The Network Paradigm in Organizational Research: A Review and Typology

TL;DR: This paper reviewed and analyzed the emerging network paradigm in organizational research and developed a set of dimensions along which network studies vary, including direction of causality, levels of analysis, explanatory goals, and explanatory mechanisms.

About: This article is published in Journal of Management.The article was published on 2003-12-01 and is currently open access. It has received 2845 citations till now. The article focuses on the topics: Organizational network analysis.

Summary

Review of Current Research

• The review is organized by the following emic categories: social capital, embeddedness, network organizations, board interlocks, joint ventures and inter-firm alliances, knowledge management, social cognition, and a catch-all category the authors have labeled "group processes.".
• Embeddedness, network organization, board interlocks and joint ventures/alliances are becoming so closely intertwined that they could be reviewed together.
• It is their feeling that there are enough differences to keep them separate.
• The authors note that the ordering of categories is largely macro to micro; the notable exception is social capital which is mostly studied at the individual level (at least in organizational research), but which has a macro side as well.

Social Capital

• Probably the biggest growth area in organizational network research is social capital, a concept that has symbiotically returned the favor and helped to fuel interest in social networks.
• While much of the earlier work on these organizational themes generally characterized social capital as ties to resource-filled others, the publication of Burt's structural holes book (1992) redirected attention to the shape or topology of an actor's ego-network.
• The ties created by such associations as organized bowling leagues are thought to knit together a society, ultimately contributing to a society's ability to prosper.
• Seidel et al. (2000) suggest that minorities have fewer ties (i.e., social capital) in the organization, and that people with fewer ties have less successful salary negotiations.

Embeddedness

• Like social capital, embeddedness has had fad-like success among organizational scholars, becoming enormously popular shortly after Granovetter's (1985) discussion of the concept.
• In particular, Granovetter painted economic exchanges as embedded in social networks, and saw this as steering a middle road between over-socialized (role-based) and under-socialized (purely instrumental rational actor) approaches to explaining economic action.
• More recent empirical work has focused on the performance benefits of embedded ties, which are often associated with closer and more exclusive business relationships (Uzzi, 1997) .
• Some have gone as far as explicitly including utility maximization functions in simulation models of embeddedness (Montgomery, 1998) .

Network Organizations and Organizational Networks

• Intertwined with the embeddedness literature is the literature on network organization (see Baker & Faulkner, 2002; Podolny & Page, 1998, for reviews) .
• Much of this research argued that as commerce became more global, hypercompetitive and turbulent, both markets and hierarchies displayed inefficiencies as modes of organizing production (Miles & Snow, 1992; Powell, 1990) .
• An early debate in this research tradition was whether network organizations represented an organizational form intermediate between markets and hierarchies (Eccles, 1981; Thorelli, 1986; Williamson, 1991) or whether they represented an entirely new organizational form characterized by unique logics of exchange (Powell, 1990) similar to those described in research on embeddedness (see above).
• While the latter perspective seems to have prevailed, one can still ask a more fundamental question about whether the form really exists or is just a reification of organizational networks (cf., Podolny & Page, 1998) .
• Attempts to bring order to this area continue (Baker & Faulkner, 2002) .

Board Interlocks

• Empirical research on board interlocks (ties among organizations through a member of one organization sitting on the board of another) has a long history in sociology and management (for an excellent review, see Mizruchi, 1996) .
• Early board interlock work was dominated by resource dependence and class perspectives which saw interlocks as a means to (a) manage organizational dependencies (Pfeffer, 1972; Pfeffer & Salancik, 1978) and (b) maintain power and control for social elites (Domhoff, 1967; Palmer, 1983; Pennings, 1980; Useem, 1979) .
• While the primary objective in both research streams was identifying the causes of interlock ties (Pfeffer, 1972; Palmer, 1983; Zajac, 1998) , some of this early research used interlocks to predict similarity in organizational behaviors (Mizruchi, 1989) .
• Several studies highlight the uncertainty reduction benefits of interlocks by arguing that they are more important in uncertain than certain environments (Carpenter & Westphal, 2001; Geletkanycz & Hambrick, 1997) .
• One development in this literature, paralleling developments in the social capital literature, is that researchers are beginning to study the contingencies that determine when interlocks have the effects they do (Davis & Greve, 1997; Gulati & Westphal, 1999; Haunschild & Beckman, 1998) .

