How can Strategic People Networks (SPNs) be successful? · PDF fileAn inquiry into the causes and nature of social networks striving toward ... Common affections and common ... Networking

Universität Lüneburg Fachbereich Wirtschafts- und Sozialwissenschaften

Institut für Betriebswirtschaftslehre, Entscheidung und Organisation Prof. Dr. Egbert Kahle

Scharnhorststrasse 1· 21335 Lüneburg · Deutschland

How can Strategic People Networks (SPNs) be successful?

An inquiry into the causes and nature of social networks striving toward a mutual goal

Vom Fachbereich Wirtschafts- und Sozialwissenschaften der Universität Lüneburg

zur Erlangung des Grades

Doktorin der Wirtschafts- und Sozialwissenschaften (Dr. rer. pol.)

Dissertation

von Dahlit Brin

aus Berlin, Deutschland

Band 1

Eingereicht am: 4. Mai 2005

Mündliche Prüfung am: 3. August 2005

Gutachterin/Gutachter: Prof. Dr. Egbert Kahle

Prüfungsausschuss: Prof. Dr. Egbert Kahle, Prof. Dr. Günter Burkart & Prof. Dr. Lutz Zündorf

Erschienen unter dem Titel: “How can Strategic People Networks (SPNs) be successful? An inquiry

into the causes and nature of social networks striving toward a mutual

goal.”

Druckjahr: 2005

“Through all the days that eat away at every breath that I take …

… all the words in truth we have spoken

that the wind has blown away it's only you that remains with me

clear as the light of day…

… through swollen eyes he sways and smiles 'cause noone can put him down

inside of him a boy looks up to his father for a sign or an approving eye

oh, it's funny how those once so close and now gone can still so affect our lives…”

(Johnny Clegg, 19931)

In loving memory of my grandmother, Sara Weinryb ל""ז (born as Sala Erlich) (31.12.1929 - 26.09.2003)

and those who went before her.

1 “The Crossing (Osiyeza)”, from the Album “Heat, Dust & Dreams”

Part 1

i

INDEX

ACKNOWLEDGEMENTS ....................................................................................................I

ABSTRACT ................................................................................................................... III

CHAPTER 1. INTRODUCTION........................................................................................... 1

CHAPTER 2. THEORETICAL PRELIMINARIES..................................................................... 6

CHAPTER 3. NETWORK DEFINITIONS – WHAT ARE NETWORKS? ...................................... 63

CHAPTER 4. NETWORK ANALYSIS.............................................................................. 104

CHAPTER 5. NETWORKING SKILLS.............................................................................. 130

CHAPTER 6. EMPIRICAL RESEARCH ........................................................................... 171

CHAPTER 7. SUMMARY AND CONCLUSIONS ................................................................ 313

BIBLIOGRAPHY ......................................................................................................... 319

OTHER INTERNET ARTICLES....................................................................................... 345

TABLE OF FIGURES

DIAGRAM 1.1: STRUCTURE OF THE DISSERTATION.......................................................................5 DIAGRAM 2.1: SOCIETY, THE ENVIRONMENT AND SUB-SYSTEMS.................................................10 DIAGRAM 2.2: GIDDENS'S 3 COGNITIVE LAYERS.........................................................................31 DIAGRAM 2.3: TIME-SPACE.......................................................................................................33 DIAGRAM 2.4: THE STRATIFICATION MODEL OF THE AGENT ........................................................35 DIAGRAM 2.5: MATERIAL AND STRUCTURAL CONSTRAINTS.........................................................45 DIAGRAM 2.6: THE DIMENSIONS OF GIDDENS’S DUALITY OF STRUCTURE ...................................49 DIAGRAM 2.7: GIDDENS'S TWO TYPES OF RESOURCES ..............................................................53 DIAGRAM 2.8: LEVELS OF METHODOLOGICAL INSERTIONS..........................................................57 DIAGRAM 3.1: REAL AND IDEAL TYPICAL FORMS OF THE ORGANISATION IN THE TRICHOTOMICAL

MODEL .............................................................................................................75 DIAGRAM 3.2: FORMS OF STRATEGY.........................................................................................87 DIAGRAM 3.3: THE LATENT NETWORK .......................................................................................88 DIAGRAM 3.4: BUILDING SPNS FROM THE LATENT NETWORK.....................................................89 DIAGRAM 3.5: ACCESSING NEW CONTACTS VIA EXISTING TIES....................................................90 DIAGRAM 3.6: POSSIBLE COMBINATIONS OF MEMBERS WITHIN AN SPN ......................................93 DIAGRAM 3.7: SPNS IN THEIR SETTING OF ALTERNATIVE FORMS FOR ECONOMIC EXCHANGE.......99

Part 1

ii

TABLE 3.1: COMPARING DIFFERENT FORMS OF EXCHANGE ......................................................100 DIAGRAM 3.8: EXTENDED TRICHOTOMY MODEL OF THE ORGANISATION ....................................101 DIAGRAM 4.1: TYPES OF NETWORK STRUCTURES....................................................................116 DIAGRAM 4.2: LOCAL BRIDGES ...............................................................................................122 DIAGRAM 4.3: BURT’S SPARSE AND DENSE NETWORK STRUCTURES.........................................124 DIAGRAM 4.4: LOCAL BRIDGES AND BETWEENESS CENTRALITY ...............................................125 - LOCAL BRIDGE..............................................................................................125 DIAGRAM 4.5: LOCAL BRIDGES AND BETWEENESS CENTRALITY - SHORTEST ALTERNATIVE ROUTE

......................................................................................................................126 DIAGRAM 4.6: INCREASING EFFICIENCY WITHIN NETWORKS......................................................127 DIAGRAM 4.7: LEVELS OF RELATIONSHIPS ...............................................................................128 DIAGRAM 5.1: BUILDING TRUST...............................................................................................143 DIAGRAM 5.2: ATTRIBUTES TO WHICH TRUST REFERS ..............................................................147 DIAGRAM 5.3: THE PROCESS OF COMMUNICATION (SIMPLIFIED) ...............................................153 DIAGRAM 5.4: THE 4 SIDES OF A MESSAGE - A PSYCHOLOGICAL MODEL OF INTERPERSONAL

COMMUNICATION ............................................................................................154 DIAGRAM 5.5: FACTORS THAT INFLUENCE COMMUNICATION.....................................................156 DIAGRAM 5.6: KNOWLEDGE CONVERSION (SIMPLIFIED)............................................................161 DIAGRAM 5.7: GENERAL CRITICAL SUCCESS FACTORS FOR KNOWLEDGE TRANSFER .................162 DIAGRAM 5.8: THE STOCK OF ORGANISATIONAL KNOWLEDGE ..................................................163 DIAGRAM 5.9: ELEMENTS OF KNOWLEDGE MANAGEMENT ........................................................165 DIAGRAM 5.10: THE 8-STEP "RELATIONING®" MODEL ...............................................................169 DIAGRAM 6.1: THE PROCESS OF QUALITATIVE CONTENT ANALSYIS ...........................................177 DIAGRAM 6.2: ADAPTED PROCESS OF CONTENT ANALYSIS.......................................................178 DIAGRAM 6.3: DATA COLLECTION PROCEDURE ........................................................................181 DIAGRAM 6.4: THE THREE CORE ASPECTS OF SPNS ...............................................................183 DIAGRAM 6.5: A GRAPHICAL PRESENTATION OF THE CORE ASPECTS OF SPNS .........................183 DIAGRAM 6.6: SOCIOGRAM OF GEORGE SOROS'S FAMILY........................................................189 DIAGRAM 6.7: AN EXAMPLE OF THE CONTACTS OF GEORGE SOROS'S FAMILY...........................190 DIAGRAM 6.8: AN EXAMPLE OF A RELIABLE NETWORK..............................................................198

Acknowledgements

i

Acknowledgements

The practical implications of networking and the application of the strategic utilisation of

ones social networks became very much apparent throughout the process of this research

study. A large number of individuals have helped me along the way - each one in their own

special way. Without this help I would not have been able to successfully carry out this

research effort and reach the goal I have sought to accomplish from a very young age on. This

network has proven especially valuable to me during times of a great personal loss and helped

me to continue my doctoral studies regardless. I very much appreciate this and would like to

thank everyone who had such a positive impact on me.

Although it is not possible for me to name each and every one, I would like to express my

specific gratitude to the following:

Firstly, I would like to thank my supervisor, Prof. Dr. Egbert Kahle for his academic guidance

and support throughout each step of the way. I especially appreciate his understanding for my

personal situation.

I would like to thank Prof. Dr. Günter Burkart and Prof. Lutz Zündorf for taking the time to

evaluate my thesis and for the oral doctorate examination. Further, I would like to thank them

for their valuable comments and criticisim which will aid me in my future research efforts.

Over the past 3 years Dr.Peter Westebbe developed into a valuable mentor who was always

prepared to guide me with respect to the subject matter at hand and beyond. The numerous

hour long conversations were a great source of support for me. Thank you so much.

Thank you also to Dr. Michael A. Freeman for his patience, time and efforts.

I would like to thank Dr.Peter Mnich (Universtität Lüneburg) for his help with respect to the

research design.

I would like to express my deep gratitude to Prof. Dr. Thomas Fischer (WHU) for his time,

effort, assistance and, above all, his honesty.

Acknowledgements

ii

My heartfelt thank you is directed at Ariane Berger, my most faithful childhood friend, who

took it upon herself to prepare me for the oral examination. Thank you for your guidance,

support, understanding and for being a friend all these years.

Varda Zimet, thank you for just being there.

The basis of my success was provided without doubt by my family, who is always there for

me. Their love, support, strength and faith in me provides me with the ability to reach the

goals I set myself, having taught me that the sky is indeed the limit. My gratitude to them

cannot be expressed in words.

Abstract

iii

“No men can act with effect who do not act in concert; no men can

Act in concert who do not act with confidence; no men can act with

Confidence who are not bound together with common opinions,

Common affections and common interests.”

Edmund Burke (1729 –1797)2

Abstract

Networks of social relationships are becoming increasingly important in today’s business

environment. By cooperating in such structures players seek to overcome the shortcomings of

the alternative forms of exchange, namely markets and hierarchies, and to realise (greater)

information benefits. This is done through the reduction of complexities and uncertainties, as

well as by increasing the speed of information flows and decision-making within networks.

Traditional network research has focused on company networks and neglected the assessment

of the underlying dynamic constituents of social networks. Studies concerned with the use of

social ties for economic goals are generally not scientific and lack the theoretical foundation

to guide such an analysis.

For these reasons it is the aim of this research paper, based on a theoretical framework, to

systematically examine the underlying factors that lead to successful co-operations within a

social network seeking to reach a common goal.

The results of the current qualitative research study indicate that the factors suggested in the

literature as significant for successful networking (e.g. common base; common language;

mutual goals; sympathy for each other; a general interest in social contacts, combined with

the necessary skills to act within social contexts) do indeed impact this type of co-operation as

proposed. In addition to what is put forward in the literature it became evident that all

successful individuals have a passion, besides their business activities, such as music, art or

sports. This ardour also serves as a platform on which valuable contacts are established and

maintained.

2 in Rijkens, 1993, p.xi

Introduction

1

Chapter 1. INTRODUCTION

1.1 BACKGROUND AND RELEVANCE OF THE RESEARCH QUESTION

Social networks are generally perceived as a key to economic and personal accomplishments.3

Modern management turns to the ability to operate within this form of co-operation as a

revolutionary new soft skill, time and again emphasised to be a vital element of success4.

Networking, sometimes connected with a sense of secrecy or “belonging to an exclusive club”

is perceived to be the make-or-break of business deals. It is said to provide access to

resources, to be the most efficient way of marketing and client acquisition, as well as to

improve a firm’s competitive advantage. In the specific case of start-ups, social nets are

believed to enhance the chance of survival and success of the new firm5. Members of such

structures seek to benefit from advantages such as reduction in complexities, increased

flexibility and creativity, as well as cost savings due to shorter information paths and faster

decision making.6 While the majority seems to support cooperations among social ties, critics

believe them to foster corruption and nepotism7.

Relationship complexes of all kinds have emerged specifically over the past decade, serving

an immense variety of purposes. Constructing social nets is perceived as an essential part of

career planning, while some even argue that in times of economic hardship, it is the sole road

to employment and client acquisition. Networking is often celebrated as the global solution to

most management and firm-related problems.

No doubt this is an exaggeration. Be that as it may, empirical research does show that these

sets of social connections do, indeed, have a number of positive effects on organisations and

business ventures. While in the light of the “networking craze” of the past years, it may seem

that this form of co-operation and exchange is a new phenomenon, individuals have in fact

used these relationship structures ever since the beginning of our time.

3 See e.g. Baskerville, 1993; Boos et al., 2000; Burt, 1998; Collins and Pancoast, 1981; Hesse and Schrader,

1999; Kremer, 2000; Scheler, 2003; Wikner, 2000; Uhrig,2001 4 See e.g. Cooper and Sawaf, 1996; Ibarra, 1998; Pitcher, 1997 5 See e.g. Witt and Rosenkranz, 2002; Witt, 2004 6 Heintel, 2000, p.12. See also e.g. Boos et al., 2000; Fischer, 2001, 2003; Henschel, 2001; Schwertfeger, 2001;

Sydow, 1991; Powell, 1990; Wikner, 2000. See also chapter 4 “Network Analysis”, p.104 ff 7 See e.g. Arnim, 2003

Introduction

2

1.2 NETWORK RESEARCH: STATUS QUO

As a consequence of the “network euphoria” an explosion in academic and non-academic

literature on networks and networking practices occurred. Nonetheless, structures of social

ties have been the object of research for several decades in a variety of fields, such as

sociology, psychology, molecular biology, technical related fields and anthropology. Within

economics they have become an important part in the area of organisations theory. As early as

in the 1930s Roethlisberger and Dickson (1939) have already discussed the importance of

informal networks in organisations8. The two main theoretical methods adopted in network

analysis to-date are the transactions-cost approach9 and resource-based view10. Defined as a

form of economic exchange, nexuses of social ties are seen as an alternative to markets and

hierarchies, posing an opportunity to overcome the respective drawbacks of these two11.

Professional magazines increasingly publish articles on the needs for and benefits of these

alternative forms for organising economic exchange. Moreover, manifold publications

aimed at the general public were made about this topic as well. 12

Both, theoretical and empirical research of networks within economics (and related fields) and

sociology tend to be concerned with company networks or social ties within hierarchical

organisations. On the other hand, studies on personal networks are inclined to focus on non-

economic or non-business related contexts. Thus, the possibility to use one’s social circles

for the pursuit of economic goals has, yet, not been systematically analysed.

There is much literature from the popular-science about the strategic use of personal contacts

for business purposes. Still, these have a tendency to be on a rather non-academic level and do

not include valuable insights gained from academic research, such as structural elements that

may explain the underlying constituents of social networks. Examples of those factors may be

Giddens´s structural properties or Luhmann´s self-referential systems.13

8 in Nohria, 1998, p.1 9 See e.g. Albach, 1993; Aldrich, 1982; Jarillo, 1993; Tsang, 2000; Weyer, 2000 10 See e.g. Alt et al., 2001; Bouncken, 2002; Galaskiewicz, 1979; Tsang, 2000; Zündorf, 1994 11 See e.g. Fischer, 2001; Powell, 1990; Schuh et al., 1998; chapter 3 “Network Definitions”, pp. 74 ff, 100 ff 12 See e.g. Arnim, 2003; Dyer and Hatch, 2004; Fricke, 2004; Gitomer, 2000; Kremer, 2000; Schaudewet, 2002;

Scheler, 2003; Schulhof, 1999; Uhrig, 2001; Wikner, 2000; Wolf, 1999 13 See chapter 2 “Theoretical Preliminaries”, p.6 ff

Introduction

3

1.3 THE CURRENT RESEARCH QUESTION - A FIRST ATTEMPT TO TRY TO FILL THE RESEARCH

GAP For these reasons it is the goal of the current thesis to research the elements that lead to a

successful co-operation within network structures, and to test them empirically. The

aspiration thereby is to try and make network research more practically relevant by

combining elements from theory and practice.14 In order to do so aspects that are perceived as

favourable for network activities in the existing literature will be examined. The focus will lie

on the factors that influence the establishment, organisation and maintenance of social nets.

Further, constituents will be analysed that seem to affect the co-operation efforts within these

nets, and the members´ ability to succeed, i.e. reach their goals.

1.4 POTENTIAL BENEFITS OF THE RESEARCH RESULTS

Beyond the interest of networks for academics, practitioners can also learn and gain greatly

by understanding these constructions, their dynamics, attributes, characteristics and how to

steer and manage them. It seems plausible to suggest that the increasing non-academic

literature on networking appears to support this view.

An organisation’s social capital is made up of internal and external relationships of

individuals and can be seen in form of networks.15 In turn, the effects of organisations’

networking activities root in the efforts and abilities of the individuals within and outside that

organisation16. In fact, this understanding has lead to an increased efforts made by

management within organisations to improve the networking activities and skills of the

workforce.

Taking a step further, this paper attempts to aid this process by aiming to provide an

understanding of the necessary attributes of a “successful networker”. This knowledge can

be used by entrepreneurs, so as to increase their networking skills in order to gain the

economic benefits of a strategic and highly qualitative network. On a company level, the

human resource department could use this knowledge to understand what makes a good

networker and include it in the profile for employment vacancies. In fact this knowledge can

be used by anyone who recognises the importance of networks in our daily professional and

private lives, to improve their networking abilities and increase the chance of success in a

variety of areas. 14 See also Eccles and Moss Kanter, 1998, p.522 ff; chapter 6 “Empirical research”, p.171 ff 15 Burt, 1998. See also Kogut, 2000, p.422 16 See e.g. Kogut, 2000

Introduction

4

On a personal note, I have often experienced and observed the dramatic difference the

existence or absence of personal networks and networking skills can make, both in my

professional and non-business related activities. This realisation has spurred my desire to

research this area in an attempt to shed some light on this relatively uncovered field of study.

