Lecture 6 - Corporate Entrepreneurship (BMSE04) 2018-2019
On Monday, December 10 I gave a lecture on social networks and innovation to 62 students of the Rotterdam School of Management, Erasmus University. In this lecture, I discussed the importance of social network theory as a lens to study innovation within firms, the benefits and drawbacks of different types of social capital, and the effect of social capital on entrepreneurship.
Innovation within organizations is a social process. Even if you are able to generate novel ideas on your own, you need others to refine them, to promote the most promising ones, and to translate those ideas into new products, processes, or services that are beneficial to your company.
As a result, the social relationships you have at work can either stimulate or limit your ability to generate and implement novel ideas. The structure of relationships between you and your colleagues—your workplace social network—is therefore a key determinant of innovation.
When you take a network perspective on human behavior, you shift your attention from the attributes of people to their relationships. Instead of judging them based on their skills, education, or experience (i.e., their human capital), you establish how well they are connected to each other.
I introduced the network perspective in the first part of the lecture and used the social network of the class as an illustration of people’s tendency to form relationships with similar others—a phenomenon known as homophily. For example, in our class of 62 students, girls are more likely to form relationships with other girls and guys tend to interact with other guys. Whether homophily is an advantages or disadvantage depends on the outcome your are interested in, but it serves as a powerful sociological mechanism that exists in every organization.
To explain the effect of social networks on the innovative behavior of employees, the literature distinguishes between two types of social capital: brokerage and closure. Someone in a brokerage network connects colleagues who do not interact with each other directly. We call this network open or sparse, because it offers plenty of opportunity for new relationships to form. Someone in a closed network, in contrast, connects people that do interact with each other directly. We call this a dense network, because most people are already connected to each other.
In the second part of this lecture, we zoomed in on these two types of social capital and discussed their characteristics. These characteristics provide several advantages and disadvantages when it comes to the generation and implementation of novel ideas.
In the third and final part of the lecture, we linked brokerage and closure to the generation and implementation of ideas. A brokerage network stimulates the generation of ideas because it provides employees with early access to diverse information. It is less useful, however, for idea implementation because it does not provide the trust and support necessary for coordinated action.
We discussed the paper by Carnabuci and Dioszegi (2015) in which they argue that people fare better in closed or brokerage networks depending on their cognitive style. We also examined Obstfeld’s (2005) tertius iungens conceptualization of brokerage and discussed brokerage as a process in which the broker brings people together.
We ended the lecture with the Six Myths About Informal Networks — and How To Overcome Them paper written by Cross, Nohria, and Parker in 2002. One of the myths we discussed is de idea that how people fit into networks is a matter of personality which can’t be changed. The lecture clearly showed that people fit into social networks as a result of intentional behaviors which can be influenced.