Management Brokerage in Networks
by
Roslina Yong, Yong H. Kim, Yonghoon G. Lee
  • LAST REVIEWED: 14 December 2022
  • 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.

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    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.

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

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    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.

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Antecedents and Origins of Network Brokerage

Given the competitive advantages that network brokerage can provide, are some individuals more likely to be brokers than others? Burt 2012 finds that a person is more likely to be a broker in one setting if he or she is one in another setting. If so, then what are the factors that encourage network actors to become brokers? Burt, et al. 1998 suggests that there is an association between personality and structural holes and find that brokers are often characterized by traits such as independence and care for information accuracy. Kalish and Robins 2006 supports this suggestion by finding that brokers tend to be individualists, but they also find that brokers tend to be more neurotic and have greater internal locus of control. O’Connor and Gladstone 2018 demonstrates that attractive people tend to be and prefer to be brokers in their social networks. Further, Fang, et al. 2015 demonstrates that brokerage can be predicted by the trait of self-monitoring above and beyond the Big Five personality traits. This relationship between self-monitoring and brokerage is stronger for highly empathic persons, as demonstrated by Kleinbaum, et al. 2015. Personality attributes aside, the emergence of network brokerage can also emerge from factors related to an individual’s surroundings. For example, Kleinbaum 2012 argues that brokerage comes with accumulated relationships with former co-workers and friends’ friends and is more likely available to organizational misfits. Investigating knowledge transfer of return migrants, Wang 2015 finds that the success of knowledge transfer and the ability to broker depend on factors such as host- and home-country embeddedness and home-country’s state of xenophobia. Network brokerage also emerges from factors related to the past. Lee 2010 finds that past performance and actor-level heterogeneity predict brokerage patterns. Sytch, et al. 2012 studies the effect of proximate network structures on the emergence of new briding ties. Lastly, Zaheer and Soda 2009 provides evidence to show that structural holes emerge from past structural holes.

  • Burt, R. S. “Network-Related Personality and the Agency Question: Multirole Evidence from a Virtual World.” American Journal of Sociology 118.3 (2012): 543–591.

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    This study examines the presence of agency in building ego-network drawing on an analytical opportunity to examine multiple networks created by the same individual in a virtual world. Burt finds that individuals build similar networks in their different roles. However, he also finds that this network consistency makes no contribution in determining achievement. Rather, achievement is predicted by experience and the role-specific network.

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  • Burt, R. S., J. E. Jannotta, and J. T. Mahoney. “Personality Correlates of Structural Holes.” Social Networks 20.1 (1998): 63–87.

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    This paper makes an early attempt to explore the association between personality and structural holes. The authors find that personality varies systematically with structural holes. Structurally least constrained individuals are independent persons who care about the accuracy of their information on colleagues, have experience with resistance, and appreciate persuading others. Conversely, constrained individuals score high on conformity and obedience, do well with social support from colleagues, are risk-averse, focus on assignment technicalities, and attracted to stability.

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  • Fang, R., B. Landis, Z. Zhang, M. H. Anderson, J. D. Shaw, and M. Kilduff. “Integrating Personality and Social Networks: A Meta-Analysis of Personality, Network Position, and Work Outcomes in Organizations.” Organization Science 26.4 (2015): 1243–1260.

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    Using a meta-analytic approach, this study presents an integrated view of the impact that personality and network position have job performance and career success. The authors find that (i) self-monitoring predicted in-degree centrality and brokerage above and beyond the Big Five personality traits; (ii) compared with brokerage, in-degree centrality was more strongly associated with job performance and career success; and (iii) personality predicted job performance and career success and more importantly this relationship is partially mediated by people’s network position.

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  • Gould, R. V., and R. M. Fernandez. “Structures of Mediation: A Formal Approach to Brokerage in Transaction Networks.” Sociological Methodology 19 (1989): 89–126.

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    This paper attempts to clarify the concept of brokerage. The authors achieve this through developing the theory of brokerage behavior in social structures defined by the transfer of resources. Five categories of brokerage are identified and quantitative measures for each category are created to test whether the acquisition of a brokerage position is due to a random distribution of transfer relationships or due to underlying social systems.

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  • Kalish, Y., and G. Robins. “Psychological Predispositions and Network Structure: The Relationship between Individual Predispositions, Structural Holes and Network Closure.” Social Networks 28.1 (2006): 56–84.

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    This paper explores the influence of psychological predispositions on individuals’ network structure. Results reveal that there are three major components explaining strength-of-weak-ties and structural holes theories. First, individuals embedded in closed networks of weak connections perceive themselves as vulnerable to external forces. Second, individuals spanning structural holes are individualists, have greater internal locus of control, and score higher on the neuroticism scale. Third, individuals in cohesive networks with weak structural holes classify people according to group members, are extraverts and less individualistic.

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  • Kleinbaum, A. M. “Organizational Misfits and the Origins of Brokerage in Intrafirm Networks.” Administrative Science Quarterly 57.3 (2012): 407–452.