1.5 STRUCTURE OF THE PAPER

The research efforts of this current paper rests on the theoretical foundation of Niklas

Luhmann´s systems theory and Anthony Giddens’ structuration theory. In order to specify the

research object a variety of definitions and explanations concerning networks will be

discussed, followed by a detailed explanation of the type of social net analysed here. For

means of obtaining appropriate analytical tools for the subsequent empirical research, chapter

4 turns to a variety of analytical approaches used to examine a nexus of social ties. At the

same time this section tries to understand why these structures are used, and how they develop

and operate.

In the field of economics a large amount of research and theoretical approaches have been

developed with respect to firm networks. On the other hand, only very little has been done

concerning people networks. However, when speaking of concepts such as ‘the learning firm’

or ‘innovation networks’ the actors, although organisational units, always in essence are

individuals. Hence, it seems plausible to turn to these works and to adopt these accordingly to

the current context of this research paper.

The focus of the current study lies in the behavioural aspect of individuals. For this reason

sociological explanations of co-operations within networks will be turned to as well. In the

next step follows a discussion of what the current state of the literature says about successful

networking practices and the skills that are required to network well.

In our efforts to find empirical evidence for the factors leading to successful co-operation

within net structures a qualitative approach will be taken. Based on the insights gained from

the previous chapters an adapted content analysis procedure is developed, analysing texts in

form of biographies of successful individuals from the financial sector.

Introduction

5

Diagram 1.1 depicts the logical set-up of this research paper.

DIAGRAM 1.1: STRUCTURE OF THE DISSERTATION

♦ Interpersonal relationships ♦ Pre-requisites - Elements of Networking

Social competence Trust Communication Information and knowledge management

♦ Networking strategies

Chapter 5 Networking skills

♦ Summary of the methodology, approach and results ♦ Critical evaluation of the paper ♦ Scope for further research

Chapter 7 Summary and conclusions

Chapter 6 Empirical research

♦ Introductory thoughts on network research ♦ The research process

Methodology ♦ Data selection ♦ Evaluation criteria/measurements ♦ Results and findings

Network structure Network activities Networking skills Others

Chapter 4 ♦ Why networks? ♦ How networks operate ♦ Network measurements

Network analysis

Chapter 3

Theoretical Preliminaries Chapter 2 ♦ Systems theory (Niklas Luhmann)

♦ Theory of structuration (Anthony Giddens)

Introduction Chapter 1 ♦ Presentation of the research question and aim of the paper ♦ Structure of the thesis

Network-definitions

Overview of different definitions and explanations of networks System theoretical development of a new or own definition of networks – „Strategic People Networks (SPNs)”

Theoretical Preliminaries

6

Chapter 2. THEORETICAL PRELIMINARIES

In this chapter we will study a series of global theoretical concepts that later will be applied to

our specific field of interest – networks. At first we will look at Niklas Luhmann´s

“Systemtheorie” (“systems theory”). His main goal is to understand how society functions, to

find a way in which societal complexity can be reduced and social order be restored. A

fundamental contribution of Luhmann´s approach was to change the view of society in terms

of social classes to that of a functionally differentiated society17. As the reader will see

Luhmann´s teachings provide us with a framework, which helps us to focus our object of

study and to clearly define it, too. Therefore, after discussing Luhmann´s systems theory we

will look at it within the network context.

Subsequently we will turn to Anthony Giddens´s “Theory of structuration”. In his theory he

concentrates on the individual. His interest lies on an individual’s behaviour within society

and the interaction between actors, while paying specific attention to the practical

implications of social analysis. Through the “duality of structure” Giddens overcomes the

problem of dualism. As opposed to the customary belief of dualism, which is the division

between agent and structure, and object and subject, he sees them as inter-reliant and

entangled, resulting in a duality. Thereby he states that actors are influenced by their social

structures as well as reproducing them via their own actions.18 His teachings will aid us in the

empirical analysis of the individual’s operations within SPNs. Just as with the systems theory

we will then apply Giddens theory to networks.

For these reasons both approaches are, first of all, useful for the definition and derivation of

our special social structure – SPN. Secondly, they aid us in clarifying the focus of our

empirical research. As we will see the two theories agree on a variety of basic elements and

complement each other in other areas.

The reason for choosing to provide a separate chapter for the discussion of these theories is

because these are fundamental theories within the social sciences and are not explicitly tailor-

made for or aimed at interpersonal networks. The network specific theoretical teachings are

presented in chapters 3 (“Network Definitions”) and 4 (“Network Analysis”). All these

17 See this chapter, p.7 ff 18 See this chapter, pp.25, 40 and 42


7

theoretical and methodological approaches build the fundamental for the empirical research in

chapter 6.

2.1 THE SYSTEMS THEORETICAL APPROACH

Throughout this section we seek to acquire an understanding of “the systems theory”. The aim

is to obtain a sound theoretical basis for our further research. For this reason we will turn to

the core elements of Luhmann´s systems theory, rather than endeavouring into a detailed and

in-depth discussion. Although he was not the initiator of the system theory we will

concentrate on Luhmann´s teachings, since he had arguably the most impact on this

theoretical area.

Niklas Luhmann (1927-1998)19 was one of the most renowned (German) social scientists of

this century, whose teachings greatly influence today’s academic landscape. His desire was to

find a way to restore social order despite society’s numerous problems. This he intended to

do in his “theory of society”, of which his later famous teachings known as “the systems

theory” is a part of.20,21

In order to find a solution to the disorder of human society he firstly aimed to develop a

framework within which society, human behaviour and their development could be explained.

His intention was to build a model, which, on the one hand, included as much complexity as

necessary to reflect reality. On the other hand, Luhmann argues, the human mind is incapable

of absorbing, processing and understanding all the facets and complexities of the world. Thus,

he strove to find a system that would provide a picture of the world that would be

comprehensible for the individual through the reduction of complexity. At the same time the

model needed to reflect reality as closely as possible, in order to find real, i.e. practical and

adaptable solutions to the problems of society.

Unlike social science as it was taught prior to Luhmann, his approach was neither to

reproduce society within his models nor did he try to fully understand it. Rather he attempted

to explain how society functions.22,23

As a complexity reduction method Niklas Luhmann views society in terms of a network of

different systems, such as the economic, education or healthcare system.24,25 All these 19 Jahraus, 2001 20 Horster, 1997 21 Luhmann, 1984 22 Luhmann, 1984 23 Jahraus, 2001


8

different sub-systems interact to make up the superior system called society. Consequently, by

being a network structure made up of different systems society is no longer perceived as a

hierarchical structure. Rather, each system has their own unique function with an equal worth

and weighting. “The unlike systems stand as equals next to each other. This is the order of the

social systems among themselves within a functional differentiated society.”26

Although it is not the main focus of this paper, it is worthwhile noting that as such, the

political system no longer stands at the top of society with a ruling function, as it would do in

a hierarchy. In the Luhmannian understanding of society politics, as all other systems, has a

specific function, which he identifies as a compensatory one. Luhmann argues that the state

and other political institutions need to cater for needs that otherwise would not be satisfied.

Examples of these are measures for environmental protection, ensuring the provision of

education, health care or roadwork. However, at the same time it is not the function of the

state to take over all responsibility, leaving the individual with no personal responsibility for

his own actions and for society in general.

Another revolutionary stance taken by Luhmann is to change the perception of society in

terms of the social classes into a modern view of a functionally differentiated society. “I

believe that the explanation lies in a modification of the primary principle of societal

differentiation: in the re-organisation of the social system of stratification into a functional

differentiation. This transformation gives the modern society its character. In the eighteenth

century this development was more or less clearly grasped, and this is why the conceptual

universe of old Europe lost its plausibility.”27

Thereby he sees persons within society in terms of their social function as opposed to their

social origins. While traditionally the focus lay purely on a person’s social background, today

his or her function in society takes priority. For this reason it is possible (in principle) for an

individual from any social class to fill any vacant position, given he has the required

prerequisites such as schooling, language abilities or work experience.28

24 Luhmann, 1984; Luhmann ‘s justification or motivation to view the world in terms of systems stems from the

ancient European semantics perceiving the individual as a part of the whole - in terms of society. 25 Horster, 1997 26 Horster, 1997, p.68 27 Luhmann, 1990, p.15 28 However, it would be naïve to state that a person’s social background and personal contacts would not be of

importance today. Nevertheless, Luhmann’s functional view of society explains how these social factors have lost in significance.


9

According to Luhmann each system differentiates itself though its operations, i.e. its

functions, from other systems. Hence, taking the functional view provides yet another

justification for his systems approach.

Now the question needs to be asked as to what according to Niklas Luhmann is “a system”.

As stated above Luhmann understands “society” to be a “social super system” within which a

wide host of other social systems, or “sub-systems”, exist and interact. A social sub-system

(ego) operates in an environment consisting of all other social systems (alter ego1, alter ego2

… alter egon)29 within society as a whole. Thereby, each separate social sub-system operates

within the realms of the same social super system known as society, yet has its own unique

environment. The reason being that the social environment is the result of society minus ego

for each individual sub-system, as depicted in diagram 2.1. “The environment receives its

unity30 only through the system and only relative to the system … it is for each system a

different one, since each system subtracts only itself from its environment.”31

The area inside the circle represents the super system “society”. The focal point is the social

sub-system ego, represented by the area in the white square. The environment for ego is the

grey area minus ego’s white area. We can also see the interaction between the individual

systems; yet, not all sub-systems necessarily are required to interact with all other sub-

systems.

As Willke32 explains, a “system” can be described as a connection of elements “… whose

relationships among themselves are quantitatively more intensive and qualitatively closer

than their relationships to other elements.”33 A system consists of specific elements, which

are typical for this system and cannot be found in other systems or within another

environment. “The characteristic properties are not to be deducted from its elements in

isolation. Rather through their unique synergetic effect do the system specific character traits

materialise. The individual elements connect in order to create new qualities. This is what

Luhmann refers to as the emergent characteristics of a system.”34

29 Where n is the maximum number of other social sub-systems, i.e., maximum number of alter egos. 30 In the sense of identity 31 Luhmann, 1984, p.36 32 Willke, 1982 33 Willke, 1982, p.149 34 Horster, 1997


10

DIAGRAM 2.1: SOCIETY, THE ENVIRONMENT AND SUB-SYSTEMS

In order to be able to refer to a system as a social system in the Luhmannian sense an

important element is required, namely “Autopoiesis”35. This term refers to the self-

maintenance and self-creation characteristics of social systems. “A system not only observes

itself, it also generates and maintains itself. ‘Systems have a tendency to maintain themselves

– otherwise they would disintegrate into chaos, into entropy’ (Tönnies, 1993)”36. Whereby

Horster proposes self-observation to be the “… most important condition for the improvement

and reproduction of social systems”.37

Citing Luhmann we can say that “… there are self-referential systems … there are systems

with the ability to create relations to itself and to differentiate these relations to relations it

35 Maturana and Varela derived the terminology Autopoiesis from the Greek words “auto” (self or alone) and

“praktikos” (to carry out an act or practice something). Further the word “poietikos” means “to create or produce something” and similarly “poein” is to be translated with “to make, do or create something”. Furthermore, they base the meaning of this term on Plato who thought that science is threefold: first it is practical, secondly science means to create or produce something (referring to the poietical aspect) and the third aspect is observing (theoretical). Maturana and Varela, 1987, p.55 ff See also Capra, 2002; Horster, 1997, p.61, Kahle and Wilms, 1993, p.19 ff

36 Horster, 1997, p.61 37 Horster, 1997, p.65

The super system society

Ego’s environment Social sub-system

alter ego2, e.g. economic system

Social sub-system alter ego5 Social sub-system

alter ego4

Social sub-system alter ego3, e.g.

health care system

Social sub-system alter ego1 , e.g.

educational system

Social sub-system alter ego4




Social sub-system ego


11

has with its environment. …”38 “… systems are not just occasionally and not simply adaptive,

rather they are structurally orientated to their environment and could not exist without the

environment. They constitute themselves and maintain themselves through the creation and

maintenance of the difference to their environment, and they use their boundaries to regulate

these differences. Without these differences to the environment there would not even be self-

reference, since differentiation is a functional premise of self-referential operations. In this

sense boundary maintenance is system maintenance.”39 In other words by explicitly stating

the differences between itself and the environment the system clarifies its own identity.

Jahraus describes social systems according to Luhmann´s teachings as “… operatively closed,

self-referential processes.”40 Jahraus’s reference to the operatively closed processes stems

from Luhmann´s understanding that systems differentiate themselves from other systems

through their actions and operations, i.e. through their functions. As mentioned above this has

been the revolutionary stance which lay the foundation for his later work. Luhmann explains

that systems not only define themselves in terms of their mode of operation, but they also

differentiate themselves from their environment. Moreover “The social function of a system

consists of the differentiation to its environment through its specific mode of operation and to

thereby stabilise its boundaries.”41 In fact Maturana and Varela were the first to claim that

only autopoietic systems can be referred to as “living systems”42.

The environment does not contribute to the operations, but brings about disturbances to the

system. Thereby the social sub-system differentiates itself from the environment through its

modes of reproduction, whereby systems focus on operations and environments on

disturbances. Consequently, the structures of the social systems need to be clearly defined and

fulfil the aim of clearly differentiating the system from other systems, i.e. from the

environment. Further the structures of the system need to be flexible enough to apply them in

a variety of situations in the uncontrollable and changing world, i.e. environment. Thereby,

social systems fulfil their second function that is not only to stabilise themselves, but to also

stabilise the environment.43 Through this approach we can see an attempted solution to

38 Luhmann, 1984, p.31 39 Luhmann, 1984, p.35 40 Jahraus, 2001, p.306 41 Horster, 1997 42 Maturana and Varela, 1987, p.56. See also Capra, 2002, p.27 ff 43 Horster, 1997


12

Luhmann´s main problem, namely to restore order by solving the numerous problems of

society.

As mentioned above, the focus lies on the operative differentiation of systems, which are

tightly knit with self-observation and self-reference of the social systems. Luhmann

emphasises on this issue by stating that “Self-reference can only be realised within the current

operations of a system, when a self44(be it in form of an element, a process or a system) can

be identified through itself and be differentiated against another 45. Systems need to be able to

handle the difference of identity and difference, in order to reproduce themselves as self-

referential systems; or to word it differently: reproduction is the handling of these

differences.”46 As we will see the view that societies are self-referential systems that are

created and maintained by their members is a main element of Giddens´s structuration theory

as well.47

In order to demonstrate the self-differentiation of systems through their explicit modes of

operations, Horster turns to the example of communication as the mode of operation of social

systems. “Via communication, the social mode of operation, autopoietic psychical systems are

connectable and can make themselves understood.”48 Communication consists of elements

such as words, sentences and gestures, all of which are temporary and need to be frequently

repeated, i.e. re-produced. However, the elements are not simply reproduced in the same order

as before, rather they are arranged and applied according to the current need of each situation.

Thereby Horster explains that reproduction does not mean repeating but he speaks of a “…

reflexive production, a production stemming from production”49. This reproduction of

communication is referred to as operation. The special mode through which a system

connects and communicates with the environment is unique to itself. Everywhere where there

is no communication, Horster explains, the boundaries of society are reached and beyond

them there is no society.

Following this train of thought Luhmann derives the term “world society”, since everywhere

in the world we find communication and, thus, society.50 Moreover he states that “Human

beings, concrete individual persons, take part in all social systems. But they do not enter into 44 “ego” see diagram 2.1 above 45 “alter ego” see diagram 2.1 above 46 Luhmann, 1984, p.26 ff 47 See this chapter, p.26 48 Horster, 1997, p.74 49 Horster, 19997, p.64 50 Horster, 1997


13

any of these as determinant parts themselves or into society itself. Society is not composed of

any human beings: it is composed of the communication among human beings.”51

What has been described here is the external differentiation of systems. Luhmann also speaks

of internal differentiation of systems. When faced with the super system society we find a

series of sub-systems that differentiate themselves from other sub-systems, which for the

individual sub-system make up the environment. The difference between environment and

system is repeated and included within the system society. Horster explains that by

differentiating themselves from other systems individual sub-systems represent or reproduce

the difference between environment and (the system) society as a whole. Hereby the complete

system is reconstructed as an internal difference between sub-system/sub-system

environment, where each sub-system differentiates it for its individual case. “Consequently

society multiplies its own reality numerous times within its different sub-systems. By this

means the modern social system is at the same time society as well. As examples we can look

at the political functional system and its internal unique social environment, religious

functional systems and its internal unique social environment or the economic functional

systems and its internal unique social environment.”52 “Luhmann differentiates the social sub-

system according to their functions, whereby each system within society can have many

functions, however, it needs to have a main or essential function through which it identifies

itself, since it would otherwise be difficult to recognise which function a system has within

society.”53 Subsequently it would be difficult to identify a system (as that particular system)

as well as its self-description, i.e. self-definition.

Luhmann places an emphasis on the issue of observation. When an observer examines a

specific phenomenon he or she needs to make a selection and decide where to draw the

boundaries of the system(s) that he analyses. The observer needs to clearly define his object

of study in order to reduce complexity and so as to make any useful study possible. “One can

answer the question: how is recognition possible? by saying: through the introduction of

differentiation.”54 “An observation is a differentiating operation that describes something. …

to describe something is the act of recognition and understanding.”55

51 Luhmann, 1990, p.30 52 Luhmann, 1984, p.262 53 Horster, 1997, p.66 54Luhmann, 1990a, p.34 55 Horster, 1997, p.74


14

In order to make practical or sensible selections Luhmann argues that an individual uses

sense. “The phenomenon sense appears in form of an excess of references to other possible

experiences and actions. Something is in the focus, in the centre of the attention, and others is

hinted at marginally, as a horizon for an and-so-on for the experience and actions. … The

reference up-dates itself as a reference point of reality, but does not refer solely to real events

(e.g. presumptive reality), but also possibilities (conditional reality) and negatives (unreal,

impossibilities). The total of the references made from the sensible intended object offers

more than can factually be up-dated in the next step. Consequently the form of sense forces a

selection as a next step through its reference structure. … Sense grants the currently carried

out action or experience a redundant opportunity. In so doing, the insecurity of selection is

compensated for. Redundancy has a security function. One can allow oneself to make

mistakes as not all possibilities are exhausted. One can return to the initial starting point and

chose another path.”56

Sense, according to Niklas Luhmann, developed out of the intertwining co-existence of social

and psychical systems. “Psychical and social systems established through co-evolution. The

one system type is a necessary environment for the other. … Persons cannot develop and

survive without social systems, and vice versa. The co-evolution led to a mutual achievement,

which is used from psychical as well as social systems. Both system types rely on and are

dependent of it, and for both it is binding as an imperative, inevitable form of their complexity

and self-reference. We call this evolutionary achievement ‘sense’”.57 Besides talking about

the creation of sense this statement also tells us that individuals cannot exist without a social

system and likewise a social system cannot exist without people.