Joint Ventures and Inter-firm Alliances

• Over the last twenty years, research on joint ventures and inter-firm alliances has proliferated (for a review, see Gulati, 1998 ).
• A variety of approaches are used to explain why organizations form joint ventures and alliances and how they choose their partners.
• A third perspective focuses on what can be learned from alliance partners.
• These ideas are of course identical to the information side of the social capital literature, a point made explicitly by Burt (2003) .

Knowledge Management

• The term "knowledge management" may soon disappear as practitioners rush to disassociate themselves from the relatively unsuccessful effort to use technological solutions to help organizations store, share and create new knowledge.
• The current mantra is that knowledge creation and utilization are fundamentally human and above all social processes (Brown & Duguid, 2000; Davenport & Prusak, 1998) .
• The basic idea is that new practices and concepts emerge from the interaction of individuals engaged in a joint enterprise; the classic example is members of a functional department, such as claims processors in an insurance firm.

Social Cognition

• The term "social cognition" could easily include the transactional memory research reviewed above.
• One stream of research takes as premise that cognition of the network determines interaction, and interaction in turn changes the network (Carley & Krackhardt, 1996) .
• Hierarchical position, and centrality in the network affected the accuracy of her perception of the network (see also Kenny, 1994) .
• Another approach seeks to uncover patterns in perceptual errors.
• The social cognition field clearly has much to offer the field of transactive memory, since groups can exploit the knowledge of their members only to the extent that their cognitive maps of 'who knows what' and 'who knows who knows what' are accurate.

Group Processes

• A well-established area of research, with roots in classical social psychology (e.g., Allen, 1977; Homans, 1950; Newcomb, 1961) , is concerned with how physical proximity, similarity of beliefs and attitudes, amount of interaction, and affective ties are interrelated.
• On the positive side, interacting exclusively with similar others is thought to be efficient to the extent that similarity (a) facilitates transmission of tacit knowledge (Cross, Borgatti & Parker, 2001, p. 229) , (b) simplifies coordination (Ancona & Caldwell, 1992; O'Reilly, Caldwell & Barnett, 1989) , and (c) avoids potential conflicts (Pelled, Eisenhardt & Xin, 1999; Pfeffer, 1983) .
• At the individual level, homophily is seen as a mechanism maintaining inequality of status for minorities within organizations.
• Carley (1991) uses agent-based models to investigate group stability, while Zeggelink (1994 Zeggelink ( , 1995) ) examines the growth of friendship networks, and Macy and Skvoretz (1998) simulate the development of trust networks.

Dimensions of Network Research

• The authors examine the dimensions along which network studies vary, including direction of causality, level of analysis, explanatory mechanisms, and explanatory goals.
• The first two dimensions, while important, are more methodological than the last two, and the authors do not use them to actually classify work.
• Rather, they are included here in order to point out some peculiarities of network research, such as the relative dearth of work on network antecedents.
• The last two dimensions are more substantive, and the authors use them as the basis for a typology of network research (focusing on network consequences).
• 'Explanatory mechanisms' refers to how network ties are seen to function, whereas 'explanatory goals' refers to what exactly is being explained.

Direction of Causality

• A fundamental dimension distinguishing among network studies is whether the studies are about the causes of network structures or the consequences.
• The bulk of network research has been concerned with the consequences of networks.
• One reason for this has to do with networks being a relatively young field whose first order of business was to achieve legitimacy.
• Hence, studies that examine the consequences of networks are typically consistent with the structuralist agenda.

Levels of Analysis

• In the network case, there are some subtleties that make the dimension worth attending to.
• Dyadic hypotheses essentially predict the ties of one social relation with the ties of another relation measured on the same actors.
• In network research, the situation is subtly and deceptively different, because the obvious levels of analysis (dyadic, actor and network) do not necessarily correspond in a simple way to the type of entities being studied.
• But now suppose the authors do a network analysis of alliances among biotech firms, hypothesizing that firms with more alliance partners will be more successful (e.g., Powell et al., 1996) .
• Surprisingly, the authors are now back at the actor level of analysis, probably invoking the same arguments that were used for the first actor-level hypothesis.

