Note that other tools involve
alliance and network related
aspects as well: CRM, outsourcing,
growth strategies, supply chain
management
Source: Rigby, 2005, Management Tools 2005, Bain & Company
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Alliances lead to networks
Network in Flat Screens 2000-2001
Source: De Man, 2006,
Alliantiebesturing
In 2 years time 75% of the firms in the industry are directly or indirectly connected
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Alliances come in a variety of forms
Forms of cooperation
Market transaction
Outsourcing
(traditional)
Licensing
Joint venture
Joint R&D,
production etc
Outsourcing
Merger/
Minority acquisition
participation
(new)
Alliances
Important elements are joint decision-making, joint revenues, joint risks, actual collaboration
between people taking place while partners remain independent
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Network questions and arguments
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Typicalities of network arguments
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Non-linear effects can occur easily (cf “Smallworld phenomenon”) in networks [lecture 3]
Data collection often daunting
= “is being eaten by”
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Typical network related questions
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Which of these actors has the best position in the
network?
 Example: firms in alliance networks
Which kinds of networks are best for <…>
purposes?
 Example: R&D teams
Which are the key relations in the network?
 Example: terrorism
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Networks = Y
or
Networks = X
In most social science applications, networks are considered
as an independent variable.
For instance
Firm A performs better than B because firm A is embedded
in a network with a lot of ties (a network of higher “density”)
or
Person A performs better than B because person A has a lot
of ties to other persons and person B doesn’t
(firm A has a higher “outdegree”)
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Networks = Y
or
Networks = X
Sometimes: networks as the dependent variable
For instance:
How do the social networks of successful people differ from
the social networks of others? (and why is that?)
And, even rarer: dynamic network theory
For instance:
How do the friendship networks of people change over time?
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Using network arguments...
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Make sure that you define the actors/nodes, and
what the ties between them represent (directed?,
weighted?).
Make clear how and what (kind of) network
characteristics drive your result. There are so
many network characteristics … think hard!
Shop around for arguments in areas unrelated to
your own! (where perhaps only the nodes and the
ties are different!)
“The best ideas already exist”
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Kinds of network arguments
(in detail next week)
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Closure competitive advantage stems from managing risk; closed
networks enhance communication and enforcement of sanctions
Brokerage competitive advantage stems from managing
information access and control; networks that span structural holes
provide the better opportunities
Contagion information is not a clear guide to behavior, so
observable behavior of others is taken as a signal of proper
behavior.
[1] contagion by cohesion: you imitate the behavior of those
you are connected to
[2] contagion by equivalence: you imitate the behavior of those
others who are in a structurally equivalent position
Prominence information is not a clear guide to behavior, so the
prominence of an individual or group is taken as a signal of quality
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To Do:

follow the directions on
www.tue-tm.org/INAM

Studyweb: register!
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