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social capital an introduction to managing networks kenneth w koput university of arizona usa edward elgar cheltenham uk · northampton ma usa

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© kenneth w koput 2010 all rights reserved no part of this publication may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or photocopying recording or otherwise without the prior permission of the publisher published by edward elgar publishing limited the lypiatts 15 lansdown road cheltenham glos gl50 2ja uk edward elgar publishing inc william pratt house 9 dewey court northampton massachusetts 01060 usa a catalogue record for this book is available from the british library library of congress control number 2009941278 isbn 978 1 84980 099 0 printed and bound by mpg books group uk 02

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contents foreword part i 1 2 3 4 theory and applications vi 1 3 16 33 44 61 63 72 96 107 109 130 146 151 168 171 social capital and social networks in action central concepts social capital strong and weak sociocentric perspectives with applications to human resources egocentric concepts and applications data methods part ii 5 6 7 obtaining data handling data i preparations handling data ii visualizations analytic methods part iii 8 9 10 analyzing structure analyzing positions social networks and social capital in action revisited appendix references index v

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foreword this book contains a course in social capital covering both substantive and analytic material part i introduces basic theory concepts and terminology and applies them to business and human resource management part ii covers considerations in obtaining relational data and preparing the data for analysis on the computer part iii presents the methods for social network analysis social network analysis was until recently a relatively unknown branch of sociology and anthropology the development of menu-driven computer software packages has opened up access for business and human resource managers among others two of the more popular software packages are ucinet and pajek the software and tutorials are easy to obtain on the internet yet the tools themselves are of little value without an understanding of concepts that can relate the computed measures to relevant applications in this text the focus is foremost on gaining such an understanding social capital provides a framework for relating the abstract world of graph theory which underlies network analysis to the concrete world of human behavior vi

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part i theory and applications this part introduces basic theory concepts and terminology and applies them to business and human resource management the emphasis throughout is on how networks of social relationships facilitate individual and organizational learning and goal attainment we begin in chapter 1 by presenting basic terminology and examples of social network analysis applied to formal organizations.

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1 social capital and social networks in action in this chapter we ll set forth some terminology that we ll carry forward throughout the text and foreshadow things to come by previewing the steps involved in mapping networks we ll do the latter by providing examples of the use of social network analysis in diagnosing problems or uncovering opportunities in organizations 1.1 some terminology and definitions the most fundamental concept we have to define is that of a social tie a relation or tie is said to exist when there is an incidence of ongoing repeated contact between two parties when a tie is distinct from any formal organization it is called a social tie or social relation there are some things worth noting about social ties 1 2 they require two parties the relations you have with yourself are not social they require contact but this contact does not have to be face to face contact could occur via phone email written correspondence text messaging or other means the contact must be repeated but it need not be frequent seeing a classmate every ten years at your reunion still constitutes a social tie the contact must be ongoing meaning that it is subject to occurring again at some time although such a time can be indefinite even if you don t know how long it will be until the next incidence of contact or exchange but both parties are open to contact or exchange a social tie exists in the context of a formal organization social ties must in some way go beyond the prescribed workflow interaction if a worker is required to report specific information to their supervisor then the incidence of contact in which only that specific information is exchanged does not by itself constitute a social tie a social network is a pattern of social ties among a well-defined group of parties 3 4 5 6 there are many kinds of social ties and thus many kinds of social networks friendship advice family collegial just to name a handful in 3