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    Introducing a novel application of sequence-analytic methods and a new instrument for measuring brokerage spanning across observable boundaries, this study investigates the effect of career processes on the emergence of brokerage positions. Kleinbaum argues that brokerage emerges from having an atypical career path, because such a career trajectory helps to accumulate former co-workers and friends’ friends who are part of a different communication circles. He finds that when compared with individuals who follow more conventional career paths, organizational misfits have more access to brokerage opportunities.

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  • Kleinbaum, A. M., A. H. Jordan, and Audia. “An Altercentric Perspective on the Origins of Brokerage in Social Networks: How Perceived Empathy Moderates the Self-Monitoring Effect.” Organization Science 26.4 (2015): 1226–1242.

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    Using an altercentric approach, this study investigates the influence of other-perceived personality and relational behavior on the shaping of an individual’s network structure. Building on past literature about the relationship between self-monitoring and brokerage, the authors argue that this relationship is stronger for those who are perceived as highly empathic individuals. This is attributed to the higher tendency of others reciprocating the social interactions of high self-monitors with higher levels of empathy.

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  • Lee, Jeongsik “Jay”. “Heterogeneity, Brokerage, and Innovative Performance: Endogenous Formation of Collaborative Inventor Networks.” Organization Science 21.4 (2010): 804–822.

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    In this study, the author argues for the impact of past performance on actors’ network positions. Using the data on collaboration network of U.S. biotech inventors, he finds that high performing inventors tend to have collaborations that enhance brokerage. He also finds support for the argument that individual heterogeneity explains brokerage patterns, mediating the association between position and performance.

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  • O’Connor, K. M., and E. Gladstone. “Beauty and Social Capital: Being Attractive Shapes Social Networks.” Social Networks 52 (2018): 42–47.

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    This study explores physical appeal as a contingency factor to brokerage. The authors argue that attractive individuals have a greater propensity to prefer brokerage positions as compared to less attractive individuals, and that they have networks with greater brokerage potential. Results confirm these hypotheses, demonstrating that compared to less attractive individuals, attractive individuals have a greater propensity to choose advantageous broker positions. Attractive persons also tend to have networks of low density.

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  • Sytch, M., A. Tatarynowicz, and R. Gulati. “Toward a Theory of Extended Contact: The Incentives and Opportunities for Bridging across Network Communities.” Organization Science 23.6 (2012): 1658–1681.

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    This paper explores the antecedents of new bridging ties. It argues that the number of new bridging ties a firm enters increases with (i) interaction between its current local and bridging ties; (ii) number of bridging ties of firms of which it relies on; and (iii) number of accessible bridging compared to local partners. The authors find that dynamics of proximate network structures have a positive effect on a firm’s subsequent number of bridging ties.

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  • Wang, D. “Activating Cross-Border Brokerage: Interorganizational Knowledge Transfer through Skilled Return Migration.” Administrative Science Quarterly 60.1 (2015): 133–176.

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    Wang investigates how return migrants transfer knowledge from host to home countries. He argues that the success of knowledge transfer relies on returnees’ embeddedness in host and home countries and tests for circumstances influencing returnees’ the ability to broker knowledge transfer. The study confirms that host- and home-country embeddedness help successful knowledge transfer. Success also depends on the presence of other returnees, the similarity between returnee’s industry, the returnee’s home-country backgrounds, and their home-country’s level of xenophobia.

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  • Zaheer, A., and G. Soda. “Network Evolution: The Origins of Structural Holes.” Administrative Science Quarterly 54.1 (2009): 1–31.

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    This study investigates the origins of structural holes and proposes that brokerage originate from interaction between structural constraints and network opportunities. Studying the network positions of teams developing creative contents, this study reveals that structural holes emerge from past structural holes and the status and centrality of teams that members are previously from. It demonstrates that teams span fewer structural holes if their members are from cohesive teams and if members’ past teams produced comparable content. Lastly, teams spanning structural holes perform better.

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Externalities of Network Brokerage

Following Burt 1992 (cited under Foundational Works), much research has been conducted to explore and document the outcomes of network brokerage. In his original work, Burt 1992 (cited under Foundational Works) proposes that structural holes enhance information and control benefits. A set of following studies contribute not only to this idea that network brokerage gives competitive advantage, but also suggest other positive outcomes of network brokerage such as economic development, leadership emergence, and improved group performance. While much of the literature has focused on the advantages of network brokerage, more recent studies identify the dark side of network brokerage, giving an alternative view of network brokerage. Stovel and Shaw 2012 also gives an overview of the significances of network brokerage.

  • Stovel, K., and L. Shaw. “Brokerage.” Annual Review of Sociology 38.1 (2012): 139–158.

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    This review article covers significance of the brokerage concept in sociological research. The authors identify three themes in the brokerage literature. First, informal relationships in brokerages make an important contribution in linking otherwise unconnected parts of a population. Second, brokers usually gain advantage from its position in the triadic relationship. Third, the characteristics of brokerage is highly related to the macro-level consequences.