There are numerous debates and teachings surrounding the paradigm of the term sense. For

the purpose of this paper it suffices to acknowledge that Luhmann understands sense in terms

of the above, based on the teaching of the Bewußtseinstrom (flow of consciousness) by

Husserl. The reason being is that he assumes a permanence of operations, which is necessary

in order to maintain systems.58 Consequently the author states that: “Sense is a constant up-

dating process of possibilities. Since sense can only be the difference of current experiences

and the possibility horizon can only be sense, will each up-date always be a virtualisation of

56 Luhmann, 1984, p.93 ff 57 Luhmann, 1984, p.92 58 Horster, 1997


15

possibilities that can be taken in the next step.”59 Furthermore, returning to Luhmann´s

approach of complexity reduction, he states that “… sensible observation is only possible in

the form of differentiating, through a ‘reduction of the external world complexity’”60.

According to Luhmann the main function of sense is to be a selection tool, in order to make

the experiences with the real and social world comprehensible for the psychical system.

We have said that sense is a selection tool and any social system is required to choose and

draw his own boundaries. Moreover, Luhmann said that individuals are social sub-systems.

Consequently, he shows that by defining ones own limits on the basis of sense a social system

creates its identity, because to a person “ … Sense leaves no other choice but to choose.”61

This issue leads us to another essential theme in Luhmann´s system theory, namely

contingency (Kontingenz). Contingency and double contingency refer to a problem that arises

out of the freedom to choose from various social combinations.62 “The term is derived

through the exclusion of necessities and impossibilities. Something is contingent when

something which is neither necessary nor impossible, which is as it is (was or will be), can be

but is also possible differently. … it describes objects along the horizon of possible

alternatives. It assumes the given world, hence, does not describe the possibilities in general,

but what is realistically a possible alternative.”63 One alternative is chosen among a wide

variety of other possibilities, while something else could have been chosen with an equal

probability.

The problem of double contingency occurs when “Everyone acts contingently, i.e. everyone

could also act differently and everyone knows this about himself and about others and

accounts for the unlikeness that ones own actions will have an opportunity to interface (and

thereby: the creation of sense) with the actions of others; since the self-commitment

(Selbstfestlegung) would require that others would commit themselves, …”64

At first sight this situation of uncertainty, which seemingly may lead to stagnation seems to

hold no solution and no opportunity for interaction between the systems. Nevertheless, Niklas

Luhmann proposes double contingency to be the starting point for the creation of a social

59 Luhmann, 1984, p.100 60 Luhmann, 1973; p.121 61 Luhmann, 1984, p.194 62 Jahraus, 2001 63 Luhmann, 1984, p.152 64 Luhmann, 1984, p.165


16

system. “… double contingency … contributes to actions that serve the selective

establishment of systems …”65 He elucidates that over time morals lead to a solution in such

situations and that “in such a situation trust or distrust among the parties can develop.”66 “ …

however much by chance an action occurs: it receives its specific sense based on the fact that

ego and alter can assume that they are treated in terms of selection.”67 Phrasing it differently,

every system ego knows that they themselves, are being considered and selected from alter.

Alter either chooses for or against ego and all the other alters, in the same way as ego itself

does with alter.

“Only within this context can an ‘implied sense’ of social interaction (Max Weber) be built.

The interaction can still form consensus or dissent, it can lead to co-operation or

confrontation, but it cannot avoid that selections which are arranged and made with the other

in mind occur, and that thereby the formation of social systems occur. … The problem of

double contingency explains, in other words, the auto catalyst of social systems. The problem

itself is the auto catalyst, which raises the likelihood of the system formation, which itself is

made out of by-chance events. The auto catalyst itself is not used up and continues to exist as

contingency problem. … as a double contingency problem the self-referential circle of social

situations becomes a form which at the same time leads to a situation where uncertainty is

turned to certainty; that the reciprocate interdependencies are disturbed and that almost

every coincident will be utilised as a break to the interdependencies.”68

Jahraus explains that “double contingency hinders the restoring of social order. …it [social

disorder] can only be solved when both sides, ego and alter, take account of this reciprocate

uncertainty within their selection once more. This uncertainty is the source of social systems.

Social systems regulate expectations, and also expectations of expectations, i.e. what one

expects is expected. Hence, double contingency becomes the catalyst of social systems since it

forces the reduction of double contingency and to diminish complexity. However, double

contingency does not occur just the once, … each solution to a problem leads in form of a

process to new situations in which there is double contingency.”69

Thereby we can see another explanation or path to social order. Double contingency leads to

the creation of a social system, set in a situation that calls for selection. Selection, as we have

65 Luhmann; in Jahraus, 2001, p.12 66 Horster, 1997, p.91 67 Luhmann, in Jahraus, 2001, p.12 ff 68 Luhmann, in Jahraus, 2001, p.13 69 Jahraus, 2001, p.311 ff


17

seen above, is made on the basis of sense. Sense, furthermore, enables social systems to make

the required internal and external differentiations that are necessary for them to be able to

refer to themselves as self-referring social systems. The differentiation processes are

imperative for us in order to reduce complexity, so as to be able to observe and understand,

while at the same time studying an object in a manner, which is as close to the real world as

possible.

When talking about sense we quoted Luhmann´s statement about the co-evolution of the

psychical and social system70. Furthermore, we saw that individuals cannot exist without a

social environment and vice versa.71 Nevertheless, Luhmann views psychical and social

systems as two different ones, each with their unique mode of operation. The psychical

system of the individual has consciousness as a mode of operation while the social system

utilises communication as its mode of operation72. The interaction between the two systems

requires the preparation of conditions under which these can interface. Luhmann proposes

that a structural interaction between two different systems can take place on the basis of

morals. Moral in the Luhmannian sense “…refers to the question as to whether and under

which conditions individuals appreciate themselves and when they do not. … in this sense we

mean the person as a whole and not only individual actions, achievements or skills, … as

moral of a social system we refer to the conditions under which each system decides what

deserves respect and what deserves disrespect …”73 With this paradigm of moral we also

refer to the possibilities for actions, which regulate the social order. By this token we

understand good as a possibility that lies within this frame of socially acceptable actions,

while something bad lies outside this frame. Linking back to the issue of double contingency

we can see that through morals the double contingency problem is reduced, and our certainty

rises since there are fewer possible alternative actions than they were without the introduction

of morals. Consequently, Luhmann understands the function of morals to be the restoration of

social order.74 It is important to note that Luhmann´s concept of morals, in their stabilising

function within society, does not solely apply to the psychical system, but to all social

systems.

70 See this chapter, p.14 ff 71 See this chapter p.14 72 As we have seen on p.12 this chapter 73 Luhmann, 1984, p.318 ff 74 Horster, 1997


18

Another stabilising element is structure. Hereby Luhmann talks about the internal structure or

setting of a system. Each structure is built according to the system specific mode of operation,

which is its codes75, i.e. semantics. We have seen that expectations offer possibilities for

actions. Luhmann suggests that expectations are formed through morals and values via double

contingency as well as through structure. The stabilisation of expectation structures is,

according to Luhmann, the central problem of each social order. Consequently, we can say

that social structures are nothing but expectation structures, which require stabilisation.76 “The

restoration of the ability to expect is not a requirement of stability, but a requirement of

reproduction. Expectations are an autopoietic requirement for the reproduction of actions,

and in this sense they are structures. Without these [expectations] a system in any given

environment would cease to operate – on its own initiative - due to a lack of internal ability to

connect or interface. … Expectation structures are firstly simply a condition, which grants the

possibility to interconnect and act, and thereby, it is a condition for self-reproduction … The

elements … need to be constantly renewed; otherwise the system would cease to exist. … This

can only be prevented by constituting the sense of action within a horizon of expectations – be

it because one expects the continuation of a specific order [of actions] such as when dialling

the telephone where one expects to dial the next number, or be it that one expects a

complementary action [from another party] such as when ringing the doorbell one expects the

door to be opened. …”77 In other words there is a certain system specific action or operation

which can be expected to follow another. 78

A main advantage when regulating and stabilising expectations is the subsequent reduction of

disappointments, whereby Luhmann differentiates between normative and cognitive

expectations. In essence, normative expectations are linked with a certain behavioural codex,

while cognitive expectations concern intangible aspects such as looks. Horster cites an

example that Luhmann gave in order to explain the difference. “When for instance I receive a

new secretary […] and I expect a blonde but receive a brunette […] can I not, for example,

expect her to dye her hair. With respect to her efforts am I entitled to have my expectations;

and I do not need to adjust my expectations to a level of effort chosen by her.”79 The second

example demonstrates normative expectations. We can insist on the fulfilment of normative

expectations, while we cannot impose the fulfilment of cognitive expectations. Furthermore,

75 See this chapter p.20 76 Horster, 1997 77 Luhmann, 1984, p.392 78 Compare with Giddens, this chapter, p.30 79 Luhmann, „Normen in soziologischer Perspektive“, 1969; in Horster, 1997, p.111


19

Horster explains that the responsibility for the disappointment in case of normative

expectations lies not with the individual that is being disappointed but the individual who acts

against the stabilising expectations. Therefore, in case of disappointments, Luhmann speaks

of diverging behaviour.80

We have seen that structures in the Luhmannian sense are structures of expectations and have

a system stabilising function. Structures are a prerequisite for social systems, without these

[structures] social systems could not exist. “Unstructured complexity would be an entropic

complexity; it would disintegrate into disconnected [elements] at any time.”81

However, in order to maintain the structure, structural changes are necessary. In order to do

so, system structures need to be constant and variable at the same time. “That structural

changes occur in such a system is a requirement for self-preservation of this system. … ‘The

process [the structural changes] is the system itself, which preserves itself by changing itself.

… The system that integrates complexity as a latency of possibilities, secures its further

existence with a high chance of success.’ (Bubner, 1984, p.149) … The demand for change

must come from within while the communication needs to continue at the same time.”82

In addition it requires the appropriate communication with which the changes can be

implemented. Luhmann even emphasises that “Especially structural changes need to be

persuasive according to the situation. First of all a continuation of actions needs to be made

sure; only then can one see whether the structural value increases, in other words whether it

[the structure] is appropriate for forming expectations. This implies also that structural

changes occur all the time without announcing them, intending them or without being

explicitly responsible for them. … And it is not seldom the case that structural changes are

realised and communicated only when they need to be changed. … All structural changes are

changes of the system itself (Selbständerung), be it an adjustment to the environment or

not.”83 So, we can see that structural changes are necessary processes in the self-referential

actions of a social system. Moreover, in order to successfully implement changes

good/appropriate communication is required.

80 Horster, 1997 81 Luhmann, 1984, p.383 82 Horster, 1997, p.112 83 Luhmann, 1984, p.476 ff


20

As we have seen communication is the mode of operation for social systems and the boundary

of society is reached where there is no communication. Luhmann categorises communication

into three parts: (i) information, (ii) telling and (iii) understanding.84,85 Luhmann also speaks

of communication media. A medium of communication is used as a means of transfer

between systems (or individuals) in order to enable interaction. Luhmann explains that there

is a whole range of different communication media, such as language, money and power,

whereby language poses the central and unique medium of communication (for social

systems)86. (Further, unlike other scholars, especially Habermas, he makes no differentiation

between communication and regulative media.)87

Supplementary to the above, Luhmann declares that every medium receives its own coding.

The concept of codes is rooted in the need to reduce complexity, which arises due to

increased contingency in communication. He explains that communication pre-requires a non-

identity of those who take part in it. This results in differences in the perspectives and, thus,

will never lead to a complete consensus of all experiences. This basis of all communication is

structurally accepted within communication in terms of language and is taken into account by

accommodating for possibilities of negation. Thereby there are always two options for

information: a positive and a negative one. Luhmann refers to structures, which have this dual

function as codes. These symbolic codes are instruments with which to reduce complexity,

which comes about due to the increased contingency stemming from language. Other such

symbolic codes can be certain behavioural codes.88

The binary code simply refers to the choices between a positive or negative and can be found

in all communication media.89 Examples of such are “have or not-have”, “love or not-love”,

“right or wrong”, “true or false” and most basically “yes or no”. Further, Luhmann explains,

probably the most important property of codes is “that the codes of a medium are suited to

define the uniqueness [in terms of identity] of a system compared to other systems of its

environment.”90

84 Luhmann, 1990, p.115 85 Luhmann, in Jahraus, 2001, p.78 ff 86 See also Fischer and Maschler, 2004, chapter 5 „Networking skills“, p.161 ff 87 Luhmann, 1984 88 Luhmann, in Jahraus, 2001, p.37 89 Luhmann, „Die Gesellschaft der Gesellschaft, unveröffentlichtes Manuskript”, 1995, p.191; in Horster, 1997,

p.138 90 Luhmann, „Die Gesellschaft der Gesellschaft, unveröffentlichtes Manuskript”, 1995, p.192; in Horster, 1997,

p.142


21

Luhmann gives a series of examples of media. For instance “The coding for the economic

medium is based on the difference between have and not-have, which leads to the legal term

of property … the function of this medium is first and foremost in the selective satisfaction of

desires and the transfer of exchange processes through unspecified equivalents. …”91 At the

same time it encourages individuals to accept property and wealth as such even if they

themselves do not own it. With this understanding, according to Luhmann, it is possible to

carry out economical processes.92

In general the function of generalised communication media is to make reduced complexity

transferable and, thus, to ensure the ability to interface even in highly contingent situations.

Therefore, the general function of communication media is a vital prerequisite for the creation

and maintenance of any social system. Without these media, Luhmann explains, could the

contingency of actions and experiences not be sufficiently raised. It could not be taken as a

given that the one member of a system takes the behaviour of another into account when

making his or her selection. “Only under these two conditions of high contingency of selection

and sufficient non-arbitrary relationships between them can complex systems establish, which

can leave it structurally open, yet, can synchronise how everyone behaves.”93

On top of what has been said about communication thus far, another important aspect is

discussed by Luhmann, which are values as symbolically generated media of communication.

These symbolically generated communication media are a functional equivalent of morals.

“We use the term ‘symbolically generated’ with reference to media which use generalisations

in order to symbolise the context of selection and motivation. … important examples are:

truth, love, property/money, … ”94

When certain conditions are present there will be a motivation to accept the communication,

which ensures its continuation. These symbolically generated communication media are used

in order to provide this motivation. Thereby, Horster proposes, can symbolically generated

communication media be regarded as a special type of communication structures.95

A special type of symbolically generated communication media are values. Luhmann states

that the function of values as symbolically generated communication media is “… solely to

provide a guidance for actions and behaviour in situations of communications which is not

91 Luhmann, in Jahraus, 2001, p.49 92 Luhmann, in Jahraus, 2001, p.49 93 Luhmann, in Jahraus, 2001, p.39 94 Luhmann, 1984, p.222 95 Horster, 1997, p.134


22

questioned by anyone.”96 Hence, we can see that, firstly, symbolically generated

communication media pose a motivation to accept communication. Secondly, values imply a

certain behavioural codex, about which exists a social consensus. Thereby the contingency

problem with reference to communication is reduced.

In the above section we have seen that Niklas Luhmann provides us with a framework with

which we can attempt to explain behavioural phenomena within society. Secondly, we can

use this framework in order to study a wide range of problem areas and aim to find a solution

to them. The solution to society’s main problem, according to Luhmann, is the restoring of

social order.

He shows us that society consists of a wide range of social (sub-) systems, which together

make up the super system society. Each social sub-system operates in its unique environment.

Through means of self-observation, self-reference and self-differentiation it derives its

identity. This identity mainly stems from its unique mode of operation. Social systems use

communication as its mode of operation, where the most prominent communication medium

is language.

In any operation a system carries out it is required to make a selection of some form. These

selections are made on the basis of sense and morals. Due to the freedom to choose from an

almost endless number of social combinations, systems face the contingency problem. Since

all systems act among other systems a situation occurs where all parties face the contingency

problem, leading to a situation of double contingency. Luhmann shows how morals and

values regulate and stabilise expectations. By stabilising and regulating expectations the

problem of double contingency, and consequently risk, is reduced aiding the restoring of

social order. Furthermore, he proposes that structures of social systems in fact are structures

of expectations, which need to be stabilised and regulated in order to re-instate social order.

Communication entails different system specific codes, which increase the possible actions

and experiences a social system can choose from. Thus, communication, through the codes,

increases double contingency. Therefore, in order to motivate social systems to communicate

so called symbolically generated communication media, such as values money or power are

used. 96 Luhmann, „Die Gesellschaft der Gesellschaft, unveröffentlichtes Manuskript” 1995, p.165; in Horster, 1997,

p.137


23

Luhmann in the network context

First of all Luhmann´s system theory helps us in the structuring of this work and specifically

in focusing on the object of this research by clearly defining it.97 Through his systems-

theoretical approach Luhmann not only helps us to structure the direct research object, in our

case Strategic People Networks, and their elements. He also aids us to understand the

environment and its individual elements. Consequently, we are able to understand and analyse

them. Secondly, Luhmann very clearly defines what social systems are. These criteria also

pose a series of factors and elements, which we can focus on and analyse.

The author also speaks of communication, how it takes place among the social systems and

individuals within them. Further he explains the basis of communication and how it evolves.

All of these aspects are very important for the social system SPN and by discussing these

Luhmann provides us with a framework according to which we can examine them.

The systems approach not only helps to understand how SPN interact with other social sub-

systems in their environment. When looking at the SPN as a composite of a set of sub-

systems we can apply Luhmann´s approach to help us understand the endogenous factors and

internal interaction within SPNs as well.

Following the discussion of the systems theory approach a series of questions arise with

respect to strategic people networks. Below is a list of aspects that we will aim to analyse in

the empirical research.

