Brokerage in Networks

by

Roslina Yong, Yong H. Kim, Yonghoon G. Lee

• LAST REVIEWED: 24 July 2018
• LAST MODIFIED: 24 July 2018
• DOI: 10.1093/obo/9780199846740-0146

Introduction

Networks refer to a web of social relations by which social actors—be they individuals or organizations—exchange knowledge and resources, tangible or intangible. Brokerage occurs when these actors—often noted as brokers—connect otherwise disconnected alters. Brokerage is important in network research for several reasons. Brokers play an integral role in connecting different communities of actors, moving knowledge and information, or intermediating resource exchanges. In doing so, brokers take various types of advantages based on their access to diverse information and their opportunities to arbitrage resource exchanges. These advantages have been shown to help brokers gain competitive advantages. However, such advantages might come at a cost, especially because brokers sometimes need to handle and work with alters who hold incompatible expectations with each other, or with alters who wish to disintermediate brokers. Given these implications of brokerages on various types of advantages, another set of works focuses on where do brokers come from and how brokerage changes over time. Both dispositional characteristics and situational conditions are known to help social actors to engage in brokerage activities. However, given the inherent challenges in brokerage acts, actors find difficult to persist as brokers, ensuing a complex dynamics on the brokerage.

Foundational Works

Simmel 1950 forms the basis of research on networks and brokerage. Simmel introduces the idea of the third actor as the tertius gaudens—the “third who benefits,” a concept that is accepted and assumed by many existing studies on network brokerage. Burt 1992 furthers the understanding of this triadic relationship by introducing the concept of structural holes—an environment where the tertius communicates information between unconnected contacts. His work also provides insight into the strategic advantages of spanning structural holes and bridging positions.

• Burt, R. S. Structural Holes: The Structure of Competition. Cambridge, MA: Harvard University Press, 1992.

  Burt introduces the concept of structural holes—an environment for tertius strategies, where the tertius transfers information between unconnected contacts. Structural holes provide brokers with competitive advantage by conferring information and control benefits. Information benefits refer to access to a wide range of information in a timely manner. Control benefits refer to having an upperhand in deciding the terms and conditions of resource exchanges.

• Simmel, G. “The Triad.” The Sociology of Georg Simmel. Edited by Kurt H. Wolff, 145–169. New York: Free Press, 1950.

  Simmel elaborates on three types of triadic relationships, and emphasises on the third social element. The first kind was the nonpartisan where the third actor strengthens the relationship between the other two actors. The second kind is the tertius gaudens. Here, the third actor maintains the separation between the other two actors, thus benefiting as a broker. The third kind is the divide et impera, where the third actor sows discord between the other two actors to acquire a dominating position.