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Information Benefits: Knowledge Transfer and Innovation

The first type of positive outcomes of network brokerage is information benefits. The following studies largely focus on the effect of network brokerage on knowledge transfer and innovativeness. As elaborated in Burt 2004, brokers are exposed to diverse thoughts and behaviors, which they translate to a variety of positive outcomes such as generating creative ideas. De Vaan, et al. 2015 reveals that teams in structural folds produce more creative products. Rodan 2010 also finds that heterogeneity of knowledge available to managers through brokerage leads to more innovativeness, and thus better job performance scores. Hargadon 1998 introduces knowledge brokers as firms that innovate through the brokerage of knowledge. People who span multiple groups to facilitate knowledge transfer are appreciated in the communities that value innovation, as Fleming and Waguespack 2007 finds. Others have focused on finding the boundary conditions in which network brokerage enhances information benefits, Obstfeld 2005 finds that individuals’ tertius iungens orientation and network brokerage increase innovation involvement. Vasudeva, et al. 2013 further demonstrates that innovation benefits are highest when the broker or its partners are based in corporatist countries. Shipilov 2009 demonstrates that firms with broader experience absorb heterogeneous information better. Burt 2007 introduces the idea of secondhand brokerage—the transfer of information between one’s indirect contacts, and finds direct contacts receive greater returns than indirect contacts. Nevertheless, Galunic, et al. 2012 finds that investment bankers can gain advantages when connected to higher rank colleagues with sparse social networks.

  • Burt, R. S. “Structural Holes and Good Ideas.” American Journal of Sociology 110.2 (2004): 349–399.

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    The author proposes that since thought and behavior are more similar within than between groups, brokerage provides social capital by exposing brokers to alternative thoughts and behaviors. Examining networks of managers in an American electronics company, the author found that between-group brokers are more likely to receive rewards, positive performance evaluations, raises, and have good ideas. These brokers provide more ideas, and these ideas are rarely rejected and frequently evaluated as useful.

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  • Burt, R. S. “Secondhand Brokerage: Evidence on the Importance of Local Structure for Managers, Bankers, and Analysts.” Academy of Management Journal 50.1 (2007): 119–148.

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    This study provides the concept of secondhand brokerage—the transfer of information between one’s indirect contacts. The author argues that direct contacts provide greater returns than indirect contacts and that returns are more concentrated in direct contacts with sparser networks. Analyzing populations of managers, investment bankers, and analysts, the author finds that, consistent with the hypotheses, performance is greater for direct compared to indirect contacts. However, there is insufficient evidence to demonstrate this second brokerage argument for sparser networks.

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  • de Vaan, M., D. Stark, and B. Vedres. “Game Changer: The Topology of Creativity.” American Journal of Sociology 120.4 (2015): 1144–1194.

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    This study looks at the sociological factors facilitating the production of game changers in creative teams. The authors argue that creative teams perform the best when their members are from overlapping cohesive groups but cognitively diverse—that is, when teams have structural fold. Investigating teams for developing video games and career histories of video game developers, the authors found that cognitive distance and structural folding drive and create productive tension that help teams to create “game changers.”

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  • Fleming, L., and D. M. Waguespack. “Brokerage, Boundary Spanning, and Leadership in Open Innovation Communities.” Organization Science 18.2 (2007): 165–180.

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    This article identifies social capital that help people to emerge as leaders in open innovation communities. Results show that, consistent with engineering cultural norms, the likelihood of emerging as a leader increases with technical contribution. The likelihood also increases with internal community boundary spanning. However, social brokerage moderates this relationship, such that when boundary spanners are also brokers in co-authorship network, their chance of becoming a leader gets lower.

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  • Galunic, C., G. Ertug, and M. Gargiulo. “The Positive Externalities of Social Capital: Benefiting from Senior Brokers.” Academy of Management Journal 55.5 (2012): 1213–1231.

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    This article explores the benefits of second-order social capital. The authors argue that actors add more value to others when they are connected with higher rank brokers and when their leader has a sparse social network. The study reveals that while a banker’s social capital does not help add value to others who seek his or her advice, a banker helps add value to others when he or she is connected to higher rank colleagues and leaders with sparse social networks.

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  • Hargadon, A. B. “Firms as Knowledge Brokers: Lessons in Pursuing Continuous Innovation.” California Management Review 40.3 (1998): 209–227.

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    This article considers knowledge brokers as firms that occupy more than one market and technology domain and innovate through the transfer of knowledge to where it is unknown. Using successful knowledge brokering organizations as case studies, the article summarizes four important techniques that facilitate innovation by knowledge brokering: (i) exploring new territories, (ii) learning, (iii) discovering new links, and (iv) integrating new ideas with current ideas.

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  • Obstfeld, D. “Social Networks, the Tertius Lungens Orientation, and Involvement in Innovation.” Administrative Science Quarterly 50.1 (2005): 100–130.

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    This study investigates the micro-processes involved in the social networks of individuals who engage in organizational innovation and their strategic orientation toward bridging ties between other individuals. Obstfeld hypothesizes that an individual’s tertius iungens orientation and social network sparseness are positively associated with innovation involvement. He also suggests that an individual’s innovation involvement increases with his or her depth in technical knowledge and diversity of social knowledge.

