Personal and Business Networks Gerrit Rooks 29-09-10 “no man is an island, entire of itself…”...
-
Upload
leon-woods -
Category
Documents
-
view
215 -
download
1
Transcript of Personal and Business Networks Gerrit Rooks 29-09-10 “no man is an island, entire of itself…”...
Personal and Business Networks
Gerrit Rooks29-09-10
“no man is an island, entire of itself…” (Donne 1624).
This lecture• A tidbit on personal networks
– How many close friends do people have? How many do you have?
• The evolution of business-networks from entrepreneurial networks
• The Toyota supplier network• Alliance networks: direct and indirect ties
Social Brain Hypothesis• Ronald Dunbar (1947),
anthropologist and evolutionary biologist. Director of the Institute of Cognitive and Evolutionary Anthropology, University of Oxford
• Ronald Dunbar hypothesized that the development of human intelligence (and the neo-cortex) is the evolutionary result of the need for social coordination and cooperation
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• Based on a regression
equation on data for 38 primate genera, Dunbar predicted a human "mean group size" of 148 (casually rounded to 150).
• Dunbars number: 150 (estimates of network size vary between 100-230)
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
• Support clique: people who we seek personal advice from
• Sympathy group: special ties, frequent contact
• Band: acquaintances, frequent contact Clan: all current contacts
• Megaband + Tribe: larger social units
(Co)variation in network size
Any group greater than 150 will become disfunctional
Company size = 75-200 Organizations > 150 need bureaucracy…
75-200
475-1000
50,000 +
20,000 to 45,000
10,000 to 15,000
20,000 to 45,000
lieutenant general
major general
colonel
lieutenant colonel
captain
lieutenant general or higher
Personal and business 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 networkshigh 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 networksTies are primarily motivated by expected economic benefits
Weak ties that are more market like, less redundant
Result of pro-actively managing networks
From embedded to balanced
• Emerging firms rely on embedded ties – Low reputation / legitimacy
• Not an attractive partner • -> reluctant banks etc.
– Limited search capabilities• Growth firms have to rely on arms
length relations as well– Firm is more attractive etc– Better search capabilites
From cohesion to bridging structural holes
• Emerging firms rely on cohesive networks– Reciprocity, Enforcable trust,
direct access to resources– However, available resources
are limited.– Add new contacts, bridge
structural holes• Firms need a balanced network,
neither too dense, nor too sparse
Intentionally managed networks• Firms (can) learn to create
network value• Creation of networks also
depends on specific skills (in case of persons social competences)
• Co-evolution of firm and network
The Toyata supplier network• Japanese
automobile makers are more and more productive, US is lagging
• WHY?• Dyer and
Nobeoka:"Creating and managing a high performance knowledge-sharing network: the Toyota case"
• One large network with core firm as hub
• Bilateral relationships• Weak ties/arm's length
relations• Structural holes
• Large network plus multiple nested networks
• Multi-lateral relationships• Strong/embedded ties in
nested networks with core firm
• Dense network
Knowledge sharing routines• Dilemmas associated with knowledge
sharing1. 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
appropriation3. how to maximize the efficiency of knowledge transfers?
– Creating multiple knowledge-sharing processes and sub-networks 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'.
• Toyota creates a shared network identity by developing multiple groups– The supplier association– Toyota's operations management consulting division– Voluntary small group learning teams (jishuken)
Developing ties
• The supplier association (s)– Kyohokai: Toyota's supplier association was
established in 1943– Suppliers must be close to each other
• Supplier association has regular meetings, fi– Quality committees.– Visit `best practice' plants– Quality management conference held once a year
Developing ties
• 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– After determining theme, 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
25
Alliance networks: Ahuja
• Two types of ties
• Direct ties– knowledge sharing– complementary
skills– scale economies
• Indirect ties– knowledge
spilloversDirect tie
Indirect tie
26
Effects of direct ties
Many direct ties Fewer direct ties
Knowledge sharingComplementarity higher innovation output Economies of scale
27
Effects of indirect ties
Many indirect ties Fewer indirect ties
Information gathering devices higher innovation output Screening device
28
Effects of indirect ties depend on the # direct ties
Many direct ties Fewer direct ties
Relative addition of new resources is smaller.
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?
• Ahuja finds clear support that network closure is superior