economicsstudysheet - Social networks Relationship Types...

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Social networks Relationship Types Undirected Appeared in a movie together shop at the same store, entered into a business contract together Directed Likes, gave gift to, sent economic aid, bought from, sol to, gave loan to, is brother to, sends diplomats to, owes a favor to RELATIONS AMONG FIRMS- Arms-Length Standard business relations: formalized, short term, self interested Embedded Closer relations, often negotiated informally on implicit understandings, often include personal ties in addition to business ADVANTAGES AND DISADVENTAGES IN EMBEDDED TIES Ad- Trust, information, joint problem-solving Dis- Too heavy reliance on one partner, stagnant relations, slow to innovate CONCLUSIONS: BEST PERFORMING FIRMS HAVE MIS OF TIES—CAN’T HAVE TOO MANY “EMBEDDED” TIES Valued Strength of friendship, how many papers coauthored, how much aid sent, number of flights between cities, how much stock sold Networks- are made into a set of nodes: people, firms, organizations, countries, etc. Set of ties: relationships among nodes (also called links, edges) TIE STRENGTH The strength of an interpersonal tie is a combination of the Amount of time, emotional intensity, intimacy and reciprocal services that characterize a tie. A tie can be absent, weak or strong IMPLICATIONS OF STRONG TIES Individuals a and b. The set s= (c, d, e…) of all individuals with ties to either or both of them Hypothesis: The stronger the tie between A and B the larger the proportion of individuals in S to whom they will both be tied. BRIDGE-line in a network that provides the only path between two nodes If forbidden triad is absent, strong tie cannot be a bridge. Not all weak ties are bridges but all bridges are weak ties. Weak ties spread information to more people across wider social distances than strong ties. For a job searcher weak ties should bring in Greater quantity of information Greater diversity of information
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Connectedness-example 6 degrees of Kevin Bacon STRONG AND WEAK TIES Strong ties are clustered-Duncan watts More likely to form ties to people with whom you have ties in common. The more friends you share the more likely you are to have a tie. WEAK TIES ARE RANDOM Sometimes we know someone else that no one else knows Meet in a bar, on an airplane, etc Social CAPITAL- Social resources that can be used to get economic return-friends, families, favors, goodwill, obligations. People with high social capital have access to information and influence that can help them achieve goals. Social capital often embodied in networks Social capital usually accumulated for non-economic reasons STRUCTURAL HOLES-the absence of a ties, individuals who form bridges are at an advantage GUANXI IN CHINA Connection, relationship, sphere of influence, network Traditionally, negative implications: cronyism, nepotism, corruption Characteristics of guanxi Intimacy or familiarity Trustworthiness Reciprocal obligation GUANXI IN CENTRALIZAED GOVT access to goods and resources allocated hierarchically-including
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economicsstudysheet - Social networks Relationship Types...

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