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  • Rodan, S. “Structural Holes and Managerial Performance: Identifying the Underlying Mechanisms.” Social Networks 32.3 (2010): 168–179.

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    This paper attempts to distinguish among the various theoretical mechanisms that explain the association between structural holes and performance of managers. These theoretical mechanisms are: autonomy, competition, information brokering, opportunity recognition, and innovativeness. Results suggest that brokers do not manipulate others to take advantage of individual autonomy, generate competition, broker information, nor advance through the recognition of opportunities. Instead, heterogeneity of knowledge available to managers results in more innovativeness and as a result greater job performance scores.

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  • Shipilov, A. V. “Firm Scope Experience, Historic Multimarket Contact with Partners, Centrality, and the Relationship between Structural Holes and Performance.” Organization Science 20.1 (2009): 85–106.

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    This study of UK investment banks examines the factors that influence the relationship between firms’ network positions and their performance. The author argues that (i) firms with broader experience can better absorb heterogeneous information; (ii) firms with more historic multimarket contact with partners can lower risks of partner non-cooperation; and (iii) greater bargaining power can help firms with low centrality to improve performance.

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  • Vasudeva, G., A. Zaheer, and E. Hernandez. “The Embeddedness of Networks: Institutions, Structural Holes, and Innovativeness in the Fuel Cell Industry.” Organization Science 24.3 (2013): 645–663.

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    This study claims that state institutions moderate the association between network positions and innovation. The authors argue that differences in institutional logics result in brokerage positions producing varying effects on innovativeness, such that innovation benefits are highest when the broker or its partners are based in corporatist countries or are under specific broker and partner corporatism. These arguments were supported through a longitudinal study in the fuel cell industry.

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Control Benefits: Power, Politics, and Influence

The second type of advantages in network brokerage is control benefits. Control benefits refer to having an advantage at setting the terms and conditoins of exchanges (Burt 1992, cited under Foundational Works). Up to now, researchers have explored that brokers gain advantages in negotiations in market exchanges, which would leed to positive firm performances. Fernandez-Mateo 2007 finds that brokers can transfer price from one party to another, thus manipulating price setting in the market. Mizruchi and Stearns 2001 shows that transactions are more likely to close in banks when approval network density and hierarchy are low. Hillmann and Aven 2011 finds that enterprise growth is supported by reputation in small and similar network components as well as diverse networks in large network components. Closely related to the idea of control and power, network brokerage has also been found to be advantageous to leadership-related outcomes. Hillmann 2008 further supports the idea that brokerage results in greater leader emergence by providing evidence for 18th-century Vermont coordinator elites’ efforts in gaining influential political offices jeopardizing local community interests. Furthermore, Mehra, et al. 2006 shows that a leader’s centrality within a group and among peer group leaders improves leadership reputation among members and peer group leaders respectively. Ibarra, et al. 2005 provides further research agendas on the relationship between the invidual and his or her structural context in network brokerage.

  • Fernandez-Mateo, I. “Who Pays the Price of Brokerage? Transferring Constraint through Price Setting in the Staffing Sector.” American Sociological Review 72.2 (2007): 291–317.

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    This study examines a broker’s capacity to influence prices. The author argues that brokers may partially manipulate price setting by passing on price constraints imposed on them from one side of the market to the other, thus generating differing returns for the brokered contacts. The author finds evidence for the above argument with data from an intermediary in the staffing sector.

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  • Hillmann, H. “Localism and the Limits of Political Brokerage: Evidence from Revolutionary Vermont.” American Journal of Sociology 114.2 (2008): 287–331.

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    Contrary to the prior argument that political brokerage aids national state builders in discouraging local autonomy, this paper suggests that political brokers represent local interests by limiting the power of cosmopolitan brokers. Studying the societal and political conflicts that occurred in late 18th-century Vermont, the author demonstrates evidence for coordinating elites’ efforts in gaining influential political offices and contributing to local autonomy without jeopardizing local community interests.

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  • Hillmann, H., and B. L. Aven. “Fragmented Networks and Entrepreneurship in Late Imperial Russia.” American Journal of Sociology 117.2 (2011): 484–538.

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    This study looks at entrepreneurship and attempts to reconcile the conflicting demands for close-knit networks in informal reputation-based arrangements and diverse networks in economic development. Analyzing data of 4,172 corporate partnerships during late imperial Russia’s period of industrialization, the authors found evidence supporting the positive effects of (i) reputation in small and similar network components and (ii) diverse networks in the largest network components.

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  • Ibarra, H., M. Kilduff, and W. Tsai. “Zooming In and Out: Connecting Individuals and Collectivities at the Frontiers of Organizational Network Research.” Organization Science 16.4 (2005): 359–371.

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    This paper contributes to brokerage research by making the connection between the individual and his or her structural context. The authors first discuss the dilemma whereby individuals aiming to maximize network incentives may help or undermine shared public goods. Second, the authors discuss how networks and social identity can influence each other. Third, they also explore the relationship between network structure and cognitions (i.e., perceiving, making meaning of nodes and relationships).

