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Sunday, June 23, 2013

Weak Ties, Family Ties, and Business Success

In what is now considered a classic study, the sociologist Mark Granovetter (1973) found that people were far more likely to have used occasional personal contacts in finding their present job than by other means, and of those personal contacts, most were what Granovetter called "weak ties."  More precisely, he found that although 19% used formal means and another 19 percent directly applied for their job, approximately 56% found their jobs through personal ties, of which 83.4% were people they saw occasionally or rarely. This led Granovetter to conclude that when it comes to finding jobs, our weak ties are often more useful than our strong ties. Why? Because our weak ties (i.e., our acquaintances) are less likely to be socially involved with one another than are our strong ties (i.e., our close friends).


Imagine the pattern of social ties suggested by this argument (see the graph above) and take any individual in the network. He or she will most likely have a collection of close friends, most of whom know one another. This same individual will also probably have a collection of acquaintances, few of whom know one another. But these acquaintances, in turn, are likely to be embedded in tightly knit networks of their own. According to Granovetter, weak ties are important in terms of the overall network structure because they form the crucial bridges that tie these densely knit clusters of people together. In fact, if it were not for these weak ties, these clusters would not be connected at all.

Indeed, Granovetter argued that while not all weak ties are bridges, all bridges are weak ties. This is because of a process captured by what he referred to as the forbidden triad (see the graph below). Imagine that the ties between A and B and A and C are strong, and that initially B and C have no relationship with one another. In the short run the strong ties that run from C to B through A will function as a bridge between C and B. However, in the long run a tie will form between C and B (this is known as triadic closure) because A regularly interacts with B and C and odds are that in the long run B and C will meet and a tie will form between them. The resulting tie may be strong or weak, but the end result is that the ties running between C and B through A will no longer function as a bridge between C and B. Put differently, our close friends’ close friends are likely to at least become acquaintances and possibly even friends. While Granovetter conceded this was something of an exaggeration, he noted that research suggests that this holds true most of the time, meaning that weak ties are much more likely to form bridges than are strong ties (Onnela et al. 2007).


Granovetter’s argument suggests that whatever is to be diffused – whether it is job information, influence, resources, trust, etc. – it will reach more people and travel a greater social distance if it passes through weak rather than strong ties. It also implies that actors with few weak ties are more likely to be “deprived of information from distant parts of the social system and will be confined to the provincial news and views of their close friends” (Granovetter 1983:202). Their lack of weak ties “will not only insulate them from the latest ideas and fashions, but it may also put them at a disadvantage in the labor market, where . . . knowing about appropriate job openings at just the right time” is paramount (Granovetter 1983:202).

Granovetter did not argue that strong ties were of no value. He also noted that although weak ties provide individuals with access to information and resources beyond those available in their immediate social circles, strong ties have greater motivation to be sources of support in times of uncertainty. Indeed, there "is a mountain of research showing that people with strong ties are happier and even healthier, because in such networks members provide one another with strong emotional and material support in times of grief or trouble and someone with whom to share life’s joys and triumphs” (Stark 2007:37).

Granovetter's study has implications beyond finding jobs. For example, Brian Uzzi (1996 - one of Granovetter's former students), found that a mix of weak and strong ties proved beneficial to the long-term survival of apparel firms. The firms he studied tended to divide their market interactions into two types: “market” or “arms-length” relationships (i.e., weak ties) and “special” or “close” relationships (i.e., strong ties). He found that although market relationships were more common than embedded ties, they tended to be less important. Embedded ties were especially important in situations where fine-grained information had to be passed to the other party, and when certain types of joint problem-solving were on the agenda. According to Uzzi, embeddedness increases economic effectiveness along a number of dimensions crucial to competitiveness in the global economy: organizational learning, risk-sharing, and speed-to- market. He also discovered, however, that firms that are too embedded suffer because they lack access to information from distant parts of the social structure, rendering them vulnerable to rapidly changing situations. This led him to argue that firms should seek to maintain a balance of embedded (strong) and market (weak) ties. In support of this he found that firms with high levels of embedded ties or high levels of market ties were much more likely to fail than were those that maintained a balance between the two.

A recent Freakonomics podcast ("Why Family and Business Don't Mix") seems to confirm Granovetter's study (although it doesn't mention Granovetter, Uzzi, or weak and strong ties). It references a study that found that strong family ties appear to depress economic activity.
We study the role of the most primitive institution in society: the family... We show that strong family ties are negatively correlated with generalized trust; they imply more household production and less participation in the labor market of women, young adult and elderly. They are correlated with lower interest and participation in political activities and prefer labor market regulation and welfare systems based upon the family rather than the market or the government. Strong family ties may interfere with activities leading to faster growth, but they may provide relief from stress, support to family members and increased wellbeing. We argue that the value regarding the strength of family relationships are very persistent over time, more so than institutions like labor market regulation or welfare systems.
I suspect that one reason why family ties negatively affect economic productions is that they crowd out (suppress) the formation of weak ties, such that family businesses lack enough weak ties (or market ties, to use Uzzi's term) so that they have access to information that is vital to their success and survival.

References:
  • Granovetter, Mark. 1973. "The Strength of Weak Ties." American Journal of Sociology 73(6):1360-80.
  • Granovetter, Mark. 1974. Getting a Job. Cambridge, MA: Harvard University Press.
  • Granovetter, Mark. 1983. "The Strength of Weak Ties: A Network Theory Revisited." Sociological Theory 1:201-33.
  • Onnela, Jukka-Pekka, Jari Saramaki, J. Hyvönen, Szabó. G., David Lazer, Kimmo Kaski, J. Kertész, and Barabasi, Albert-Laszlo. 2007. "Structure and Tie Strengths in Mobile Communication Networks." Proceedings of the National Academy of Sciences of the USA 104(18):7332–36.
  • Stark, Rodney. 2007. Sociology. Belmont, CA: Wadsworth Publishing Company.
  • Uzzi, Brian. 1996. "The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect." American Sociological Review 61(4):674-98.

1 comment:

  1. John Lakian is a very successful and experienced businessman and former gubernatorial candidate of Massachusetts. He has founded several very successful businesses, and served on the board on many others.

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