Several weeks ago I wrote about the theory of Social Capital, and that could be placed on on-line social networks (see end of post for link). Today I wish describe what implications this theory can have for online social networks like MySpace and Facebook, and to talk about a connected theory called Structural Hole Theory.
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Kangen Water ReviewRonald Burt's theory of 'structural holes' is a key extension of social network theory. This theory aims to explain "how competition works when players have established connections with others" (Burt, 1992), and asserts that networks provide two forms of advantages: advice advantages and management benefits.
Information advantages refer to how fast players find out about it and who knows about advice that is important. Actors with strong networks will usually learn more about relevant subjects, and they'll also know about it quicker. According to Burt (1992), "players with a network optimally structured to provide these advantages enjoy higher rates of return to their own investments, because such players know about, and have a hand in, more rewarding chances".
Control benefits reference the edges of being an important player in a well-connected network. In a large network, central players have more negotiating power than other players, which also means they are able to to a big extent, control several of the information flows inside the network.
Burt's theory of structural holes aims to enrich these benefits for their full potential. A structural hole is "a separation between non-redundant contacts" (Burt, 1992). The holes between non-redundant contacts supply opportunities that may enhance the information benefits of networks and also both the management advantages.
Optimizing the benefits of networks
I am going to now look at how structural holes can facilitate the optimization of information gains and control advantages. There are several ways to optimize structural holes in a network to make certain maximum information advantages:
The size of the network. The size of a network determines the level of information that is shared inside the network. An individual has a much better chance to receive timely, relevant information in a big network than in a small one. The size of the network is, however, not dependent just on the number of performers in the network, but how many non- redundant actors. The utility of a network with reference to its size can be described by means of a function know as Metcalfe's Law. Robert Metcalfe observed that new technologies are valuable only if many people utilize them. Specifically, utility, or the usefulness of the network equals the square of how many users. The more people make use of an item of software, a network, a special standard, a game, or a novel, the more valuable it becomes and the more new users it will attract, increasing both the utility and also the speed of its own adoption by still more users.
Efficient networks. Efficiency in a network is concerned with maximizing the quantity of non-redundant contacts in a network so as to increase the number of structural holes per performer in the network. It is conceivable by linking only with a main actor in each bunch that is redundant to get rid of redundant contacts. This saves time and effort that might generally have been spent on keeping contacts that are redundant.
Effective networks. Effectiveness in a network is concerned with "distinguishing primary from secondary contacts in order to focus resources on maintaining main contacts" (Burt, 1992:21). Building a powerful network means building relationships with celebrities that lead to the most amount of secondary actors that are other, while still being non-redundant.
Feeble ties. In his 1973 paper entitled "The strength of weak ties", Mark Granovetter (Granovetter, 1973) developed his theory of weak ties. The theory states that because a person who has strong ties in a bunch more or less understands what the other people in the bunch understand (e.g. in close friendships or a board of directors), the effective spread of advice relies on the weak ties between people in different clusters. "Poor ties are crucial to the flow of data that integrates otherwise disconnected social clusters into a broader society" (Burt, 1992). Structural holes describe the same phenomena as weak ties because both emphasize the importance of entrepreneurs to fill the opening between different clusters and non-redundant contacts. Yet, structural hole theory goes one step further and stresses that what makes the gap significant is not the weakness of the tie but the structural hole over which it spans. Building and maintaining weak ties over big structural holes enhances advice advantages and creates networks that are even better and effective.
To attain networks full of information advantages it is critical to create large networks with non-redundant contacts and many weak ties. Some of these information advantages are:
More contacts are included in the network, which indicates that you've got access to a larger volume of information.
Non-redundant contacts ensure this vast quantity of information is diverse and independent.
Linking with the primary performer in a cluster implies a link with all the central player because cluster. This guarantees you will be one of the initial individuals to be notified when new information becomes available.
Now, once structural holes are identified and the network is optimized to provide maximum advice benefits, an essential question is how these advantages could be used to capitalize on the opportunities in the network. Control benefits answer this question. Structural holes provide advice advantages, they also give actors a certain amount of control in negotiating their relationships with other celebrities. To understand the role of structural holes in this regard, it is vital to understand the concept of tertius gaudens. Taken from the task of George Simmel, the tertius gaudens is defined as "the third who benefits" (Simmel, 1923). It describes the individual who gains from the disunion of two others. For example, when two individuals need to buy the exact same product, the seller can play with their bids against one another to get a greater cost for this product. Structural holes are the setting in which the tertius gaudens operates. An entrepreneur stepping right into a structural hole in the right time could have the power and the control to negotiate the relationship between the two celebrities divided by the hole, most often by playing their demands.
Where structural holes provide a platform for tertius strategies, advice is the substance with which the strategy is performed (Burt, 1992). Timely accurate and useful advice delivered between two non-redundant contacts at the correct time creates an enormous opportunity to negotiate and control the relationship between these celebrities. That's the power of structural holes, and that is the reason why the theory is so relevant for social networks on the net. - Kangen Water Review