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  • Mehra, A., A. L. Dixon, D. J. Brass, and B. Robertson. “The Social Network Ties of Group Leader: Implications for Group Performance and Leader Reputation.” Organization Science 17.1 (2006): 64–79.

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    This study examines how a leader’s centrality in social networks is associated with group performance and leadership reputation. Evidence reveals that density of friendship relations within a group, and a leader’s centrality in the friendship networks of other leaders and his or her group’s friendship network improves performance. A group leader’s centrality in the friendship network within the group and among peer group leaders also improves the reputation for leadership.

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  • Mizruchi, M. S., and L. B. Stearns. “Getting Deals Done: The Use of Social Networks in Bank Decision-Making.” American Sociological Review 66.5 (2001): 647–671.

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    Examining deal approvals in an investment bank, this study finds that transactions are more likely close when approval network density and hierarchy are low. Results also show that only low levels of complexity are positively correlated with transaction success, while economic uncertainty and customer trust do not consistently influence deal closure.

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Balanced Perspectives and the Dark Side of Network Brokerage

While prior studies have shown the various advantages of network brokerage, these advantages may not be necessarily generalizable to all contexts. Some have shown that brokerage may have disadvantages. For example, Xiao and Tsui 2007 finds that the collectivistic culture of China and an organization’s high-commitment culture reduce the positive effects of structural holes and even hurts the career achievements of employees. Further, Barnes, et al. 2016 illustrates that brokerage hurts economic outcomes when there is competitiveness and little trust toward individuals communicating across divides. Current research has also delved into the negative externalities of network brokerage. Ahuja 2000 finds that structural holes decrease innovation performance. Further, Bizzi 2013 illustrates that structural holes between groups reduce perceptions of autonomy, job satisfaction, and performance. Podolny and Baron 1997 also provides evidence that small and dense networks of buy-ins are better at nurturing role expectations and thus for promotion. Lastly, Malm, et al. 2017 finds that having more structural holes in one’s network is related to greater apprehension when studying risk perception among marijuana growers. Meanwhile, some other studies present a more nuanced, balanced view of externalities that structural holes can cause. Such a perspective sheds light on the type of complexity involved in network brokerage consequences. For example, Batjargal 2010 finds that structural holes improve product portfolio but hurts early stage profit growth in software entrepreneurships. Clement, et al. 2018 finds that network brokerages help creativity-focused contacts but hinder efficiency-focused contacts when it comes to achieving project success.

  • Ahuja, G. “Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study.” Administrative Science Quarterly 45.3 (2000): 425–455.

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    This paper theorizes the association of a firm’s direct ties, indirect ties, and structural holes with its innovation outputs. The author suggests that direct ties provide resource and information, indirect ties provide information, and structural holes diversify a firm’s access to information but exposes it to possible threats. Results confirm that direct and indirect ties increase innovation output, but the impact of indirect ties reduces with increasing direct ties. However, the study finds that structural holes decrease innovation output.

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  • Barnes, M., K. Kalberg, M. Pan, and P. Leung. “When Is Brokerage Negatively Associated with Economic Benefits? Ethnic Diversity, Competition, and Common-Pool Resources.” Social Networks 45 (2016): 55–65.

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    This paper explores the negative effects that social capital has on economic outcomes. Using data sets from Hawaii’s pelagic tuna fishery, the authors find that brokerage is negatively related to economic outcomes because of competitiveness and the lack of trust across social divides and toward those communicating across divides.

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  • Batjargal, B. “The Effects of Network’s Structural Holes: Polycentric Institutions, Product Portfolio, and New Venture Growth in China and Russia.” Strategic Entrepreneurship Journal 4.2 (2010): 146–163.

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    This study investigates the effects of structural holes on product development and profit growth of software entrepreneurships in the cultural contexts of China and Russia. The author hypothesizes that structural holes improve product portfolio, and this positive relationship is stronger in Russia than in China. He also argues that structural holes have a detrimental effect on early stage profit growth and that there is an interaction effect such that this relationship is stronger with better product portfolio.

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  • Bizzi, L. “The Dark Side of Structural Holes: A Multilevel Investigation.” Journal of Management 39.6 (2013): 1554–1578.

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    Elaborating on a multilevel network theory, this study demonstrates how group-level structural holes are negatively associated with the perception of autonomy, job satisfaction, and performance. The author finds that group-level structural holes are negatively associated with the perception of autonomy, but there was no association between group-level variance in structural holes and individual job satisfaction and performance. These findings suggest that while spanning structural holes may be advantageous to individuals, they may pose a problem to group functioning and group climate.

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  • Clement, J., A. Shipilov, and C. Galunic. “Brokerage as a Public Good: The Externalities of Network Hubs for Different Formal Roles in Creative Organizations.” Administrative Science Quarterly 63.2 (2018): 251–286.

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    The authors argue that while hubs provide neighbors with original ideas, they lack commitment to neighbors’ projects because of limited attention and time. Using data in the French television game show industry during 1995–2012, they found evidence that network hubs help creativity-focused neighbors and hinder efficiency-focused neighbors in achieving project success.