♦ Autopoiesis – Do SPNs create, define and observe themselves? If yes, how do they do it?

♦ Self-reference and clear limits – While we will clearly define what we mean by the term

SPN in the definition chapter, the question arises as to whether empirically people who

cooperate in form of SPNs are fully aware that they are indeed part of this type of social

network. Moreover, do they identify and define for themselves the members of that group

and aspects such as the mode of communication, the goals to be achieved, responsibilities

and the limits of the system?

♦ Environment – Is the SPN fully aware of its environment? Is its structure able to react to

disturbances that emerge from the environment? How do SPNs interact with their

environment in general?

97 See chapter 3 „Network Definitions”, p.85 ff


24

♦ Mode of operation: communication – Given that these social networks are social systems,

according to Luhmann their mode of operation should be communication. The question to

be asked is, thus, (a) is the mode of operation indeed communication within SPNs?, and

(b) how does this communication take place within SPNs and with sub-systems in the

environment?

♦ Communication Media – (a) what are the communication media within SPNs? (b) can we

identify SPN-specific symbolic codes such as in form of behavioural codes? (c) is there a

set of common values within SPNs, which can be used as guidance for actions and

behaviour as proposed by Luhmann?

♦ Selection through sense, morals and double contingency – In his writings Luhmann shows

how selections are made on the basis of sense and morals. In this context he explains the

concept of “double contingency”. Within the empirical research process it is, hence,

interesting to see how within the strategic people networks selection processes are made.

♦ Structures of expectations – Based on the concept of double contingency certain

expectations are created within the social systems. These expectations, via double

contingency, are stabilising. Again, the question surfaces as to whether indeed double

contingency is stabilising within SPNs.

2.2 THE THEORY OF STRUCTURATION

Anthony Giddens (1984) reproaches many social scientists with not being focused on the

issues of real importance. According to him they engage in somewhat philosophical

discussions about topics such as interpretative matters, questions of relativism, verification

problems and falsifications. Instead Giddens feels that they “…should be concerned first and

foremost with reworking conceptions of human being and human doing, social reproduction

and social transformation.”98 This is exactly what he attempts to do in his “theory of

structuration”99. According to him the benefit of his theory can be seen in that it “… offers a

conceptual scheme that allows one to understand both how actors are at the same time the

creators of social systems and yet created by them.”100

This phenomenon of a social system’s self-creation and self-maintenance is what Luhmann

and Maturana called Autopoiesis.101 As a pre-requisite for these self-referential systems both,

98 Giddens, 1984, p.xx 99 For further discussion about Giddens’s approach and intentions see e.g. Burkart, 1994, p. 17 ff 100 Sydow et al, 1995, p.23 101 See Luhmann this chapter, p.10


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Giddens and Luhmann, see the need for self-observation, self-reference or self-monitoring.

Hereby the two authors include the ability of the members to observe themselves, differentiate

themselves from other structures, i.e. their environment, and from other individuals. Luhmann

even goes as far as saying that only by differentiating itself from the environment can a

system define itself and, thus, be. Hence, “…in this sense boundary maintenance is system

maintenance.”102 While Luhmann focuses on the differentiation of social systems, Giddens´s

concept of “Reflexivity”103 embraces aspects such as an individual’s posture or rhetoric as

well.

A further fundamental parallel between Giddens´s and Luhmann´s approach is their respective

emphasis on the self-observation and self-definition of a social system.104

Another main point of criticism that Giddens voices towards specifically the orthodox

approach to social science is a lack of applicability to empirical studies. “If the social science

are to be understood as they were during the period of dominance of the orthodox consensus,

their attainments do not look impressive, and the relevance of social research to practical

issues seem fairly slight.”105 Thus, it is one of his essential goals to develop a theory, which

can be directly applied to, and aid empirical research within the social sciences, focusing on

the themes mentioned above.

In addition he criticises other social scientists for not taking into account the concept of time-

space in their works. Giddens feels that this is an essential element within the social sciences

and has to be included in empirical research at all times. We will return to this issue on pages

28 ff and 33.

Giddens developed the “theory of structuration” in his 1984 book “the constitution of

society”. Within the field of social sciences Giddens focuses mainly on social theory and,

more precisely, on sociology. While speaking of “social theory” Giddens states that “… I use

the term ‘social theory’ to encompass issues that I hold to be the concern of all social

sciences.”106 Thereby the author focuses on “… the nature of human action and the acting

self; with how interaction should be conceptualised and its relation to institutions; and with

grasping the practical connotations of social analysis.”107

102 Luhmann, 1984, p.35 103 See this chapter, pp.29 and 31 104 See Luhmann, this chapter, p.10 ff; Giddens this chapter, pp.29 and 31 105 Giddens, 1984, p.xxxii 106 Giddens, 1984, p.xvi 107 Giddens, 1984, p.xvii


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With his structuration theory Giddens aims to overcome some of the weaknesses of orthodox

views within sociology. “In elaborating the concepts of structuration theory, I do not intend

to put forward a potentially new orthodoxy to replace the old one. But structuration theory is

sensitive to the shortcomings of the orthodox consensus and to the significance of the

convergent developments noted above.”108 Moreover, he very clearly states that his writings

on the constitution of society focus on the modern society only. However, for the purpose of

the introduction to the structuration theory and in order to fit the criterion of being “a

theory”109 he applies the structuration concepts to society as a whole. Giddens´s focus is the

understanding of “human agency” and “social institutions”, which we will look at closely

below.

Further, the author feels that it is important within social theory to analyse issues that touch

upon philosophical questions. It is worthwhile to note this point, however, while Giddens

continues to debate the question as to how important philosophy is to the social sciences and

how it should be applied, it is not the focus of this work.

According to him the different views on the social sciences have “… often been taken to be

epistemological, whereas they are in fact also ontological. What is at issue is how the

concepts of action, meaning and subjectivity should be specified and how they might relate to

notions of structure and constraint. If interpretative sociologies are founded, as it were, upon

an imperialism of the subject, functionalism and structuralism propose an imperialism of the

social object. One of my principal ambitions in the formulation of the structuration theory is

to put an end to each of these empire-building endeavours.”110 He believes that “The basic

domain of study of the social sciences, according to the theory of structuration, is neither the

experience of the individual actor nor the existence or any form of social totality, but social

practices ordered across space and time. Human social activities, like some self-reproducing

items in nature, are recursive.”111 This means that those items are not created by the actors

but rather constantly recreated by actors because of their actions. Through their behaviour

agents build the grounds for continuing the same practices and in that sense reproduce them.

Nonetheless, “… the sort of ‘knowledgeability’ displayed in nature, in the form of coded

programmes, is distant from the cognitive skills displayed by human agents. It is the

conceptualising of human knowledgeability and its involvement in action that I seek to

108 Giddens, 1984, p.xvi 109 See this chapter, p.28 110 Giddens, 1984, p.2 111 Giddens, 1984, p.2


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appropriate some of the major contributions of interpretative sociologies. In structuration

theory a hermeneutic starting point is accepted in so far as it is acknowledged that the

description of human activities demands a familiarity with the forms of life expressed in those

activities.”112 We will return to the issue of “knowledgeability” and “hermeneutic moments”

on pages 29 ff and 57 of this chapter respectively.

In his view “Social theory has the task of providing conceptions of the nature of the human

agent which can be placed in the service of empirical work. The main concern of social

theory is the same as that of the social sciences in general: the illumination of concrete

processes of social life.”113 Thereby we can see, as Sydow et al (1995) explain that the central

element of this premise is “the process”. In addition to “the process” the core of the

structuration theory are “the system” and the “duality of structure”, which we will study

below.

Within the current context “the process” refers to the procedure whereby “action” and

“structure” are practically combined or mediated. “Action” means the altering or stabilising

intervention of the actors in the social world. Additionally “Action is a continuous process, a

flow, in which the reflexive monitoring which the individual maintains is fundamental to the

control of the body that actors ordinarily sustain throughout their day-to-day lives.”114

Giddens views action essentially as “… a continuous process, a flow, in which the reflexive

monitoring which the individual maintains is fundamental to the control of the body that

actors ordinarily sustain throughout their day-to-day lives.”115 Individuals keep monitoring

and reflecting upon their own actions in order to ensure that their behaviour achieves the

desired results.116

Within structuration theory whenever a direct or indirect action refers to other actors one

speaks of “social action” or “social interaction”. Thereby he also includes strategic

manoeuvres, which are based on the practical pursuance of interests. These, furthermore, have

a special connection with “space” and “time”117. Strategic actions aim to maintain or expand

the possibilities of actions of the focal individual (ego). Further, they seek to tie down the

possibilities of actions of other actors with respect to space and time. According to Giddens

112 Giddens, 1984, p.2 ff 113 Giddens, 1984, p.xvii 114 Giddens, 1984, p.9 115 Giddens, 1984, p.9 116 We will go into more details of this aspect on p.59 ff of this chapter. 117 See time-space concept, this chapter, p.33 ff


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strategic actions, such as in form of organising activities, are more strongly focused on the

realisation of self-interests. This can be done via alterations of structural characteristics of

social systems, compared to spontaneous and expressive behaviour. In that way strategic

operations, like any other type of social interaction, are not only limited through structural

characteristics but are made possible through exactly these.

Giddens moves onto an explanation of his view of what constitutes “a theory”. He explicates

that one view about “theory” is “… influenced by certain versions of the logical empiricist

philosophy of natural science, that the only form worthy of that name is that expressible as a

set of deductively related laws or generalisations.”118 However, he points out that this is a

limited definition even within the natural sciences. In his view such an application can only be

relevant to some specific areas of natural science and “Anyone who would seek to apply it to

social science must recognise that (as yet) there is no theory at all; its construction is an

aspiration deferred to a remote future, a goal to be striven for rather than an actual part of

the current pursuits of the social sciences.”119 He looks at a second understanding of “theory“

within social sciences, which is that “‘theory’ in social theory must consist essentially of

generalisations if it is to have explanatory content.”120. However, the author argues that

according to this polemic much of what is referred to as “theory” within social sciences is

more of a collection of conceptual schemes as opposed to “… an ‘explanatory proposition’ of

a generalising type”.121 Giddens feels that the theory within social sciences needs to be

general and “… that the uncovering of generalisations is not the be-all and end-all of social

theory.”122 Thereby academics need to be careful in defining the nature of the generalisation,

in order not to apply too narrow a “generalisation”. Further, Giddens speaks of various types

of generalisations (e.g. regarding the actors’ behaviour) and in the context of evaluating social

change he states that “... theory means in this instance explaining social change by reference

to a single set of mechanisms …”123. However, for the purpose of this work we will not

elaborate further on this topic. It is sufficient for this paper to recognise the issues discussed

thus far.

118 Giddens, 1984, p.xviii 119 Giddens, 1984, p.xviii 120 Giddens, 1984, p.xviii 121 Giddens, 1984, p.xviii 122 Giddens, 1984, p.xix 123 Giddens, 1984, p.xxviii


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In order to ensure that his theorems can be considered “a theory” Giddens refers to the

importance of time-space relations. As he explicates “The structural properties of social

systems exists only in so far as forms of social conduct are reproduced chronically across

time and space. The structuration of institutions can be understood in terms of how it comes

about that social activities become ‘stretched’ across wide spans of time-space.”124 Further,

“… social practices, biting into space and time, are considered to be at the root of the

constitution of both subject and social object.”125

Giddens starts by discussing the concepts of consciousness, unconsciousness and what he

refers to as “the constitution of day-to-day life” 126. He refers to actors also as “human agents”

stating that “… [they] have, as an inherent aspect of what they do, the capacity to understand

what they do while they do it.”.127 “Reflexivity” is the self-monitoring of oneself, meaning

that an individual reflects upon his or her posture, body movement and upon what he or she

says. Giddens sees this reflexive capacity of the human agent as being characteristically

involved in a constant manner with the day-to-day behaviour within the contexts of social

activities. “It is the specifically reflexive form of the knowledgeability of human agents that is

most deeply involved in the recursive ordering of social practices. Continuity of practices

presumes reflexivity, but reflexivity in turn is possible only because of the continuity of

practices that makes them distinctively ‘the same’ across space and time. ‘Reflexivity’ hence

should be understood not merely as ‘self-consciousness’ but as the monitored character of the

ongoing flow of social life.”128 Reflexivity, or as Goffman also refers to it “reflexive

control”129, is an important issues specifically within the context of networking. Here much

attention is paid to an individual’s rhetoric and body language.

As we will see in chapter 5 others, such as Goleman (1998, 1999) see a number of

characteristics, e.g. self-control, self-monitoring, empathy for the situation, and self-reflection

as essential attributes of what he calls “emotional intelligence” otherwise known as “social

competency”. Such properties fall into Giddens´s concept of “reflexivity”.

A concept connected to this is that of “practical consciousness”, which refers to what actors

know about their actions and why they do it. The author refers to it as the “knowledgeability

124 Giddens, 1984, p.xxi 125 Giddens, 1984, p.xxi 126 Giddens, 1984, p.xxii 127 Giddens, 1984, p.xxii 128 Giddens, 1984, p.3 129 Giddens, 1984, p.78


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as agents”130, which is part of their practical consciousness. “Practical consciousness consists

of all the things which actors know tacitly about how to ‘go on’ in the contexts of social life

without being able to give them direct discursive expressions.”131 Giddens emphasises the

importance of consciousness within his theory and explains that there are differences between

consciousness in the sense of discursive consciousness and the unconsciousness. Similarly to

Giddens’ differentiation between these two types of consciousness, other authors have

followed Polanyi (1958) who differentiates between implicit (or tacit) and explicit

knowledge.132

Sydow et al mention Giddens´s three “cognitive layers”133 in his stratification model. These

are “the practical consciousness”, “the discursive consciousness” and “the subconscious

level”134 (see diagram 2.2). While much of the actors’ activity is based on the layer of the

practical consciousness Sydow et al suggest that it cannot be fully explained unlike the

discursive level. As a reason they suggest that the actor may not have the necessary

vocabulary or way of expression.

Giddens understands “structure” to be a memory trace, which incorporates the knowledge

about situations and sequences of actions and repertoires of actions. Sydow et al. propose that

in this sense “structure” should be based on the level of practical sub-consciousness, which is

the reason for why this type of consciousness, together with the routine operations, are of

such importance in the theory of structuration.

Referring back to Luhmann at first it may seem that his understanding of the term “structure”

is somewhat different to that of Giddens. Luhmann perceives structures in terms of

expectations, which via double contingency stabilise society135. However, it seems plausible to

say that in the Giddensian understanding of structure certain expectations about appropriate

behaviour should be build, which is indeed similar to that of Luhmann.

130 Giddens, 1984, p.xxiii 131 Giddens, 1984, p.xxiii 132 See chapter 5 „Networking skills“, p.158 ff 133 Sydow et al., 1995, p.29 134 Giddens, 1984, p.7 135 See this chapter, p.16 ff


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DIAGRAM 2.2: GIDDENS'S 3 COGNITIVE LAYERS

{Source: Giddens, 1984, p.7}

Diagram 2.2 represents the fact that between discursive and practical consciousness there is

no border. On the other hand, there is a clear limit between these types of consciousness and

the unconscious motives. “I do not intend the distinction between discursive and practical

consciousness to be a rigid and impermeable one. On the contrary, the division between the

two can be altered by many aspects of the agent’s socialisation and learning experiences.

Between discursive and practical consciousness there is no bar; there are only the differences

between what can be said and what is characteristically simply done. However there are

barriers, centred principally upon repression, between discursive consciousness and the

unconscious.”136, 137Hence, as, or if, actors learn to formulate and express their consciousness

it becomes discursive. However, the unconscious motives, by definition cannot be

communicated, but simply are acted out. Giddens uses this typology instead of the standard

Freudian triad consisting of ego, super-ego and id. He prefers to use the concepts of “basic

security system” in form of cognition, “practical consciousness” and “discursive

consciousness”.138

“The reflexive monitoring of activity is a chronic feature of everyday action and involves the

conduct not just of the individual but also of others. That is to say, actors not only monitor

continuously the flow of their activities and expect others to do the same for their own; they

also routinely monitor aspects, social and physical, of the contexts in which they move.”139

“Thus it is useful to speak of reflexivity as grounded in the continuous monitoring of action

which human beings display and expect others to display.”140 This means that all individuals

monitor and reflect on their own actions, and on the situations or contexts of actions, while

they expect others to do likewise.

136 Giddens, 1984, p.7 137 See also chapter 5 „Networking skills“, p.158 ff 138 Giddens, 1984, p.41. See also Burkart, 1994, p.18 139 Giddens, 1984, p.5 140 Giddens, 1984, p.3

discursive consciousness

practical consciousness

unconscious motives/cognition


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Burkart (1994) explicates at this point that Giddens does not imply that because of reflexivity

all social agents necessarily are rational actors. Rather, it is important to note that agents

understand their doings and reflect upon them141.

In addition Giddens states that while he accepts the importance of the unconscious aspects of

cognition and motivation he does not fully agree with some of the more traditional views of

these. Hence, he adopts an altered version of ego psychology. At the same time he aims to

relate it to another fundamental concept within his structuration theory, namely

“routinisation”142. “The routine (whatever is done habitually is a basic element of day-to-day

social activity. I use the phrase ‘day-to-day social activity’ in a very literal sense, not in the

more complex [way] … The term ‘day-to-day’ encapsulates exactly the routinised character

which social life has as it stretches across time-space. The repetitiveness of activities which

are undertaken in like manner day after day is the material grounding of what I call the

recursive nature of social life.”143 By the recursive nature Giddens refers to the fact that

structured properties of social activities are continuously reproduced out of the very resources

they constitute of. This happens via the duality of structure. Further he stresses the importance

of routine in daily life to the human psychological mechanisms. Here day-to-day routines

create a sense of security and reassurances. Moreover, because routinisation is mainly part of

the practical consciousness it hinders the “potentially explosive content of the unconscious”144

and the continuous reflexive monitoring of one’s actions from colliding. According to the

author routines provide a very strong reassurance to individuals. With reference to Erikson145

he proposes that without these routines human beings would constantly be worrying and

trapped in “unconscious tensions”146. Further, he points to the social aspect of routinisation

stating that “The routines of day-to-day life are fundamental to even the most elaborate forms

of societal organisation. In the course of their daily activities individuals encounter each

other in situated contexts of interaction – interaction with others who are physically co-

present.”147 Hence, in short we can say that routine in daily life creates certainty.

