Recommending Mike Gotta’s Reading List: Roland Burt Neighbor networks: understanding the power of networks

In my professional life I often quote the findings of Ronald Burt. Great to see this recommendation from Mike Gotta.

And yes the book is now on my reading list too.

Found at http://mikeg.typepad.com/perceptions/2010/01/on-my-reading-list.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CollaborativeThinking+%28Collaborative+Thinking%29

On My Reading List

Last year, my favorite work-related book was Identity & Control: How Social Formations Emerge (Harrison C. White). This year I will have to find time to sit back and read this book – along with Brokerage & Closure (same author).

Neighbor Networks: Understanding the Power of Networks

Research by Ronald S. Burt

Ronald S. Burt is Hobart W. Williams Professor of Sociology and Strategy at the University of Chicago Booth School of Business.

A surprising finding on the value of colleague networks leads to an even more remarkable revelation of how networks truly work.

Is it who you know rather than what you know that really matters? People hope that they will be rewarded for their ability and effort, but fear that rewards actually go to those with well-connected friends. That suspicion does not seem so far-fetched. Look around the office. Those who are doing well tend to be colleagues who know people who have an extensive network of contacts. Thus, it would be quite reasonable to assume that the success of a well-connected neighbor could somehow spill over to them.

Just how much of an advantage a neighbor’s network provides is the subject of Neighbor Networks, a thoughtprovoking book by University of Chicago Booth School of Business professor Ronald S. Burt. The answer turned out to be not quite what Burt expected: There is no advantage at all to having well-connected friends.

Although Burt found a strong correlation between the performance of managers and their affiliation with well-connected colleagues, the relationship disappears when the manager’s own network is held constant. That is, if two people have well-connected friends, then the person who is herself well-connected performs well and the person who does not have her own network of valuable contacts does not do well. Well-connected people have their own interests and need not associate with those who contribute nothing to the relationship and only seek to use them. What really matters for performance is a person’s own network and not that of her friends.

This finding has strong implications for business policy and for understanding the process underlying the value of networks. Information and behavior are almost never observed directly and so are inferred from the way relations are structured. In particular, those who were accustomed to thinking of networks as pipes through which information travels between people might be disappointed. “We seem to have misunderstood how networks work,” Burt says.

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