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  • Malm, A., M. Bouchard, T. Decorte, M. Vlaemynck, and M. Wouters. “More Structural Holes, More Risk? Network Structure and Risk Perception among Marijuana Growers.” Social Networks 51 (2017): 127–134.

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    Using survey data of marijuana cultivators, this paper investigates the relationship between network structure and risk perceptions. The authors posit that this relationship is driven by two mechanisms. First, the number of non-redundant contacts increases the likelihood of being informed about risks and detection. Second, growers in cohesive networks trust other growers from their own networks more and have a lower perception of things going wrong. Results from the survey confirm these hypotheses, contributing to the study of networked criminology.

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  • Podolny, Joel M., and James N. Baron. “Resources and Relationship: Social Networks and Mobility in the Workplace.” American Sociological Association 62.5 (1997): 673–693.

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    This study investigates the influence of individual network characteristics on mobility in the workplace. Using data on employees from a high-technology company, the authors find that, while a large and sparse network of indirect contacts improves a person’s chance of promotion, a small and dense network of buy-in contacts is better, because it helps to nurture clear role expectations.

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  • Xiao, Z., and A. S. Tsui. “When Brokers May Not Work: The Cultural Contingency of Social Capital in Chinese High-Tech Firms.” Administrative Science Quarterly 52.1 (2007): 1–31.

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    Unlike previous studies that are conducted in Western contexts, this study tests the effects of structural holes in China. The authors hypothesize that the benefits of structural holes will be reduced by China’s collectivistic culture and an organization’s high-commitment culture. Analyzing data gathered from four high-tech companies through network surveys and interviews, the authors find empirical evidence supporting their hypotheses. The results also reveal the negative influence that structural holes have on career achievements of employees.

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Comparing Brokerage and Closure

Extant research has also often compared Burt’s network brokerage argument against Coleman’s network closure argument. What are the trade-offs between sparse (brokerage) and highly interconnected (closure) network structures? Aral and Van Alstyne 2011 present a trade-off between diversity and bandwidth. They posit that diverse networks increase novelty received but at a slower rate while cohesive networks lower novelty received but at a faster rate. Bian 1997 compares the efficacy of strong and weak ties in job-seeking and demonstrates that while strong ties help acquire jobs in general, better jobs are acquired through indirect ties than direct ties. Gargiulo and Benassi 2000 find that when it comes to adapting networks to changes, managers do worse when their networks are filled with more cohesive than bridging ties. Ter Wal, et al. 2016 shows that when it comes to achieving venture success, closed-diverse networks present diverse knowledge domains interpreted by shared third-party ties, and open-specialized networks offer diversity through structural holes interpreted by shared schema, and this interpretation is aided by shared information between old and new knowledge. Reagans and Zuckerman 2001 reconciles this diversity-performance debate by showing that highly diverse networks reduce a team’s coordination capacity and heterogeneous networks are characterized by better learning capability. Vedres and Stark 2010 highlights structural folds in its importance of mixing or recombining knowledge practices as opposed to structural holes-related argument’s focus on brokerage opportunities, access to information, and structural constraint. Existing literature also suggests that perhaps having a combination of both brokerage and closure would be most beneficial. For example, Baum, et al. 2012 suggests that a combination of old closure ties with either young or old bridging ties enhance firm performance. Burt and Merluzzi 2016 demonstrates that oscillating between network brokerage and closure promotes network advantage. Fleming, et al. 2007 shows that network brokerage leads to more collaborative creativity and cohesion marginally improves this relationship when collaborators are independently connected. Oh, et al. 2004 highlights the idea of optimal levels of social capital, demonstrating that there is an inverted U-shaped relationship between group closure and effectiveness.

  • Aral, S., and M. Van Alstyne. “The Diversity-Bandwidth Trade-Off.” American Journal of Sociology 117.1 (2011): 90–171.

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    This study delves into the trade-off between structural diversity and channel bandwidth regarding the rate at which novelty is received. The authors argue diverse networks increase novelty received but at a slower rate and cohesive networks lower novelty received but at a faster rate. This study finds that the received novelty increases with (i) small information overlap, (ii) shallow current knowledge of alters, and (iii) slow refresh of alters’ knowledge stocks.

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  • Baum, J. A., B. McEvily, and T. J. Rowley. “Better with Age? Tie Longevity and the Performance Implications of Bridging and Closure.” Organization Science 23.2 (2012): 529–546.

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    This study investigates the influence of tie age on performance benefits of closure and bridging ties. The authors hypothesize and demonstrate that (i) performance benefits of closure ties have a positive relationship with age; (ii) performance benefits of young bridging ties have a negative relationship with age while that of old bridging ties have a positive relationship with age; and (iii) combinations of old closure ties with either young or old bridging ties improves performance benefits.

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  • Bian, Y. “Bringing Strong Ties Back In: Indirect Ties, Network Bridges, and Job Searches in China.” American Sociological Review 62.3 (1997): 366–385.