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4 social capital general ties can be characterized by the type of activity that is engaged in or the content of what is exchanged during incidences of contact there is no exhaustive or exclusive typology of social ties any categorization should reflect the purpose of the analysis for which it is being used the purpose of analyzing the social networks in organizations is to understand how the informal structure operates in conjunction with the formal structure and workflow the purpose is not to change the informal structure nor is the purpose to change the formal structure either may be recommended as a result of the network analysis however as illustrated in the next section 1.2 the company behind the chart if our purpose is to give a good overall sense of a work organization s functioning then according to krackhardt and hanson 1993 it is useful to look at three types of networks advice trust and communication although the terms seem straightforward we need to be careful to understand what is meant by each of these three types as the meanings intended are very specific and may not be what a layperson would think so let s look at their meanings advice in solving task-related problems and obtaining technical information needed to perform one s duties advice here does not refer to one s personal troubles trust in sharing confidential or political information and providing support for one s ideas or proposals at work so trust is separate from credibility that is trust refers to organizational politics and not to whether you trust the advice given about how to perform a task communication about what is happening at work more generally seeking advice or getting trust obviously involves some form of communication yet we do not include these as communication ties instead communication ties provide information about news or events at work rather than how to do your job or whether someone will cover your back with the understanding of these definitions for advice trust and communication the authors report that in their experiences in working with actual organizations each has proven most useful in diagnosing a particular sort of organizational problem advice networks can uncover routine conflicts routine conflicts are day-to-day or otherwise reoccurring disagreements over how

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social capital and social networks in action 5 things should be done or on what assumptions one should operate how to do things and what information to use in doing them are elements of advice as we ve defined them as a result advice networks diagnose such disagreements for example by showing when there are fragmented sources of expertise or no sources at all trust networks can diagnose non-routine problems such as failing change efforts non-routine situations by their very nature involve uncertainty and the need to generate ideas about new things to do or new ways of doing things and build support for those ideas as a result trust as defined comes into play by showing who is looked to for support or who many feel will act in their interests the trust network can help to identify good candidates for bringing the organization together to mobilize resources and marshal change communication networks can diagnose inefficiency or low productivity keeping in mind that our definition is limited to information about what is happening at work or what the organization is doing beyond one s specific tasks or company politics consider the implications of very dense or very sparse communication networks in the former dense networks workers may be spending a great deal of time and energy working the rumor mill to find out or spread the word about what is going on this is time and energy taken away from doing their tasks and is hence inefficient the organization could likely use formal means memos emails announcements meetings etc to disseminate information more efficiently at the other extreme sparse networks workers hardly talk to one another at all about what is going on in such cases workers may be perfectly or imperfectly informed but either way the lack of social bonding can create morale problems such as alienation or stress which can impede productivity just because each of the three types of networks can be most useful in diagnosing a particular sort of problem does not mean that these networks should always be used separately these networks can and should often be used together to understand other problems such as turnover and should always be used in conjunction with the formal organization chart or workflow network both to understand the problem and to formulate and enact a solution once a problem is diagnosed the optics company this is an example of using trust and advice networks to diagnose a failing change effort and enact solutions by changing the formal structure our story parallels the experiences of krackhardt and hanson 1993 with a

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6 social capital barton ceo lens design mullaney svp bahr rodrigues oaxaca mirror lab petersen svp cottrel lehman angus parsons joseph dicke taylor suarez vandeven manuel apple materials levy svp blau jimenez andersen olsen mason ztsosi control systems conn svp hubble buchanan hamil figure 1.1 formal organization for the optics firm software company we tell the story from the point of view of barton the ceo of an arizona optics company mr barton is frustrated by his inability to successfully launch a new strategic direction for his company which has four divisions lens design mirror lab materials technologies and optical control systems the formal organization organization chart is shown in figure 1.1 the history is that the mirror lab has long been the division that has generated the bulk of the company s revenues and has seen the bulk of rewards and reinvestment as a result owing to changes in federal grant priorities barton sets out to launch a new strategy that would invest some of the revenues generated by the mirror lab to build up the other divisions in hopes of expanding the company s overall position after announcing his plan morale in the mirror lab drops with clear threats of turnover among some of the key players in that division feeling their status and possibly bonuses would be lowered realizing he needs to bring his employees into the strategic planning process barton forms a task force to find a new strategic direction as a symbolic gesture barton appoints a representative of the mirror lab mr cottrel to chair the task force but includes key representatives from all divisions among the members the task force quickly breaks down with members fiercely competing for the