The issue of reducing risk and increasing certainty is an important one, both, for Luhmann

and Giddens. Both view expectations as a means to reduce risk and to thereby increase

stability within social structures. However, each one has a somewhat different view about 141 Burkart, 1994, p.18 142 Giddens, 1984, p.xxiii 143 Giddens, 1984, p.xxiii 144 Giddens, 1984, p.xxiii 145 Erikson, 1989, p.241 ff 146 Giddens, 1984, p.xxiii 147 Giddens, 1984, p.64


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how these expectations are build. Luhmann explains that members of a social system can

expect a certain outcome or behaviour due to “double contingency”148. Giddens states that

due to regionalisation through time-space and through the knowledge about structural

properties and routinisation can expectations be built, which in turn lower uncertainties149.

Giddens emphasises the importance of the positioning of an individual’s body in social

encounters. First of all “positioning” refers to the fact that within a social encounter there is

always the presence of another individual – the co-presence. The author also explains that the

body language plays an important role in the continuity of the social interaction. Secondly, the

term “positioning” can also be used with reference to the sequence of the encounters across

time-space. As mentioned above Giddens views the issue of time-space as very important.

Time-space also shows where and when as part of the daily routine actors meet and (get the

chance to) interact.

DIAGRAM 2.3: TIME-SPACE


With the graphical presentations in diagram 2.3 Giddens illustrates the concept of time-space.

In (a) he shows the co-location in time-space of two actors. He gives the example of two

individuals who throughout the course of the day meet for a short time in a certain location,

such as a coffee house. After that incident their activities and locations in time-space diverge.

The reason for why the two paths of the individuals do not cross seems to be since they do not

sit or stand in exactly the same place. The diagram on the right simply shows time-space as a

three dimensional grid. 148 See this chapter, p.15 ff 149 See this chapter, p.26 ff

space time

(a) Co-location in time space (b) Three-dimensional time-space


34

While he lists several examples of a person’s possible positioning across time-space, he

explains that “… each person is positioned, in a ‘multiple’ way, within social relations

conferred by specific social identities; this is the main sphere application of the concept of

social role.”150 In other words an individual has several functions to fulfil, depending on the

situation he or she is in. If we take as an example a young professional who researches

towards her PhD we can see a whole hosts of social role she has to fulfil. These are for

instance her role as a PhD student, being a young professional, her function in her family

(daughter, sister, mother, aunt, niece, …). She may quite possibly be a member in a sports

team or choir as well, and maybe even engage in some charity work, too. It can quite clearly

be seen that in each case she has different function to fulfil. We can say that in each case she

is differently positioned and faces different kinds of relationships with the other social agents

in the respective contexts. Furthermore, Knoke even states that “Every social role – whether

that of ‘mother’, ‘lawyer’, ‘boss’, or ‘sergeant’ – exists concretely only in relation to one or

more complementary roles with which it regularly interacts – ‘daughter’, ‘client’, ‘employee’,

‘private’.”151. Hence, a person’s social role can only ever be seen with reference to the

social positioning of other actors.

This leads us onto another aspect of “positioning” within the context of social interactions.

Giddens argues that the notion of regionalisation, which concerns the contexts of positioning,

is of great importance for social theory. The reason being that “The situated nature of social

interaction can usefully be examined in relation to different locales through which the daily

activities of individuals are co-ordinated. Locals are not just places but settings of interaction

[…] by social actors to sustain meaning in communicative acts. But settings are also

regionalised in ways that heavily influence, and are influenced by, the serial character of

encounters.”152 Thus, he explains, regionalisation, similar to routinisation, grants an element

of reassurance. Hereby certainty is increased by the ability to exclude and/or include the

appropriate individuals for any given situation.

Giddens´s “stratification model of the agent”153 helps to understand more clearly the position

of the individual actor within the process of structuration. It is graphically presented in

diagram 2.4.

150 Giddens, 1984, p.xxv 151 Knoke, 1990, p.7 152 Giddens, 1984, p.xxv 153 Giddens, 1984, p.5


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DIAGRAM 2.4: THE STRATIFICATION MODEL OF THE AGENT


Without going into depth of this issue it suffices to recognise the fact that Giddens explains

the difference between actual and intentional actions154. In this context “agency” refers to

events onto which individuals impacted, keeping in mind that they could have acted

differently if they had wanted to. It is specifically important to note that within agency

Giddens is occupied with those events that happened which would not have occurred if the

agent had not intervened.

“What I call a stratification model of the acting self involves treating the reflexive monitoring,

rationalisation and motivation of action as embedded sets of processes.”155 Hence, the

stratification model of the agent shows the continuous and dynamic interplay of the actor’s

motivations of actions, which he needs to rationalise on the level of the practical

consciousness. At the same time the actor continuously monitors and reflects upon his or her

own actions. However, it is not only the individual agent who does so. Rather all agents

expect all other agents to go through exactly the same process as well.

However, Sydow et al argue that not all results of conduct can be seen as intentional. They

suggest that this certainly applies to the organisation of ventures and is specifically true for

the organisation of networks. Actors do try to steer and control their actions and the context of

their actions as well as the consequences thereof in a reflexive manner. However, this does

not imply that actors will always succeed in doing so. The reason lies in the limitation of the

actors’ competence. By “competence” Giddens means their discursive and practical

knowledge and their ability to apply this knowledge in social interaction. He refers to this 154 Compare also Mintzberg, 1994, chapter 3 “Network Definitions”, p.86 ff Mintzberg (1994) refers, among

others, to intended, emergent and realised strategies, which come about due to exogenous and endogenous factors that the players may not have been (and could not have been) aware of. See also Burkart, 1994, p.17 ff

155 Giddens, 1984, p.3

Unacknowledged conditions of action

Unintended consequences of action

Reflexive monitoring of action

Rationalisation of action

Motivation of action


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concept as “knowledgeability”156. On the one hand this competence is limited due the

“unacknowledged conditions of action” and on the other hand by the “unintended

consequences of actions” (see diagram 2.4). There may be conditions of actions that actors do

not know of and, thus, do not consider in their rationalisation processes. Secondly, there may

be consequences of certain actions, which a person may not know of. If he or she had been

aware of those consequences, they may have chosen to act differently.

Actors not only seek to steer and control their actions reflexively but also try to rationalise

them. With the concept of the “rationalisation of action”157 “The reflexive monitoring of

action depends upon rationalisation, understood here as a process rather than a state and as

inherently involved in the competence of agents.”158 Giddens refers to his idea that actors

“maintain a continuing ‘theoretical understanding’ of the ground of their activity.”159 Hence,

Giddens assumes actors to act intentionally whereby they are assumed to have reasons for

their behaviour and are able to communicate these reasons as well. “To be a human being is to

be a purposive agent, who both has reasons for his or her activities and is able, if asked, to

elaborate discursively upon those reasons …”160 “The rationalisation of action, referring to

‘intentionality’ as a process, is, like the other two dimensions, a routine characteristic of

human conduct, carried on in a taken-for-granted fashion.”161 Further, Sydow et al explain

that the reasons for actions may involve subconscious motives, but do not necessarily have to.

This model shows the limitations of all the methods that try to discuss social topics while

focussing on the individual actor. The reason being that when solely looking at an individual

actor, the systematically or unrecognised conditions of actions (including the subconscious

motivation for action) cannot be identified. Moreover, the unintended consequences of actions

cannot be seen. The reason for this is because the consequences are a feedback on the

former.162

As mentioned above one of Giddens´s main building blocks of this theory are “systems”. He

points out the need to practice caution when using the terms “social system” and “society”.

“‘Society’ has a useful double meaning … signifying a bounded system, and social

156 Giddens, 1984, p.xxiii 157 Giddens, 1984, p.3 ff 158 Giddens, 1984, p.3 159 Giddens, 1984, p.5 160 Giddens, 1984, p.3 161 Giddens, 1984, p.3 ff 162 Thompson, 1989, p.56; in Held and Thompson, 1989


37

association in general.”163 “… ‘a society’ is a unity having boundaries which mark it off from

other, surrounding societies.”164 Hereby the author reminds of the traditional view of many

social scientists, like Luhmann, who view limits as essential to the system’s identity.165

However, Giddens sees the structural properties of social systems as being both constraining

and enabling.

“Social systems are organised as regularised social–practices, sustained in encounters

dispersed across time-space … Social systems only exist in and through the continuity of

social practices, fading away in time.”166 Furthermore, the author notes that when one stresses

the issue of regionalisation it reminds us that the level of “systemness” within social systems

becomes very flexible. Moreover, we thereby see that societies usually do not have easily

specifiable boundaries, except when looking at the systems of nation states within the modern

world. In addition, functionalism and naturalism, two core elements of social theory, tend to

lead to us to stray away from the notion that societies are clearly free entities and social

systems highly integrated unities. Giddens argues against this view stating that such systems

usually are seen out of the context of their environment, in which they clearly act and with

which they interact. Thereby he agrees with Luhmann´s standpoint that all (sub-)systems

relate and interact with their environment, and only in so doing can in fact be.167 Secondly, he

states that such an understanding of social entities is too closely related to the biological

systems, which are indeed clearly separated from their environment. In order to overcome this

problem he introduces the aspect of “intersocietal systems” and “time-space edges”168. “Time-

space edges” refer to aspects of regionalisation, which cut across social systems, which

obviously are societies. Further, he describes “time-space edges” as an “Indication of

connections between societies of different structural types.”169

“All societies are social systems and at the same time are constituted by the intersection of

multiple social systems.”170 He states that these multiple systems can be wholly internal to

societies, or may cut across the boundaries. Thereby a diversity of possible modes of

connections between societies as total units and intersocietal systems is created. The author

163 Giddens, 1984, p.xxvi 164 Giddens, 1982, p.163 165 See this chapter, p.8 ff 166 Giddens, 1984, p.83 167 See also Luhmann, this chapter, p.9 168 Giddens, 1984, p.xxvii 169 Giddens, 1984, p.244 170 Giddens, 1984, p.164


38

explains that intersocietal systems characteristically involve forms of relations between

different types of societies. Hence, he states that “‘Societies’ then, in sum, are social systems

which ‘stand out’ in bas-relief from a background of a range of other systemic relationships

in which they are embedded. They stand out because definite structural principles serve to

produce a specifiable overall ‘clustering of institutions’ across time and space.”171

Giddens views this ‘clustering’ as the first and most basic feature of societies. Other

important features to be considered are, firstly, that social systems do not necessarily need to

have a fixed locality or territory. Secondly, the styles of claiming legitimacy over territory

may be different from one society to another. Finally, Giddens mentions the sense of identity

that exists within societies. The expression of such emotions (connected to identifying with a

specific society), again, varies from one society to the next.

“Structure” or “social structure” within the theory of structuration refers to a different concept

than it traditionally does in the social sciences. In this context Giddens introduces the concept

of “‘Structural principles’, which are structural features of overall societies or societal

totalities, … through the notion of structural principles … the concept of contradiction can

most usefully be specified as relevant to social analysis.”172 Further he defines “structural

principles” by saying that they are: “… principles of organisation of societal totalities.” 173 In

other words, “structural principles” reflect the set of moral and other principles according to

which agents need to conform to. “In structuration theory ‘Structure’ is regarded as rules and

resources recursively implicated in social reproduction; institutionalised features of social

systems have structural properties in the sense that relationships are stabilised across time

and space.”174

With the help of “the structure” actors can refer to the structural characteristics of social

systems during social interactions. Giddens refers to these characteristics of social systems as

“structural properties”. He defines them as follows: “Structural properties: Institutionalised

features of social systems, stretching across time and space.”175 This means that through

structure features of a specific social system may be kept and survive over long periods of

time. Thereby structural properties can try to connect time and space within social systems.

171 Giddens, 1984, p.164 172 Giddens, 1984, p.xxvii 173 Giddens, 1984, p.185 174 Giddens,1984, p.xxxi 175 Giddens, 1984, p.185


39

Hence, structure exists only as a memory trace with respect to space and time except within

actions. As an example we can look at religious traditions and ceremonies, which are kept

over long time periods. Through such rituals, symbolism, traditions and certain modes of

conducts, which are characteristic for this faith, the structural properties of that social system

are reproduced. Furthermore, a sense of identity is created and members of the group are

connected with each other over time - like a piece in a long chain over time. Erikson even

goes as far as saying that “The result of the variable complementation and completion of the

instinct-driven behaviour via tradition -.... ties the individaul for ever to these traditions and

institutinos of his childhood and leaves it to the mercy of the –not always logical and just –

self-appraisal of its inner master, its conscience.”176

In fact an example for this can be found in the bible in Genesis XVII. That section describes

the agreement between G-D and Abraham, where Abraham promises the Lord to follow Him.

Consequently they enter a contract in form of a covenant – symbolised in form of the

circumcision of all males.

“… And G-D said unto Abraham: ‘And as for thee, thou shalt keep My covenant, thou, and

thy seed after thee, throughout their generations. 10 This is my covenant, which ye shall keep,

between Me and you and they seed after thee: every male among you shall be circumcised in

the flesh of your foreskin; and it shall be a token of a covenant betwixt Me and you.”177

This agreement says that not only Abraham agrees to follow the laws of the Lord but also all

his descendants (which is why Jews and Muslims alike still today are circumcised). Hence,

the circumcision is a reminder of this covenant. By repeating this tradition followers of both

faiths recreate this specific (element of their) structure178.

There are segments of the actors’ knowledge about the situation of action, the action

sequences and action alternatives. Thereby we can see that structure is activated within the

actions and consequently is not external to the actions. Giddens explains that specifically

functionalists and many other social scientists tend to view “structure” as a kind of pattern of

social relationships. Thereby, structure is viewed as external to the actions of individuals. On

the other hand in the perception of structuralists and post-structuralists structure is seen as “…

characteristically … not as a patterning of presences but as an intersection of presence and

absence; underlying codes have to be inferred from surface manifestations.”179

176 Erikson, 1995, p.91 177 Genesis XVII, 9 ff, Soncino Chumash 178 This one ritual, like all the other rituals and traditions, can each be seen as individual elements. All these

individual pieces than can be seen to make up the whole structure. 179 Giddens, 1984, p.16


40

Giddens himself views structure as referring “…, in social analysis, to the structuring

properties allowing the ‘binding’ of time-space in social systems, the properties which make it

possible for discernibly similar social practices to exist across varying spans of time and

space and which lend them ‘systemic’ form. To say that structure is a ‘virtual order’ of

transformative relations means that social systems, as reproduced social practices, do not

have ‘structures’ but rather exhibit ‘structural properties’ and that structure exists, as time-

space presence, only in its instantiations in such practices and as memory traces orienting the

conduct of knowledgeable human agents. This does not prevent us from conceiving of

structural properties as hierarchically organised in terms of the time-space extension of the

practices that they recursively organise.”180

Taking a structuration theoretical perspective the social practices which are produced by the

management of organisations or inter-organisational networks are perceived as the competent

accomplishments of actors, mostly but not solely of managers. Re-iterating this point we can

say that such social practices are seen as an expression of the structural properties of the

respective social systems. Moreover, “According to the duality of structure, the structural

properties of social systems are both medium and outcome of the practices they recursively

organise.”181 As Giddens explains “Structure is not ‘external’ to individuals: as memory

traces, and as instantiated in social practices, it is in a certain sense more ‘internal’ than

exterior to their activities in a Durkheimian sense. Structure is not to be equated with

constraint, but is always both constraining and enabling.”182 This means that structure

enables actors to act and at the same time it is restrictive. Thus, we can say that structure

enables actors to act within a given frame, without fully determining it. Thereby, Sydow et al

argue, behaviour is manifested within social practices and at the same time is a result of those

practices.

By understanding the structure and by behaving in the manner, which is seen as socially

acceptable in a given situation, an individual also is seen to reflect competence. By doing the

“right thing” and by being in the “right places” (such as specific conferences, exhibitions or

bars and clubs) a person is perceived to have knowledge. This in turn is related and conveyed

onto that person’s professional activities and competences as well. Hence, if a person keeps to

180 Giddens, 1984, p.17 181 Giddens, 1984, p.25 182 Giddens, 1984, p.25


41

the structural properties of a given system he or she is assumed to be competent in everything

else he or she does. This projection is referred to as the “Halo effect”183.

This effect is specifically important for the interaction within networks. By knowing and

acting according to the structural properties a common basis is created, which in turn fosters

trust and, thus, increases the chances of success within networks. Additionally, the halo effect

can also be seen as a measure for complexity reduction. The reason is that even if nothing else

is known about a person the manner in which he recognises and keeps to the structural

properties can then be taken to “evaluate” his or her other qualifications or competences by

means of deduction. Of course there may not always be a direct and positive correlation

between a person’s ability to understand and keep to structures, and his or her other

competences. However, in practice the Halo effect is more than not applied. The discussion

about the applicability and plausibility of this effect lies outside the realm of this current

paper.

Sydow et al also refer to Giddens´s different understanding of “structure” compared to its

meaning within organisation and network theories. Thereby Giddens´s polemic of “structure”

makes it possible to view the management of and within organisations or inter-organisational

networks from a different angle. “Structure” in the sense of the structuration theory provides

actors with the rules for signification and legitimisation. Further “structure” grants actors

access to allocative and authoritative resources, which are the essence of Giddens´s

domination structure. On the other hand, the authors remind us that “structure” within

organisation theory refers to the degree of decision centralisation or the external set-up.

Giddens names these characteristics as structural properties. As we have seen above actors

refer to these institutionalised properties of social systems in their behaviour via the available

resources and appropriate rules of the respective context of action.