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    This study investigates the relative efficacy of strong and weak ties in job-seeking efforts in China. The study finds that (i) jobs are attained through more strong ties; (ii) job-seeking through people affiliated to high-ranked organizations increases recruitment by high-ranked employing units; (iii) job-seekers contact people through more indirect ties; (iv) job-seekers acquire better jobs through indirect ties; and (v) persons or those from higher socioeconomic backgrounds have a greater propensity to seek jobs through indirect ties.

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  • Burt, R. S., and J. Merluzzi. “Network Oscillation.” Academy of Management Discoveries 2.4 (2016): 368–391.

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    Network oscillation refers to a process of repeated engagement in closure and brokerage. The authors propose that network oscillation promotes network advantage and then identify four dimensions of network volatility (i.e., churn, variation, trend, and reversal) and examine their ability to predict banker compensation. Results suggest that while network volatility does not have a direct effect on performance, it indirectly enhances network advantage.

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  • Fleming, L., S. Mingo, and D. Chen. “Collaborative Brokerage, Generative Creativity, and Creative Success.” Administrative Science Quarterly 52.3 (2007): 443–475.

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    This study investigates the effect of brokered versus cohesive collaborative networks on individual creativity. The authors find that brokerage results in more collaborative creativity, and that cohesion marginally improves this relationship when collaborators are independently connected, especially when (i) individuals or their collaborators have broader experience; (ii) individuals have work experience in many organizations; and (iii) collaborators work with external collaborators. They also demonstrate that brokered ideas have less potential to be carried out in subsequent creative endeavors.

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  • Gargiulo, M., and M. Benassi. “Trapped in Your Own Net? Network Cohesion, Structural Holes, and the Adaptation of Social Capital.” Organization Science 11.2 (2000): 183–196.

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    This study investigates the contradicting views of network closure and structural hole theory on the effect of an actor’s network structure on his or her ability to adapt to changes in task settings. Analyzing data gathered from a new unit formed in an Italian subsidiary of a multinational computer firm, the authors demonstrate that managers are less likely to be able to adapt networks to changes in coordination requirements when networks are characterized by cohesive ties, threatening cooperation across the new unit formed.

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  • Oh, H., M. -H. Chung, and G. Labianca. “Group Social Capital and Group Effectiveness: The Role of Informal Socializing Ties.” Academy of Management Journal 47.6 (2004): 860–875.

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    Introducing a new construct group social capital, this study argues that group effectiveness is maximized at optimal levels of group social capital. The authors hypothesize that group effectiveness peaks at moderate level of closure and that groups with more diverse social relationships with other groups and more relationships with formal leaders from other groups are more effective. Results show the hypothesized relationship between group closure and effectiveness and the positive association between number of relationships with leaders and effectiveness.

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  • Reagans, R., and E. W. Zuckerman. “Networks, Diversity, and Productivity: The Social Capital of Corporate R&D Teams.” Organization Science 12.4 (2001): 502–517.

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    This study attempts to reconcile the debate on the performance outcomes of demographic diversity by reframing social capital into two distinct network logits and concomitant variables: network density and network heterogeneity. With data from research and development teams, the authors argue that network diversity reduces a team’s coordination capacity and high network heterogeneity is characterized by better learning capability.

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  • Ter Wal, A. L., O. Alexy Block Jr., and P. G. Sandner. “The Best of Both Worlds: The Benefits of Open-Specialized and Closed-Diverse Syndication Networks for New Ventures’ Success.” Administrative Science Quarterly 61.3 (2016): 393–432.

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    The authors propose two network configurations combining diversity and ease of interpretation: closed-diverse and open-specialized networks. Closed-diverse networks present diverse knowledge domains interpreted by shared third-party ties, and open-specialized networks offer diversity through structural holes and interpretation of new information by shared interpretive schema and information overlap between old and new knowledge. Open-diverse networks risk information overload and closed-specialized networks risk over-embeddedness. The study reveals that ventures managed by investors with open-specialized or closed-diverse networks have the greatest success probabilities.

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  • Vedres, B., and D. Stark. “Structural Folds: Generative Disruption in Overlapping Groups.” American Journal of Sociology 115.4 (2010): 1150–1190.

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    As opposed to structural holes–related argument’s focus on brokerage opportunities, access to information, and structural constraint, Vedres and Stark highlight the importance of mixing or recombining knowledge practices. They argue that actors at the “structural folds” (i.e., the intersection of cohesive groups) have familiar access to diverse resources available for recombination. From a historical network analysis of postsocialist Hungarian entrepreneurs, authors show that structural folding helps group performance and increases group instability, facilitating entrepreneurial processes.

