Weak network ties, strong impact

Bridging holes in networks seems to enhance business performance, at least when innovation is important. The same seems to be true for individual people’s performance at least for people in roles where the orchestration of new ideas yields value. This is a quick review of some literature on the impact of network structures - so you can use it for your company, and yourself.

Business opportunities or cost optimization can spawn from bridging structural holes in communication networks. Organizations with numerous brokers can harness resources and business insights that can drive performance and maintain a competitive edge.

For nascent firms, where growth is integral to success, diffused communication networks were associated with 10% higher revenue. Firms with such communication networks have been found to better identify growth opportunities or cost reductions[i], better optimize resources (financial or strategic) necessary for growth, and help performance[ii]. Bridging structural holes within communication lines was associated with about a 37% increase in market share, and network brokerage enhances internal firm capabilities which also drives performance[iii].

Employees who have better access to new, changing or even contradictory information are given an advantage in staying on top of business trends and can generate valuable ideas. Acting as the pivot point of knowledge flow, brokers themselves can improve their performance and obtain promotional or compensation benefits. Research results show the possible impact[iv]. Also, research using LinkedIn data over five years, completed in 2022, shows that weak ties can help people find new jobs.

The more concentrated a manager’s contacts were within their network, the less positive their annual performance was rated. Network structures drive promotions and compensation among employees: managers brokering connections across fragmented groups had a 68% chance of receiving a promotion or salary increase, compared to 28% for managers with a limited circle of densely connected colleagues.

The impact was strongest among senior employees, showing a significant negative relationship between the average salary of senior managers and the degree of diverse connections in their networks. This negative effect became even larger among Vice Presidents and Directors.

The relationship between brokerage and an employee’s propensity to innovate provides additional insights: managers with more expansive (broad, diverse) networks produced ideas that had a low probability of being discarded (14%) by upper management; managers whose networks were more constrained were less likely to produce valuable ideas and had their ideas were discarded by upper management 43% of the time.

I discuss the "so-what", and the "how" in two other blogs here and here.

This is an extract from a chapter of "Augmented Collective Intelligence: human-AI networks in a virtual future of work" publicly and freely available at www.supermind.design

Thanks to Jacqueline Minor for helping consolidate the insight.

[i] Batjargal, Bat. 2013. Institutional Polycentrism, Entrepreneurs' Social Networks, and New Venture Growth

[ii] Hite, J. M., & Hesterly, W. S. 2001. The evolution of firm networks: From emergence to early growth of the firm

[iii] Zaheer, A., & Bell, G. G. (2005). Benefiting from network position: Firm capabilities, structural holes, and performance.

[iv] Source: Burt, Robert. 2004. Structural Holes and Good Ideas