Besides individual rules and resources there are sets of rules and resources, which are the

structural properties of social systems. Giddens refers to these as “structural sets”.184 An

example of such a structural set (of rules and resources) is relationship capital, whereby the

authoritative resource185 is a predominant characteristic. Similar to others (e.g. Burt 1998;

Schuler, 2002; Granovetter, White, 1998)186 Sydow et al explain that relationship capital is a

183 See, e.g. Rommetveit, 1960; Schmitt, 1991 184 Giddens, 1984, p.186 185 See this chapter p.53 186 See chapter 4 “Network analysis”, p.104 ff


42

very valuable resource in the analysis of the organisation of networks. Like other forms of

capital relationship capital also requires certain investments.187 The authors state that the

necessary investments are made, whether consciously or subconsciously, in the process of

building up the relationship. On the other hand, this form of investment can, like other types

of investment, reap benefits. A characteristic property of social capital is that the utilisation of

relationships cannot be carried out by a single actor alone. The use of relationships always

requires more than one actor and is dependent on the social interaction, e.g. the network of

relationships, as well as its reproduction. In general social capital requires the agreement of

other actors to take part in the interaction and displays the property of not being used up as a

resource. On the contrary, it gains in strength as it is used.

Sydow et al explicate that “The process of the practical mediation of action and structure, the

emergence of action by referring to the structure and the simultaneous reproduction of this

structure is what Giddens calls “structuration” … “The traditional practice of differentiating

structure and process known from the organisation theory and the older inter-organisational

theory is thereby overcome. At the same time dualism of action and structure is overcome as

well.”188 “Dualism”, according to the authors, not only controls the discussions surrounding

organisation theories but also dominates social and economic theoretical discussions.

As Giddens states it is his main interest to understand the human being - the agent - and his or

her behaviour, social reproduction and social transformation. Within this context he

emphasises the issue of “dualism”, which is the division between objectivism and

subjectivism. The author states that “In spite of Parson’s terminology of ‘the action frame of

reference’ there is no doubt that in his theoretical scheme the object (society) predominates

over the subject (knowledgeable human agent).”189 In his theory Giddens proposes that

“Structuration theory is based on the premise that this dualism has to be re-conceptualised as

a duality – the duality of structure.”190 Thus, rather than seeing the two aspects, agent and

structure, object and subject; as two separate and dividing elements Giddens understands

them to be intertwined and interdependent. Hence, through his theorem on the “duality of

structure” he overcomes the issue of dualism.

187 See chapter 4 “Network analysis”, p.104 ff 188 Sydow et al, 1995, p.23 189 Giddens, 1984, p.xx 190 Giddens, 1984, p.xxi


43

Closely connected to this theorem are the determination of actors through the “stratification

model of the agent” which we have studied above, and the concept of the “dialectic control”.

Through the “dialectic control” the reciprocal constitution of the social element is made

prominent by the actors. Both concepts clarify why actors are able to act the way the theorem

of the duality of structure assumes or predicts them to do. Sydow et al. look more closely at

the concepts of “the duality of structure”, “stratification model of the agent” and the

“dialectic control” and apply these to organisational and inter-organisational questions.

The basic idea of “the duality of structure” is that “The constitution of agents and structure

are not two independently given sets of phenomena, a dualism, but represent a duality.”191

This tells us that structure is part of social behaviour. Thereby structures do not simply pose

an external constraint to social actions nor can, according to Giddens, social behaviour be

arbitrary. By the same token, just as much as social actions are influenced by structure, is the

development of the individual influenced by them192.

Giddens views actors and structures as products or, at least as being heavily influenced by

history and space. He assumes that actors include time and spatial aspects into their actions.

They do so by referring to these in their behaviours and by creating or at least partially

creating structures that fit time and spatial aspects. Thereby actions are not viewed as isolated

occurrences. Rather they are seen as a flow of contextually connected interactions which

reproduce stable structural properties of specific social systems (e.g. organisations or inter-

organisational networks) with respect to time-space.193 Moreover, Giddens views the duality

of structure as an essential element of social life. “The duality of structure is always the main

grounding of continuities in social reproduction across time-space.”194

The structural properties of the context of action are reproduced by the actors’ behaviour via

the duality of structure. The structural sets are reproduced in the same way. Hereby the

structural properties and the structural sets are under constant pressure to change. Sydow et al

state that this also means that, from a stand point of a single actor or collective actors, these

can be referred to as “structural constraints”, as well. Before looking at “structural

constraints” in specific, let us turn to Giddens’s view on “constraints” in general.

191 Giddens, 1984, p.25 192 See also Erikson, 1995, p.91 193 Sydow et al, 1995 194 Giddens, 1984, p.27


44

Giddens differentiates between three types of constraints, namely, “material constraints”,

“constraints associated with sanctions” and “structural constraints” (see diagram 2.5).

Material constraints generally refer “… to limits which the physical capacities of the human

body, plus relevant features of the physical environment, place upon the feasible options open

to agents.”195 Examples of such limits are the indivisibility of the human body, the limit to a

person’s life span, sensory and communicative capabilities of an individual (and his or her

body). Giddens points out that many of such qualities are generally perceived as enabling.

Hence, he feels it is necessary to remind the reader that, while enabling, these characteristics

and abilities are at the same time limiting, too. Further he states that not all of the enabling

and limiting qualities are a given. There are aspects which the individual has an influence on.

For instance an agent can improve his or her communication skills, physical appearance or

language skills. Another example is the improvements that root in the technological

developments. Moreover Giddens states that “… constraint in this sense does not derive from

the impact which the activities or social ties of actors have upon those of other actors.

Physical capability and coupling constraints are limits to the feasible social lives that people

can lead.”196

In this context he explicitly states that all human beings are faced with certain constraints,

such as those of the human body. However, according to him the modes of coping with such

constraints do not have a more significant impact on social activity than do other types of

constraints.

The author continues to discuss the concept of power as a source of constraint. Again he

stresses the point that “… power is the means of getting things done, very definitely

enablement as well as constraint.”197 This constraining side of power is seen in terms of

sanctions. There is a whole host of different sanctions, such as the direct application of force

or even violence, or the threat thereof. Another type of sanction can be rather indirect in form

of disapproval. However, in this context Giddens refers to his theorem of the “dialectic of

control” whereby no actor (usually) is granted full power while another will have none.198

According to Giddens every agent will always have some degree of power which he can

practice.199

195 Giddens, 1984, p.174 196 Giddens, 1984, p.174 ff 197 Giddens, 1984, p.175 198 See this chapter, p.53 199 See this chapter, p.51


45

Another barrier to the abuse of asymmetric power is provided through the accepted modes of

conduct. “Power relations are often most profoundly embedded in modes of conduct which

are taken for granted by those who follow them, most especially in a routinised behaviour,

…”200

DIAGRAM 2.5: MATERIAL AND STRUCTURAL CONSTRAINTS


Finally Giddens turns to what he refers to as “structural constraint”. “… it [structural

constraint] is best described as placing limits upon the range of options open to an actor, or

plurality of actors, in a given circumstance or type of circumstance.”201 Structural properties

that turn out to be limiting are structural constraints. He explains that all structural properties

of any social systems have a certain degree of objectivity in relation to the agent. However,

the degree to which they are limiting, i.e. structural constraints, depends on the given

sequence of action or series of actions.

A very clear and every-day example of structural constraints in our daily lives is given by

Giddens. He talks about a research study carried out by Gambetta202 in which he analyses the

correlation and influence of social background on the education. “ … Gambetta, analyses his

material in such a way as to bring it to bear very firmly upon questions of structural

constraint. In taking up various educational options, he asks, are individuals ‘pushed’ or do

they ‘jump’? In what sense, if any, are there forces akin to those portrayed by ‘structural

sociologists’ which impel individuals into specific courses of actions? … class background

can be shown to influence the nature of educational choice. An ‘upper-class’ child has four

times the chances of reaching higher education than one from a ‘working-class’

200 Giddens, 1984, p.176. We will return to the issue of power on p.50 of this chapter. 201 Giddens, 1984, p.176 - 177 202 Gambetta, “Were they pushed or did they jump?” Ph.D., 1982; in Giddens, 1984, p.305

Material constraint

Constraint deriving from the character of the material world and from the physical qualities of the body

(Negative) sanction

Constraint deriving from punitive responses on the part of some agents towards others.

Structural constraint (Deriving from the context of action)

Constraint deriving from the contextuality of action, i.e., from the ‘given’ character of structural properties vis-à-vis situated actors.


46

background.”203 While of course there are children from the higher income classes that will

not go into higher education, there will be children from lower income groups who will.

Nevertheless these results do show that “… there is more influencing educational choice than

factors which could effectively be represented as an aggregate of separately taken

decisions.”204 (Similar results were found in other studies focusing on this issue.) Gambetta

made another interesting observation when looking at inter-class differences. He saw that on

the one hand lower-income children were more likely to leave school at earlier stages (i.e. as

soon as legally possible). On the other hand those children from weaker social groups who did

stay on in school were more likely to continue onto higher education. The opposite picture

was seen among children from higher income classes. These children tended to stay in school,

yet, a lower percentage of them would continue with university studies. Gambetta suggest that

the results seem to indicate that parents from the lower income classes are more likely not to

keep their children in school unless they were exceptionally gifted or motivated. By the same

token, parents from the higher income classes seem to automatically keep their children in

school, independent of their abilities or motivation.

This example quite clearly shows us that due to the automatic behaviour of the parents in the

respective income groups are the children pre-disposed to continuing a certain road in life.

This path usually reflects their parent’s way – reproducing the structural properties of their

specific social system. (In this case structural constraints can be seen in form of money, or

lack thereof. Arguably the lack of motivation or self-confidence of parents and children of not

being able to succeed in education, in the lower social classes (except obviously for those who

do stay on) can also be seen as a structural constraint.) Further as Giddens has told us there

are certain modes of conduct to be followed. We often meet the attitude among certain groups

of people of “Doing something because this is the way to do it and always has been.” Hence,

it may well be the case that the keeping of the “tradition” of leaving school early among lower

income groups can be regarded a structural constraint.

With reference to Gambetta’s question as to whether the children were ‘pushed’ or ‘did they

jump’ he states that “Constraints do not ‘push’ anyone to do anything if he or she has not

already been ‘pulled’. In other words, an account of purposive conduct is implied even when

the constraints limiting courses of actions are very severe. Second, constraints are of various

kinds. It is important in this case to distinguish between constraints deriving from different 203 Giddens, 1984, p.305 204 Giddens, 1984, p.305


47

sanctions and structural constraints. Third, to study the influence of structural constraint in

any particular context of action implies specifying relevant aspects of the limits of agents’

knowledgeability.”205

Further he states that in order to provide in-depth and complete analyses of the relationship

between social background and education Gambetta would have needed to analyse some

further aspects. These are, for instance, the way in which the actors’ motives and processes of

reasoning were impacted by a series of factors in their upbringing. Moreover according to him

it would have been interesting to see how these factors in turn were shaped by general

institutional features of the wider society. Finally, Giddens states that “Structural constraints

[…] always operate via agents’ motives and reasons, establishing (often in diffuse and

convoluted ways) conditions and consequences affecting options open to others, and what

they want from whatever options they have.”206

Again Giddens emphasises the point that structural properties are enabling as well as limiting.

In order to illustrate this point Giddens gives the example of a labour contract. Within this

contract the structural properties of the system, i.e. the working conditions, are laid down.

These structural properties include limits, with respect to aspect such as working hours, pay

and break-times. At the same time they also embrace enabling elements, e.g. with respect to

damages, insurance covers and potential study leaves. Hence, we see that on the one side the

labour contract grants the employer power over the employee and limits the labour force. At

the same time without the contract employees would have no cover and no rights, and

workers would be “… dependent upon the resources that employers provide.”207

The actors have varying degrees of influence on the structural properties, depending on the

type of constraint they are faced with. Many structural and material constraints can only be

changed marginally or not at all. However, while the structural constraints may seem as a

given to the actors these constraints do not determine the agents’ behaviour. Structural

constraints can limit the possibilities of actions but not determine or dictate them.

Sydow et al point out that since Giddens assumes that only some actors perceive the structural

changes as given and unchangeable, other actors do feel that they are able to influence these

constraints. Furthermore, they suggest that those actors who feel that they cannot change

structural properties (e.g. the conventional market place) on their own could collaborate, for

instance in form of a network and collectively overcome them. In any case, actors refer to

205 Giddens, 1984, p.308 206 Giddens, 1984, p.310 207 Giddens, 1984, p.177


48

these constraints within social interaction via the interpretative schemes, norms and facilities.

They do so either consciously or subconsciously.208

“ … the concept of the duality of structure … is implicated in the ramified sense that the terms

‘conditions’ and ‘consequences’ of actions have.”209 Every social interaction of individuals is

at some point in time expressed in and through the contextualities of the physical presence of

the agents. Through the “duality of structure” Giddens attempts to understand how the

practices followed in a set context of social action is embedded in time and space. “ … in

brief, we have to attempt to discover their relations to institutionalised practices.”210

In other words the author attempts to understand why it is that, on the one hand, the structural

properties of any social system set the stage for the agent’s behaviour. At the same time

through that specific behaviour (conditioned by the structural properties) agents reproduce the

structural properties through their very actions. Returning to Giddens’s (second) example of

the education system211 he demonstrates how children from in lower social classes who visit

state schools reproduce their system through their behaviour. At the same time children from

higher income classes may enjoy private education and again reproduce the structural

properties of their social system. However, should a family from a lower income class try to

change into a higher income groups, i.e. cross the time-space edge of the systems he

emphasises: that “… the translation of one into another for the most part involves much more

complex reproduction circuits.”212 The reason being that now agents cannot rely on the

automatism of the duality of structure to provide them with the reproduction of that system

which they aim to be part of.

“The identification of structural sets is a very useful device for conceptualising some of the

main features of a given institutional order. But, […] structures refer to a virtual order of

relations, out of time and space. Structures exist only in their instantiation in the

knowledgeable activities of situated human subjects, which reproduce them as structural

properties of social systems embedded in spans of time-space. Examination of the duality of

structure, therefore, always involves studying […] dimensions […] of structuration. ”213 The

208 See diagram 2.6, this chapter, p.49 209 Giddens, 1984, p.297 210 Giddens, 1984, p.298 211 See Willis, this chapter, p.56 ff 212 Giddens, 1984, p.304 213 Giddens, 1984, p.304


49

theory of the duality of structure implies the analysis of social practices with respect to the

two aspects of structural dimension, and action or interaction dimension (see diagram 2.6).

DIAGRAM 2.6: THE DIMENSIONS OF GIDDENS’S DUALITY OF STRUCTURE


According to Giddens all social actions can be described with the aid of these two

dimensions, which are connected via the modalities of structuration. Hence, Sydow et al state

that this scheme can describe practices such as the management of organisations and inter-

organisational networks214.

The “structure” dimension of social practices refers to the “signification”, “domination” and

“legitimisation”. The dimension of “interaction” contains communication, practice of power

and sanctioning. The respective “modalities” of the structuration consist of interpretative

schemes, facilities and norms. Actors use these modalities during their interactions. It is with

their help that they refer to the structural characteristics of social systems. The actor chooses

the modality which he or she feels is suited to (what are considered to be) the rules and the

resources of the situation of social interaction. The modalities need to ensure that the

interaction can be continued according to the wishes of the actor.

With respect to “communication” he stresses that “The communication of meaning in

interaction […] is separable only analytically from the operation of normative sanctions.”215

Besides using facilities actors utilise “interpretative schemes”. These are used for

214 Sydow et al., 1995 215 Giddens, 1984, p.28

Structure

(Modality)

Interaction communication

Interpretative scheme

signification domination legitimisation

facility

power

norm

sanction


50

communicating, interpreting and rationalising actions. Thereby actors use the rules of

interpretations and constitution of sense, which are accepted as the norm within specific social

systems. “‘Interpretative schemes’ are the modes of typification incorporated within actors’

stock of knowledge, applied reflexivity in the sustaining of communication.”216 The use of

specific interpretative schemes in the communication reproduces the rule interpreting and

rationalising actions as a signification structure, thereby being an autopoietic system. So, once

again we can see that a specific structure, in this case with respect to communication,

indicates social behaviour, in form of interpretation. By behaving in the way allowed or

somewhat prescribed by the structure the actor bolsters the structure and, by doing so,

reproduces it.

Giddens also refers to the norms actors use within their social interactions. Actors choose

norms which they feel are appropriate for the given legitimisation structure. Norms are used

in order to categorise actions and events into positive and negative (e.g. just/unjust or

right/wrong), and to sanction these accordingly. Norms contribute to the reproduction of

legitimisation structures by employing them within social interaction. These norms can be

compared to Luhmann’s concept of bindary codes, which we have discussed above.217

In a nutshell he states that “The very identification of acts or of aspects of interaction – their

accurate description, as grounded hermeneutically in the capability of an observer to ‘go on’

in a form of life – implies the interlacing of meaning, normative elements and power.”218

Giddens views economics mainly in terms of power and the practice of power.219 Thereby he

applies a very wide understanding of the term power and domination. Further he views

“power” as an essential element of agents. He states that being an agent stands for being able

to act, which means “… being able to intervene in the world, or to refrain from such

intervention, with the effect of influencing a specific process or state of affairs. This presumes

that being an agent is to be able to deploy (chronically, in the flow of daily life) a range of

causal powers, including that of influencing those deployed by others. … An agent ceases to

be such if he or she looses the capability to ‘make a difference’, that is, to exercise some sort

of power.”220

216 Giddens, 1984, p.29 217 See this chapter p.20 218 Giddens, 1984, p.28 ff 219 Sydow et al., 1995. See also Lukes, 1993 220 Giddens, 1984, p.14


51

Giddens explains “power” “… in the sense of transformative capacity. In this sense, the most

all-embracing meaning of ‘power’, power is logically prior to subjectivity, to the constitution

of the reflexive monitoring of conduct … Thus ‘power’ is very often defined in terms of intent

of the will, as the capacity to achieve desired and intended outcomes.”221 This wide

understanding of the word power in essence includes any intervention into the course of

events. Consequently, Sydow et al argue, analysis of economic practices, for instance within

organisations and firm networks, should emphasise the issue of the practice of power. Hence

diagram 2.6 can be explained by saying that actors use a variety of facilities within social

interaction in order to intervene in sequences of actions and to realise their self-interests. They

can do so either openly and obviously, or subtly and somewhat hidden. Which facility the

actors use is determined or influenced by the rules and resources of each social system.