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Dynamics of Network Brokerage

Are brokerage positions and concomitant externalities permanent? Research on the dynamics of network brokerage is relatively young but is rapidly growing. For example, Buskens and van de Rijt 2008 finds that the positive externalities of network brokerage are unsustainable if everyone aims to occupy broker positions. On the other hand, McEvily, et al. 2012 argues that bridging ties have accumulating and lasting effects. Scholars also explored the structural dynamics of network brokerage. For example, Jonczyk, et al. 2016 finds that professionals keep contacts that are powerful, competent, and trusted, while losing redundant ones during role transitions. Sasovova, et al. 2010 illustrates that self-monitoring personality influences network dynamics such that when compared with low self-monitoring people, high self-monitoring people are better at attracting new friends and occupying brokering positions over time. Lingo and O’Mahony 2010 also demonstrates that brokers engage in both tertius gaudens and tertius iungens depending on the nature of the work, such as when confronted with different types of ambiguity involved in creative processes. At the organizational level, Yin, et al. 2012 finds that firms in multipartner alliances with more partners and firms with partners that are either very similar or different in firm size tend to stay influential and retain their degree of brokerage in latter alliances. Another kind of change that has gained scholarly attention is that of triadic closure. For example, studying investment decisions from partners investing in venture capital companies, Zhelyazkov 2017 finds that triadic closures reduce with failure of relationship between evaluatee and intermediary, similarity between them, and higher reputation of evaluatee compared to intermediary.

  • Buskens, V., and A. van de Rijt. “Dynamics of Networks if Everyone Strives for Structural Holes.” American Journal of Sociology 114.2 (2008): 371–407.

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    While entrepreneurs can gain benefits by entering structural holes in networks, they may not maintain these advantages if others also strive for structural holes. In this study, the authors investigate, with a game theoretic model of network formation, the case when everyone tries to have structural holes. Results reveal that in the long run, no one can sustain an advantage due to the equal allocation of benefits by stable networks.

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  • Jonczyk, C. D., Y. G. Lee, C. D. Galunic, and B. M. Bensaou. “Relational Changes during Role Transitions: The Interplay of Efficiency and Cohesion.” Academy of Management Journal 59.3 (2016): 956–982.

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    Studying recently promoted service professionals, this study explores the effects of a role transition on a service professional’s surrounding network. The authors demonstrate that professionals keep powerful, competent, and trusted contacts with whom they share multiple types of social relationships and that they lose redundant contacts, especially when they have alternative contacts who are competent. They also demonstrate that professionals who used to have networks that connect unconnected people are better at adding new contacts with cognitive trust.

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  • Lingo, Elizabeth Long, and Siobhán O’Mahony. “Nexus Work: Brokerage on Creative Projects.” Administrative Science Quarterly 55.1 (2010): 47–81.

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    This article looks at the mechanism of brokers integrating ideas of others in creative projects. Nexus work is defined as brokerage that involves integration instead of mere transfer of ideas. The authors find that ambiguity in quality standards, occupational powers, and transformation procedures is an integral part of shared creative process. They also demonstrate ways in which brokers use their positions when faced with these types of ambiguity, thus benefiting from brokerage positions but also facilitating the creativity process.

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  • McEvily, B., J. Jaffee, and M. Tortoriello. “Not All Bridging Ties Are Equal: Network Imprinting and Firm Growth in the Nashville Legal Industry, 1933–1978.” Organization Science 23.2 (2012): 547–563.

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    In contrast with prior studies demonstrating rapidly decaying effects of bridging ties, this study suggests that bridging ties have accumulating and imprinting effects. The authors argue that with learning and application of gathered knowledge, bridging ties produce accumulating effects. They also argue that bridging ties produce imprinted effects by creating lasting network benefits. Evidence was found supporting these claims in the setting of the Nashville legal industry during 1933–1978.

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  • Sasovova, Z., A. Mehra, S. P. Borgatti, and M. C. Schippers. “Network Churn: The Effects of Self-Monitoring Personality on Brokerage Dynamics.” Administrative Science Quarterly 55.4 (2010): 639–670.

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    This article highlights the role of self-monitoring personality in network churn and brokerage dynamics. The authors argue that network churn characteristics and brokerage dynamics originate from differences in self-monitoring personality among individuals. Findings show that people with high self-monitoring have a greater propensity to attract new friends and over time gain new brokerage positions, their new friends also tend to be relative strangers when compared to friends of people with low self-monitoring.

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  • Yin, X., J. Wu, and W. Tsai. “When Unconnected Others Connect: Does Degree of Brokerage Persist after the Formation of a Multipartner Alliance?” Organization Science 23.6 (2012): 1682–1699.

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    This study identifies the conditions under which brokerage persists upon the introduction of a multi-partner alliance setting. The authors find evidence that a firm with a higher degree of brokerage formerly would have greater propensity to stay influential and retain its degree of brokerage in the latter multipartner alliance under the following two conditions: (1) the multipartner alliance consists of more partners and (ii) partners are either very similar or very different in terms of firm size.

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  • Zhelyazkov, P. I. “Interactions and Interests: Collaboration Outcomes, Competitive Concerns, and the Limits to Triadic Closure.” Administrative Science Quarterly 63.1 (2017): 210–247.

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    Analyzing longitudinal data of investment decisions from partners investing in the venture capital firms, Zhelyazkov studies how a broker’s collaboration outcomes and competitive concerns influence triadic closures. He argues that the likelihood of triadic closure is reduced by (i) failure of evaluate–intermediary relationship; (ii) similarity between evaluatee and intermediary; and (iii) higher reputation of evaluatee compared to intermediary. The author also argues that the higher reputation of evaluatee compared to intermediary will strengthen the negative effect of the second factor.

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