Consequences of Networks

• This research can be fruitfully cross-classified according to two classic dimensions: explanatory goals and explanatory mechanisms.
• Social capital studies seek to explain variation in success (i.e., performance or reward) as a function of social ties, whereas diffusion and social influence studies seek to explain homogeneity in actor attitudes, beliefs and practices, also as a function of social ties.
• The benefits to the actor are principally a function of the topology of the local network, and ties are implicitly conceived of as forming a leverageable structure (Markovsky, Skvoretz, Willer, Lovaglia & Erger, 1993) .
• Studies of this type seek to explain common attitudes and practices in terms of similar network environments, usually conceptualized as centrality or structural equivalence (e.g., Galaskiewicz & Burt, 1991) .

Conclusion

• In addition, the authors have proposed a typology of network research, which cross-classifies network studies according to the classic dimensions of explanatory mechanisms and explanatory goals or styles.
• The dimension of explanatory goals/styles distinguishes between an orientation toward modeling variation in performance and other value-laden outcomes, and an orientation toward modeling homogeneity in actor attributes, such as attitudes or practices.
• This dimension is related to the classic tension between agency and structure in organization studies.
• A big change in the 1990s was the growth of research in the former category, reflecting a strong shift toward agency in the traditional balance between agency and structure in network research.
• The dimension of explanatory mechanisms distinguishes between structuralist and connectionist types of explanations (which the authors trace to underlying conceptions of ties as functioning as girders vs. pipes), and maps onto a traditional debate in network diffusion research between cohesive/relational and structural equivalence sources of adoption.

Figures

Table 1 Typology of research on consequences of network factors

Figure 1. Exponential growth of publications indexed by Sociological Abstracts containing “social network” in the abstract or title.

Frequently asked questions

Q1. What contributions have the authors mentioned in the paper "The network paradigm in organizational research: a review and typology" ?

In this paper, the authors review and analyze the emerging network paradigm in organizational research. The authors begin with a conventional review of recent research organized around recognized research streams. Next, the authors analyze this research, developing a set of dimensions along which network studies vary, including direction of causality, levels of analysis, explanatory goals, and explanatory mechanisms. The authors use the latter two dimensions to construct a 2-by-2 table cross-classifying studies of network consequences into four canonical types: structural social capital, social access to resources, contagion, and environmental shaping. 

Q2. What have the authors stated for future works in "The network paradigm in organizational research: a review and typology" ?

In addition, the authors have proposed a typology of network research, which cross-classifies network studies according to the classic dimensions of explanatory mechanisms and explanatory goals or styles. What is new here is that this seemingly arcane distinction may be traceable to different underlying conceptions of how ties work ( girders vs. flows ), and applies to all kinds of network research, including distinguishing between the two major variants of social capital theory. 

Q3. What is the dimension of explanatory goals/styles?

The dimension of explanatory goals/styles distinguishes between an orientation toward modeling variation in performance and other value-laden outcomes, and an orientation toward modeling homogeneity in actor attributes, such as attitudes or practices. 

Q4. What is the main focus of the research on homophily?

Recent organizational research on homophily has focused on its effects on group and individual performance outcomes (e.g., Ibarra, 1992; Krackhardt & Stern, 1988; Reagans & Zuckerman, 2001). 

Q5. What is the reason why sociologists began to dominate network research?

Since sociologists began to dominate network research in the 1970s, the proposition that an actor’s position in a network has consequences for the actor has occupied a central place in network thinking. 

Q6. What was the reason for publishing papers on how networks came to be?

Until networks had legitimacy, there was little point in trying to publish papers on how networks come to be or change over time. 

Q7. What is the difference between social capital and diffusion studies?

Social capital studies seek to explain variation in success (i.e., performance or reward) as a function of social ties, whereas diffusion and social influence studies seek to explain homogeneity in actor attitudes, beliefs and practices, also as a function of social ties. 

Q8. Why do the authors include older references in their review?

The authors also note that while the objective is to review current research (primarily the last five years), the authors include older references in order to anchor a stream of work in a research tradition.