Hence, when intervening into a process of social interaction competent actors use the

practices of power which are accepted as appropriate within the specific social system and

context in which they operate. By doing so they contribute to the continuation of this practice

and add to the reproduction of the structure of domination.

“The dialectic of control”222 draws attention to the fact that every social practice is a result of

reciprocal constitution. “Power within social systems which enjoy some continuity over time

and space presumes regularised relations of autonomy and dependence between actors or

collectivities in contexts of social interaction. But all forms of dependence offer some

resources whereby those who are subordinate can influence the activities of their superiors.

This is what I call the dialectic of control in social systems.”223 Likewise he says that “No

matter how great the scope or intensity of control superordinates possess, since their power

presumes the active compliance of others, those others can bring to bear strategies of their

own and apply specific types of sanctions.”224 Thereby Giddens conveys the fact that even

under the condition of almost complete asymmetric distribution of power do those actors with

lesser power still have some influence. Hence, Giddens states that being an actor means to

practice power and to influence the course of social processes.

Adapting this principle to social systems, this tells us that actors never have no influence at

all on the results. Sydow et al point out that this applies to organisations, as well and in

221 Giddens, 1984, p.15 222 Dialectic of control - “The two-way character of the distributive aspect of power (power as control); how the

less powerful manage resources in such a way as to exert control over the more powerful in established power relationships. ” Giddens, 1984, p.374

223 Giddens, 1984, p.16 224 Giddens, 1985, p.11


52

particular to networks. To illustrate this point they give the example of a franchising

enterprise. Thereby the focal organisation has the most decision-making power. However,

without the help of the franchise takers, i.e. other organisations within the system, they cannot

be successful. Another example is a form of silent rebellious behaviour by employees, who

through their actions of “working according to instruction” can in fact cause damage to the

company. Hence, even if these employees do not have any official power, through their

actions they can impact on the situation, which otherwise would have lead to different results.

This, according to Giddens, makes them social agents, because they actively made a

difference to the situation.225

With the aid of the concept of “dialectic control” all actions can be seen in terms of a basic

balancing act of autonomy and dependency. This concept does not imply that there is always

a well balanced distribution of power among the actors. Rather it means to point out the fact

that the relationship of domination and autonomy in social interactions is very complex and

prone to changes.

The author makes a further distinction, in this case with regards to resources. “Resources

(focused via signification and legitimisation) are structured properties of social systems,

drawn upon and reproduced by knowledgeable agents in the course of interaction.”226

Furthermore, linking back to the issue of power he views power not as a resource in its own

rights. Rather he states that “Resources are a media through which power is exercised, as a

routine element of the instantiation of conduct in social reproduction.”227

He differentiates between “authoritative resources” and “allocative resources” (see diagram

2.7). The former refers to the co-ordination of the agents’ activities and the latter to the

control of material products or aspects of the material world.

225 See this chapter, p.36 226 Giddens, 1984, p.15 227 Giddens, 1984, p.16


53

DIAGRAM 2.7: GIDDENS'S TWO TYPES OF RESOURCES

{Source: Giddens, 1984, p.258)

Allocative resources enable the control over objects such as machines, raw materials, money,

or semi-finished and end-products. Authoritative resources are understood to grant power of

disposition over other individuals. Sydow et al list the following as resources which can be

perceived as allocative resources when they are used in order to gain power over objects. At

the same time should these be used to practice control over individuals they represent

authoritative resources. Their examples are: data, bureaucratic procedures, popular

management ideologies, and the accepted and practised gratification rules. However, either

type of resource can only be called a “resource” when it is used in order to reproduce the

social system. Further the authors state that “Actors will use both types of resources within

organisations or networks, as within any other social interaction. Which resource will or can

be used as a “facility” depends for example on the individual availability of the resources, the

ability to apply those adequately and on the possible reactions of the interactions

partners.”228

In his attempt to develop a generally applicable and, thus, valid theory for the analysis of

social behaviour, Giddens refers to the concept of “history”. “An ontology of time-space as

constitutive of social practices is basic to the conception of structuration which begins from

temporarily and thus, in one sense, ‘history’.”229 Without delving into the debate of “what

constitutes history?” we will simply acknowledge that “… it is worth speaking of ‘historicity’

as a definite sense of living in a social world constantly exposed to change …”.230

228 Sydow et al, 1995, p.26 229 Giddens, 1984, p.3 230 Giddens, 1984, p.xxviii

Allocative Resources

1 Material features of the environment (raw materials, material power sources)

2 Means of material production/ reproduction

(instruments of production, technology)

3 Produced goods (artefacts created by the interaction of 1 and 2)

Authoritative Resources

1 Organisation of social time-space (temporal-spatial constitution of paths and regions)

2 Production/reproduction of the body (organisation

and relation of human beings in mutual association)

3 Organisation of life chances (constitution of chances of self-development and self-expression)


54

An important approach of Giddens is that he views any social action as part of a continuous

flow and not as a sequence of isolated occurrence. He believes that the individual and, thus,

society makes and at the same time is a result of its history. Therefore, when attempting to

form a general theoretical approach within the social science it is essential to ensure that they

hold within the course of history and not only explain an event at a specific point in time in

isolation. Thus, he answers the question of why some social theories keep their validity over

time by saying that “Surely exactly because they have contributed to constituting the social

world we now live in. It is the fact that they are reflections upon a social reality which they

also help to constitute and which both has a distance from, yet remain part of, our social

world that engages our attention.”231

Moreover, Giddens argues that “If they are correct, these ruminations lead on in a direct way

to a consideration of social science as a critique – as involved in a practical fashion with

social life. … The formulation of critical theory is not an option; theories and findings in the

social sciences are likely to have practical (and political) consequences regardless of whether

or not the sociological observer or policy-maker decides that they can be ‘applied’ to a given

practical issue.”232 This shows us that a social theory can be seen as a form of a critique of

social life and will inevitably have some practical implications.

With respect to empirical research Giddens suggests that it is particularly useful to first study

“… the routinised intersections of practices which are the ‘transformation points’ in

structural relations and, second, the modes in which institutionalised practices connect social

with the system integration.”233 As an example for the first aspects the author describes how

the concept of private property (a cluster of ownerships rights) can be adapted into industrial

authority, or modes of upholding managerial control. With respect to the second aspect he

advocates that it needs to be empirically validated whether the practices analysed in a given

range of contexts come together in a way that enables them to engage in system reproduction.

In general he believes that “structuration theory will not be of much use if it does not help to

illuminate problems of empirical research […] which I hold to be inseparable from the

implications of structuration theory as a form of critique.”234. Therefore he states that “The

231 Giddens, 1984, p.xxxv 232 Giddens, 1984, p.xxxv 233 Giddens, 1984, p.xxxi 234 Giddens, 1984, p.xxix ff


55

points of connection of structuration theory with empirical research are to do with working

out the logical implications of studying a ‘subject matter’ of which the researcher is already a

part and with elucidating the substantive connotations of the core notions of action and

structure.”235 Hereby he argues that some of the points he made on the abstract level can be

directly applied to empirical research.

Giddens feels that according to the structuration theory there are two types of methodological

bracketing which can be applied to the social sciences. He first mentions the institutional

analysis in which structural properties are treated as constantly reproduced features of social

systems. The other refers to the analysis of strategic conduct where the focus lies on the

modes in which actors refer to and use the structural properties in the constitution of social

relations. According to the author these two approaches cannot be clearly differentiated. In

other words there is no exact division between them. Further he states that in each case focus

needs to be placed on the duality of structure. However, like Giddens himself we will focus

on the latter type of analysis.

“The analysis of strategic conduct means giving primacy to discursive and practical

consciousness, and to strategies of control within defined contextual boundaries.

Institutionalised properties of the settings of interaction are assumed methodologically to be

‘given’.”236 Despite the fact that he describes the structural properties to be methodologically

as given, it still holds that they are produced and reproduced through human agency.

Giddens emphasises the need to focus upon the contextually situated activities of (specific)

groups of actors. He lists the following views as imperative to the analysis of strategic

conduct: “ … the need to avoid impoverished descriptions of agent’s knowledgeability; a

sophisticated account of motivation; and in interpretation of the dialectic of control.”237 This

means that it is essential to refrain from making superficial assumptions about the actors’

knowledgeability. Next, in order to fully understand and to be able to make a complete and

correct analysis of the actor’s strategic behaviour it is necessary to understand his or her

motives behind the respective actions. Finally the degree of power needs to be made clear and

the manner in which it can be used to impact on the given situation.

235 Giddens, 1984, p.xxx 236 Giddens, 1984, p.288 237 Giddens, 1984, p.289


56

Giddens refers to a study carried out by Willis (1980) where he analysed a group of working-

class children of a poor neighbourhood. Giddens’s interest lays in the fact that Willis’s

observations match or undermine Giddens’s hypothesis of his theory of structuration. By

rebelling against the schools rules and other modes of conducts intentionally (which

specifically the boys did), they did not succeed in school.238 Consequently they had to face the

unintended consequences of having to carry out unskilled low-paid jobs. Due to their

behaviour and the consequences the boys later on in life reproduced the generalist features of

capitalist-industrial labour. Therefore, “Constraint, in other words, is shown to operate

through the active involvement of the agents concerned, not as some force of which they are

passive recipients.”239

Willis also points out that at first sight it may seem that those children who are more

conforming to the structural properties of the social system would be most knowledgeable

about the system. However, he then explains that on both levels of consciousness – practical

and discursive – those children who are rebellious and non-conform to the system are more

knowledgeable than the conforming children. “Because they actively contest the authority

relations of the school, they are adept at picking out where the bases of the teachers’ claims

to authority lie, and where their weakest points are as the wielders of discipline and as

individual personalities.”240

The question now arises as to what the motives of those rebellious children are. Since we

have said that these children very well know the school systems, their reasons for acting the

way they do cannot be due to a lack of knowledgeability. Giddens argues that “Rather, it is

because they know a great deal about the school and the other contexts in which they move

that they act as they do. Such knowledge may be carried primarily in their practical activities

or in discourse which is highly contextualised, although in Willis´s account ´the lads´ emerge

more articulate than others in the school would probably acknowledge. However, the bounds

of what they know about the circumstances in which they live out their lives are fairly

confined.”241 Willis further suggests that these boys realise their own prospects of

employment and for this reason act rebelliously242. Nonetheless, the author does propose that

‘the lads’ will at the most have an incomplete picture of the “… aspects of society that

238 See Willis, 1980, p.12 239 Giddens, 1984, p.189 240 Giddens, 1984, p.291 241 Giddens, 1984, p.291 ff 242 Willis, 1980, p.97, p.172


57

influence the contexts of their own activity.”243 Nevertheless, Giddens adds that observers will

not be able to fully understand the motivation244 behind these boys’ behaviour “… unless we

see that they do grasp, although in a partial and contextually confined way, the nature of their

position in society.”245

Finally, Giddens engages in a discussion about the more general implications for research

within the social sciences from the standpoint of structuration theory.

DIAGRAM 2.8: LEVELS OF METHODOLOGICAL INSERTIONS


He claims that the methodological ‘insertion’ for the research of any object can be made at

any one of the of the four levels as depicted in diagram 2.8. First of all he explains that

without exception all social research assumes a hermeneutic moment, which may remain

under the surface and may not be mentioned explicitly. In those cases presumptions are made

about issues which are considered mutually accepted. With respect to quantitative research

Giddens states that researchers tend to fail to include hermeneutic moments in their analysis.

Alternatively they fail to see their implications on the research and tend to stay purely

descriptive. He argues that hermeneutic aspects may not help the objects of the study to

understand the underlying forces. Therefore, they will not help to answer their “why?”

questions. On the other hand, Giddens believes that the analysis of practical consciousness

will do so. “Studying practical consciousness means to investigate what agents already know,

but by definition it is normally illuminating to them if this is expressed discursively, in the

metalanguage of social science.”246

243 Giddens, 1984, p.292 244 Willis, 1980, p.171 245 Giddens, 1984, p.292 246 Giddens, 1984, p.328

Hermeneutic Elucidation of Frames of Meaning

Investigation of Context and form of Practical Consciousness (The Unconscious)

Identification of Bounds of Knowledgeability

Specification of Institutional Orders

(1)

(2)

(3)

(4)


58

He repeatedly stated the importance of identifying the actors’ knowledgeability boundaries. In

order to do so, he states, it is necessary to have a profound understanding of elements (1), (2)

and (4) in diagram 2.8. However, Giddens does acknowledge the difficulty of identifying

many of the necessary aspects such as differentiating between intentional and unintentional

actions, and acknowledged and unacknowledged consequences.

The specification of the final element, “… institutional orders, involves analysing the

conditions of social and systems integration via identification of the main institutional

components of social systems. Those institutional forms are most important which in terms of

designated structural principles, can be specified as overall ‘societies’.”247

Giddens points out the traditional debate in social science of qualitative research versus

quantitative analysis. He claims that qualitative research can be allocated to the relation

between points (1) and (2) while quantitative research can be attributed to the relationships

between elements (3) and (4). “A fondness for quantitative methods has, of course, long been

a trait of those attracted to objectivism and structural sociology.”248 From this stance the

main objective of social science is seen as analysing conditions of social life that stretch well

beyond any immediate contexts of interaction. In that context the somewhat cold or

“hardened” characteristics of the institutional components of social life are best analysed

through categorisation, measurements and statistical analysis. Followers of the qualitative

research methods aim to understand the necessarily situated and meaningful aspects of social

interaction. While there are big debates about the advantages about either approach it is not

the aim of our work to follow and discuss these in more detail. Rather we should note

Giddens’s belief that both are useful in the respective appropriate situations. He states that

usually when there is a lot of data and a relatively small number of characteristics to be

analysed quantitative analysis will be favoured. However, “… both the collection and

interpretation of quantitative material depends upon procedure methodologically identical to

the gathering of data of a more intensive, ‘qualitative’ sort.”249 Additionally he states that

“All so-called ‘quantitative data’, when scrutinised, turn out to be composites of ‘qualitative’

– i.e., contextually located and indexical – interpretations …”250

247 Giddens, 1984, p.329 248 Giddens, 1984, p.329 249 Giddens, 1984, p.333 250 Giddens, 1984, p.333


59

He showed that (1) and (2) are imperative for the understanding of (3) and (4) and visa versus

arguing that qualitative and quantitative methods are complementary. Thus, the choice for a

research method should not be viewed as an either-or decision.251

Giddens aims to analyse the reasons for why individuals act the way they do within social

contexts. His interest lies in shedding light on essential issues such as the motives, distribution

of power among actors, and more fundamentally the interaction between the social

environment of a specific social system and the human agents.

The essence of his theory on structuration is the concept that individuals’ behaviour is

influenced by their (social) surroundings while at the same time it is those very actions which

in turn re-create those structural properties (“Duality of structure”).

In general Giddens argues that agents, in order to be called such, act purposefully, monitor

their actions and reflect upon them. They do so in order to obtain whatever desired result.

Giddens refers to the aspect of “reflexivity” as a basic element of human behaviour. Some

will do so in order to conform to the accepted modes of conducts within that specific social

system, but do not necessarily need to do so. In line with that concept Giddens points to the

fact that actors do recognise certain conditions of actions and may not know of others.

Similarly there will be consequences entailing an action. Actors will know of some

consequences (positive and negative) and arguably will, via a rationalisation process, aim

their actions accordingly. However, at the same time there may be consequences which agents

may not know of and, subsequently, will not be able to take into considerations. Thus,

although according to the author, agents act with a specific goal in mind, the resultant

consequences of their actions must not always be fully intentional. These processes and issues

are summed up in his “stratification model of the agent”.

The aspect of the conscious and unconscious can be looked at in a similar light. Giddens

studies a whole host of underlying aspects of the processes described above. Trying to obtain

an understanding of the underlying motives for an individual’s actions he turns to the

conscious and unconscious knowledge, and actions of a person. He argues that there is certain

knowledge that individuals have and arguably knowingly translate into actions. On the other

hand, actors will take certain actions which they do not do consciously. Rather they simply

carry them out without thinking about them.

251 See also Lamnek, 1995


60

Under the premise that agents act intentionally and knowingly Giddens speaks of

“knowledgeability”. Hereby he refers to the level of an actor’s knowledge, and his or her

ability to apply it strategically and appropriately to the given circumstance in order to achieve

the desired results.

In order to be able to interact and to be an agent, Giddens states, an actor needs to be able to

intervene into events. Without the use of power, to whichever degree and whichever form it

may take, an agent would not be able to interact, steer and control situations. Giddens argues,

that while there may be power asymmetries, no actor will ever be left with any influence at

all. This is what he calls “the dialectic of control”. Within the context of power Giddens

differentiates between the control over material resources (“allocative resources”), and

“authoritative resources”, which grant power over other actors.

Human beings by being exactly that are reassured through routine actions, which comprise a

large part of their daily activities. Giddens describes the importance of such routine actions to

a person’s psychological state. Further these actions of day-to-day life pose the opportunity

for social interaction and, thereby, the re-creation of the structure of the social system.

In that context it is important to remind of the fact that Giddens views “structure” differently

than the orthodox sociological teachings do. According to him structure gives a virtual frame

setting the stage for an individual’s actions in terms of social interaction. Following the

duality of structure, these actions will lead to the recreation of this very same structure.

Giddens points out that unlike followers of the orthodox school, he views those structures as

enabling the actors to do something, while they can be restricting at the same time. Once

structural properties are limiting the actors, he talks of “structural constraints”.

Since actors do not act in isolation Giddens turns to the issue of “positioning”. He firstly

refers to the actual physical positioning of an individual with reference to the “co-presence” in

the presence of another person. In this context he speaks of different social functions an actor

has to fulfil and the need to act differently according to the needs of the social context.

Secondly, positioning can also be viewed in relation to time-space. Generally the author

believes that individuals are part of their history and actions are a continuous flow to be seen

in time-space.


61

Finally, Giddens emphasises the need for an empirically applicable social theory. In his view

there is no point in simply engaging in theoretical discussions or in empirical research if there

is no empirical implication from which a real practical use can be gained.