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social capital and social networks in action petersen svp conn svp taylor jimenez ztsosi levy svp mason manuel oaxaca dicke 7 barton suarez buchanan angus hamil lehman rodrigues olsen andersen blau joseph vandeven apple parsons mullaney svp bahr cottrel hubble figure 1.2 trust network for optics firm interests of their respective divisions rather than working cooperatively to improve the interests of the company a whole as barton wonders what has happened he calls the local business school management department looking for advice faculty with expertise on managing networks offer to help recognizing this as a non-routine problem a failing change effort they are particularly interested in the trust network as a diagnostic tool it is clear from the trust network map in figure 1.2 that cottrel who has been asked to lead the task force is not well trusted this is seen because he is off on the periphery rather than near the center of the map and has just a single trust tie why then was he chosen to lead the change effort to understand this we need to look at another map the advice network we see from the advice network in figure 1.3 that cottrel has a key role as a technical expert which we can infer from his central position in the advice network barton mistook colleagues faith in cottrel s technical expertise credibility for faith that he would act in their political interests trust this is a good example of the importance of keeping in mind the specific narrow definitions of advice trust and communication used here.

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8 social capital rodrigues vandeven angus buchanan manuel lehman olsen oaxaca taylor joseph apple petersen svp levy svp cottrel barton mullaney svp blau hamil hubble conn svp dicke ztsosi jimenez mason andersen parsons bahr suarez figure 1.3 advice network for the optics firm to formulate and enact a solution the consulting faculty used both of these network maps along with the organization chart cottrel cannot simply be dismissed since he is such a valuable technical expert yet we can see from the trust network that lehman who is also in the mirror lab is well trusted by employees throughout the company hence lehman would make a good task force leader to bring lehman on board without insulting cottrel is the trick consulting faculty devised a remedy in which cottrel and lehman were made co-chairs of the task force and it was presented as a way to help relieve cottrel of what had become a bigger job than originally anticipated cottrel stayed on board and the combination of his expertise with lehman s trust soon produced positive results the consultants also noticed something peculiar involving petersen the head of the mirror lab can you diagnose the problem can you suggest a solution the realty office krackhardt and hanson 1993 also describe an example of using communication networks to diagnose low productivity and inefficiency leading to changes in the informal structure via changes in routines and practices

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social capital and social networks in action a3 a19 a12 a5 a4 a2 a18 m1 m2 a1 a7 a10 a15 a14 a16 9 a17 a11 m3 a20 a9 a8 a6 figure 1.4 communication network for the realty office of a large bank we relate a similar story that begins when a realty office conducted what was expected to be a routine customer satisfaction survey the results showed a high level of customer complaints about a lack of timely response to questions about the office s realtors and services the realty office s inefficient response to customer inquiries was diagnosed using the communication network what consulting analysts found was the network shown in figure 1.4 a structure split into two separate subnetworks when we have a case like this where the subnetworks are completely disjoint we call the subnetworks components looking at the network map we find managers denoted by m and some agents denoted by a in one component and another set of agents in a second component what was not apparent from the initial social network map was just what was keeping the two subnetworks apart to understand this analysts needed to look at the formal organization alongside the communication network doing so revealed that the subnetworks were defined by work status one subnetwork consisted of the full-time realtors while the second subnetwork consisted of realtors who work only part time or intermittently to see this visually we color the points for each person according to their work status light circles for full time and dark squares

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10 social capital a3 a19 a12 a5 a4 a17 a2 a18 m1 m2 a7 a1 a10 a11 m3 a20 a9 a8 a6 a15 a14 a16 figure 1.5 communication network for the realty office nodes colored by shift for part time the resulting network map is shown in figure 1.5 now it is clear that the components are defined by work status to understand why the communication network is imploded by work status and how this led to customer dissatisfaction the analysts further had to look at the organization s practices managing agents worked full time and all meetings were held on midweek mornings when part-time workers were often not available as a result the part-time agents were not kept up to date on changes in staff products and services and had difficulty in getting answers for customers and the full-time agents were not informed about the availability and expertise of the part-time agents to remedy the problem the consulting group recommended changing communication patterns to bridge the two subgroups through changes in practices to begin meetings were now held at the end of the day between shifts so that all workers could attend in addition workers were rotated when possible between the two shifts when a worker needed a day off they were required to contact workers from the other shift to find a substitute these and other new practices altered the communication patterns creating ties and leading to a more robust single network customer satisfaction improved.

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