Giddens in the network context

Scott (1998) explains that “It is undoubtedly the case that social network analysis embodies a

particular theoretical orientation towards the structure of the social world and that it is,

therefore, linked with structural theories of action.”252 Hence structural issues are very

important within the network concept. The aspect to consider and questions to ask when

taking a structuration view on networks are such as:

♦ Structures and structural properties - Strategic People Networks are a special social

system with given structures and structural properties. Hence, it is first of all interesting to

see how these structures are built, i.e. what the rules and resources of that specific type of

social system are. Further, it is interesting to find out whether individuals acting within

SPNs are able to identify structures and structural properties of other social systems and

act appropriately. This is specifically interesting since networks consist of social

relationships. Furthermore, especially individuals acting within SPNs usually interact with

individuals outside of these SPNs. Thus, it is important for these network members to be

able to identify structural principles and adopt an appropriate behaviour. Sydow (1991)

also explains that network structures and cultures within such networks change over time.

With respect to Sydow’s strategic firm networks he explains that these changes occur due

to the efforts of the member firms’ management to promote these networks and to make

them successful. Further, the perception, interpretation and sense-making of non-

management network members’ impact on the shaping of the network structure and

strategies. Adopting this to our Strategic People Networks, we can attempt to identify how

the individuals influence and change structures where the need arises. Consequently, the

question arises whether SPNs are able to change their structures and structural properties if

necessary in order to survive. In other words, are SPN structures dynamic?

♦ Duality of structure and dimensions of duality of structure - Further, we will attempt to

see how individuals recreate these structures through their behaviour. What are the

interpretive schemes, facilities and norms within SPNs?

252 Scott, 1998, p.38


62

♦ Self reflection and self monitoring – Do individuals within SPNs observe themselves and

their actions and do they then monitor themselves and how the environment reacts around

them? Do members of SPNs reflect upon themselves and their actions? Furthermore, are

they also able to realise changes that might need to be made (e.g. in their communication

or appearance) and do they make the necessary alterations?

♦ Consciousness – which type of consciousness is used when building and acting within

SPNs, or is it a mixture of all three levels of consciousness?

♦ Stratification model of the agent – can we identify the different stages that Giddens shows

in his stratification model of the agent? Are the SPN members aware of the fact that there

are unconscious conditions of actions or unintended consequences of action? How do they

react to these once they become prevalent? Do individuals acting within such social

network rationalise their actions prior to taking the action?

♦ Structural constraints – what are the structural constraints that SPNs have to face and how

do the members handle these?

♦ Time-space concept – what are the conditions with respect to time and space under which

members of SPNs interact and communicate. What are the different social roles that a

member has to fulfil? Are the individuals within SPNs able to identify the social

positioning in which they are situated? Hence, are they able to signal the relevant

competences in the appropriate situation? Turning to the goals that the SPNs try to

achieve: the question needs to be asked whether all members need to fulfil the goal at the

same time or with a time lag.

In the current chapter we have laid down the fundamentals for the remaining paper. Our next

step will be to focus on our research object. To do so we will develop a clear definition of the

type of network we are examining in this research effort. For this purpose we use the

frameworks provided, both, by Luhmann and Giddens, as discussed above.

Network Definitions

63

Chapter 3. NETWORK DEFINITIONS – WHAT ARE NETWORKS?

The words “Network” and “networking” are widely used in a whole host of contexts. Co-

operations in form of networks were formed for a large number of purposes for as long as

mankind exists253. Although it is not the focus of this current research paper, it is important to

note that networks are not a new invention. Be it as it may, for a variety of reasons, such

structures have received increasingly more attention in recent times. Yet, it lies beyond the

scope of this work to delve into the reasons for the growing interest in network structures as

well as to examine the development and activities of networks throughout history.

The aim of this chapter is to, firstly, provide the reader with an overview of the different

applications of this expression. Subsequently we will develop the terminology “Strategic

persons networks (SPNs)” which will be our understanding of networks for the purpose of this

current research endevour. These SPNs are th e object of our study. In order to clarify their

functions we will compare and contrast them later to alternative structures for economic

exchange, namely (hierarchical) organisations, markets and firm networks.

3.1 AN OVERVIEW OF DIFFERENT NETWORK DEFINITIONS

There are numerous types of networks, such as innovation networks254, computer networks,

communication networks255, regional networks256, entrepreneurial networks257, inter-firm258

and intra-firm or official networks259, as well as people networks260. Due to the wealth of

literature and the breadth of different definitions we may argue that we will not derive at a

clear definition as to what form and boundaries networks have – if they have any at all261.

253 See e.g. Stone Sade and Dow, 1994 254 See e.g. Brantley and Powell, 1998; Brown, 2002; Henschel, 2001; Koschatzky, et. al, 2001; Mueller, 1986;

Wenger, 2003; Zündorf, 1994 255 Luhmann, 1972, p.191, and see this chapter p.67 ff, and chapter 4 “Network analysis”, p.116 256 See e.g. Powell, 1990, p.311 257 See e.g. Pollack, 2004; Witt, 2004; Witt and Rosenkranz, 2002 258 See e.g., Ebers, 2001; Fischer and Rehm, 2004; Grabher, 1993; Kogut, 2000: Kogut et al., 2005; Nohria and

Eccles, 1998; Jarillo, 1993; Mueller, 1986; Powell, 1990; Schuh et al., 1998; Sydow, 1991, 1995; Sydow, et al., 1995

259 See e.g., Fischer and Maschler, 2004; Heimer, 1998; Ibarra, 1998; Luhmann, 1972 260 See e.g., Boos, et al.; 2000; Collins and Pancoast, 1981 261 See e.g., Ebers and Oliver, 1998; Eccles and Moss Kanter, 1998; Johnson, 1994

Network Definitions

64

In the Oxford dictionary we find the following definition: “Network of old friends:

interconnection, nexus, system, complex, organisation, structure, arrangement,

formulation"262.

Powell (1990) proposes that “… it is meaningful to talk about networks as a distinct form of

coordinating economic activity”263. This certainly concerns relationships that are used for and

with respect to economic activity, as opposed to non-economic activities such as family and

friends. Nevertheless, since “networks” is a word so broadly applied, it can be used by anyone

for a variety of contexts and, thus, needs to be clearly defined for each specific case.

He states that due to the vast amount of research on organisation practices and arrangements

in network like forms, it has become very difficult to follow all the different developments

that took place over time. The common denominator shared by all these different works,

however, is the focus on lateral or horizontal patterns of exchange, interdependent flows of

resources and reciprocal communication.

According to Nohria and Eccles (1998) “The most general use of the term ‘network’ is for the

structure of ties among the actors in a social system.”264. The “actors” can be a range of

different things, such as roles, individuals, companies, industries, families or countries. The

basis for the relationships among these actors may be such as friendship, exchange of

information or other resources, economic exchange, authority or conversation.

Similarly, Lincoln (1982) describes networks as a composite of “points” (or “knots”) and

“links” (or “arrows”) that connect “dyads”. Dyads portray the types of connections between

the points, (e.g. content, focus or strength). The points illustrate the type of unit that exists in

the network (e.g. individuals, organisations, authorities or states). Additionally, Lincoln states

that each network has certain characteristics, which are for instance their degree of tightness,

solidarity and hierarchical structure265. Witt and Rosenkranz (2002) explain that in

sociological and economic research the points typically represent the units, in form of

individuals or organisational units, while the lines typically show the information flow or

other exchange activities and relationships between the points. In their paper they emphasise

that the nature of relationships within networks may change, for example from a purely

professional relationship to a friendship.

262 The Oxford Paperback Thesaurus, 2000, p.542 263 Powell, 1990, p.301 264 Nohria and Eccles,1998, p.288 265 Lincoln,“Intra- (and inter-) organisational networks”, 1982; in Bacharach (ed.), “Research in the sociology

of organisations”; in Witt and Rosenkranz, 2000

Network Definitions

65

Hence, in this broad sense the structure of any social organisation can be named a network,

which seems to be one of the reasons for why it is used in numerous contexts.

Nohria and Eccles discuss two specific uses of this terminology, which they perceive as

important elements in considerations surrounding what is thought of as the transition from

industrial to post-industrial society266. The first one describes networks as a relatively new

organisational type, which is substantially different from the traditional bureaucracy. A

network is characterised by relations that are not based on hierarchical authority or market

transactions267. It is a response to increasing environmental changes which create growing

uncertainties and risks, as well as greater requirements for information processing. The

authors point out that, thus far, no consensus has emerged as to the analytical distinctiveness

of “the network organisation”. Moreover, they argue that there is also no consensus about the

wording itself, with scholars using a wide variety of other phrases to describe the same thing.

However, they state, that the network properties consist “… of fluid, flexible, and dense

patterns of working relationships that cut across various intra- and interorganisational

boundaries.”268.

The second application refers to modern communication technology. Thereby, advanced

communication technology enables new modes of communication, and data access and

processing.269

Kogut (2000) states that “economic networks” are “... the pattern of relationships among

firms and institutions. In this definition, an idealised market is a polar case of a network in

which firms transact at spot prices and a fully connected in potential transational relations

but are disconnectected through their absence of cooperative agreements.”270 Furthermore, he

explicates “A network is then a collection of firms, each ensconced in an identity that supports

specialisation and a dynamic of learning and exploration. But, the network, unlike the firm,

does not consist of an authority relationship that can enforce an organisational structure on

its members.”271

266 Touraine, “The post-industrial society”, 1971; in Nohria and Eccles, 1998; Bell, 1973 267 See this chapter, p.74 ff 268 Nohria and Eccles, 1998, p.289 269 See also Ebers, 1994; Monse and Reimers, 1994; Neuburger, 1994; Picot, et al., 1998 270 Kogut, 2000, p. 407 271 Kogut, 2000, p.409

Network Definitions

66

Ibarra (1998) differentiates clearly between formal and informal networks272. She points to

Mitchell (1969) for a definition of social networks, which he defines as “… a specific set of

linkages among a defined set of persons, with the additional property that the characteristics

of these linkages as a whole may be used to interpret social behaviour of the persons

involved.”273. Informal or personal networks of relationships involve an understanding of

informal and often even “quiet understanding” of certain manners of interaction. The

relationships within informal networks may be of different natures, work related, social or

both274. Whereby Galaskiewicz (1979) states that emergent networks evolve out of “… the

purposive action of social actors […] who seek to realise their self-interests, and depending

on their abilities and interests, will negotiate routinised patterns or relationships that

enhance these interests.” 275.

Ibarra describes organisational networks as being “… composed of a set of formally specified

relationships between superiors and subordinates and among functionally differentiated

groups that must interact to accomplish an organisationally defined tasks.276 Prescribed

networks also encompass the sets of relationships created by ‘quasi-structure’: committees,

tasks forces, teams, and dotted-line relationships that are formally sanctioned by the firm but

are more fluid than relationships represented in the organisational chart.”277. “Network

organisations are described as characterised by lateral or horizontal patterns of exchange,

interdependent flows of resources, and reciprocal lines of communication.”278. Furthermore,

Ibarra points out that there is no one generic form of networks but rather a range of different

ones. The benefit that can be reaped from each network depends on its characteristics.

Capra (2002) describes formal networks as somewhat rigid structures that are clearly defined

and can be represented in form of organisational diagrams. Within these structures there are

official rules and regulations which label the relationships between individuals within the

organisation, their tasks and the distribution of powers. The informal networks, on the other

hand, are fluid, dynamic and fluctuating communication networks. These informal

communication structures include non-verbal engagement through which skills are

272 See also, e.g. Schulte-Zurhausen, 2002 273 Mitchell, “The concept and use of social networks”; in Mitchell (ed.), “Social Networks in urban situations”,

1969; in Ibarra, 1998, p.166. See also Sydow, et al., 1995, p.15 274 See Giddens, 1984, chapter 2, “Theoretical preliminaries” on social positioning, p.33 ff; Uhrig, 2001, in

chapter 4, „Networking Analysis“, p.127 ff 275 Galaskiewicz, 1979, p.16 276 Also see Luhmann, 1972, this chapter, p.67 ff; Sydow, 1995 277 Ibarra, 1998, p.166 278 Ibarra, 1998, p.169

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exchanged. This usually takes place in co-operations when working on the same projects or

whenever else teamwork may be required. Capra explains that the membership to a network

may be based on the fact that an individual is able to follow a specific (type of) conversation

or that a person knows the latest gossip.279

Luhmann (1972) explains the reasons for these phenomena, by arguing that within classical

organisations theory formal communication is equated with vertical communication, i.e.

hierarchy280 is equated with coordination tasks. Thereby, rather than validating the operational

qualities and abilities of the hierarchical structure, it is taken for granted that communication

takes place on the basis of authority and instructions. This results in a one-way

communication (top-down) in form of delegation rather than communication in terms of

mutual and reciprocal exchange. Luhmann points out that the innate limitations of

hierarchical communication structures hinders the optimal utilisation of the information and

intellectual potential of the members.281

Once a formal communication structure poses a functional solution to the communication

demands of a given organisation, it has the potential to support the network by “… relieving it

of all redundant communication and makes it a rule that all messages are not primarily

chosen based on the showmanship of the sender but according to the information needs of the

recipient (while in informal conversations the opposite is almost a matter of course).”282.

Additionally, formal networks hold the potential of being reliable structures, whereby its use

is independent of the moods and interests of its individual members. However, by imposing

rules no room is left for communicating information that lay outside the specified frame. This,

in turn, curbs problem solving potential and creativity, i.e. innovation. In order to circumvent

these problems informal networks need to evolve, which can be accessed when required.

Nonetheless, the disadvantages of the informal structures are that they “… are relatively

unreliable, not closed off, not thematically specified, prefer to pass on messages [i.e.

information] verbally and not via authentic [i.e. written] messages, they require additional

motivation and, thus, are subject to personal interests and emotions; while being non-

obligatory, innovative and carrier of numerous messages that are disclosed to the formal

net.”283

279 Capra, 2002 280 See Luhmann, 1972, p.29 ff 281 Luhmann, 1972, p.197 ff 282 Luhmann, 1972, p.195 283 Luhmann, 1972, p.196. See also Grunwald, 1995

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Heitger’s (2000) view on modern networking agrees with Luhmann’s opinion that informal

structures have the propensity to complement formal ones. According to Heitger today’s

network activities aim to increase flexibility of the information flows within and beyond

organisations. To do so it encompasses a wide array of persons, interests, cultures and

institutions, and combines them in order to prepare and increase their readiness to cooperate.

Luhmann uses the word “communication network” in order to describe a specific

phenomenon which is not prevalent in all social systems. Only when members of a social

system have a specific interest in a systematic or disciplined communication within the

system, can this term be used. “Communication channels build a net only when they are

connected in such a way that information can flow through many places in a transparent

manner.”284 He further adds that it is characteristic of communication networks that the

sender can forward a message in such a way that he can see (to varying degrees) how and in

which manner this information is passed on. Luhmann does state that communication does not

solely concern the passing on of messages, but also the processing of sense.285

In addition to communication networks Brass and Burckhardt (1998) explain the concepts of

“workflow network” and “friendship network”. These three networks cover three of the basic

flows within organisational structures, namely, (1) the exchange of goods, (2) the exchange

of information and (3) affect or liking. 286 (Within the exchange theory framework on power

these three basic flows are seen as the grounds for interdependency of network partners

(employees in an organisational context).)

“Workflow networks” are formally prescribed networks. However there are informal or

emergent patterns that also evolve within workflow networks. This type of network embodies

a very restricted interaction network. The basis for interdependencies among network partners

within this type of net occurs through the division of labour, because the complete

organisational task is split and all partners/employees perform a part. In order to complete the

whole organisational goal all workers within this network rely on each other. The relevant

outcome of each worker’s efforts is the completion of his or her duties in order to continue the

successful flow of information.287

284 Luhmann, 1972, p.191. See also chapter 4 “Network analysis”, p.116 ff 285 See chapter 2 „Theoretical preliminaries”, p.14 ff 286 Tichy, Tushman and Fombrun, “Social Network analysis for organisations”, 1979; in Brass and

Burckhardt,1998 287 See also Albach, 1993; Alt et al., 2001

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The more alternatives a partner within a workflow network has in acquiring inputs or

distributing outputs, the less dependent he or she is on others. This in turn should increase his

or her power. In summation, the more central an actor within a workflow network is the more

alternatives he or she will have to complete his task and distribute outputs, the more

independent on others and the more powerful he or she will be. Additionally, mediating flows

of work, i.e. betweeness, may also be a source of power.288

“Friendship networks” comprise of links between actors based on social liking or friendship.

Here the relevant resource is friendship, which in itself is not a direct source of power. Brass

and Burckhardt (1998) argue that friendship may be instrumental in obtaining other relevant

resources, such as information, rewards and access to otherwise inaccessible resources.

Friendships may be the starting point for later coalition, while coalition partners may also

become friends in the future. Further, the authors point out that the overlap of friendship and

work-related relationships might make it difficult for friends to withhold certain information

that they otherwise would not have shared with a (non-friend) co-operation partner.

Wikner (2000) focuses on the aspect of inter-personal relationships describing networking as

“ … the ability to enter, build relationships, maintain and utilise them. It is the ability of

active relationship management. Through networking it is possible to win partners from ones

professional and personal life and to make them to friends and allies, and to win their good

will and their active support. The ability to network poses an advantage everywhere where

one interacts with other people.”289 According to the author “networking” is

♦ “Every relationship that has the goal to exchange information, communication, aid and

mutual support.

♦ The strategic equation for success, which is the make-or-break of success and whether

someone enjoys their work.

♦ The ability to enter relationships, to maintain and utilise them. In other words it is the

ability of active relationship management.

♦ The opportunity to make ones partners from the private and professional life to ones

friends and allies, and to receive their acknowledgment, good will and active support.”290

288 See chapter 4 “Network analysis”, p.119 ff 289 Wikner, 2000, p.14 290 Wikner, 2000, p.34

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Similarly Birley (1985) says that “In all business related actions and decisions the

information and exchange relations with third parties play an important role. These

information and exchange activities can be carried out via the market or formal transactions,

such as through a tax consultant or contractual agreement via a lawyer or the purchase of

supplies via a supplier. Information and resources can also be exchanged via non-market or

informal channels, such as through friends and family or ex-colleagues. The sum of these

informal or personal contacts of an individual is called a personal network.”291

Many authors such as Pellert (1991) and Burmeister et.al (1991) use the terms “social

systems” as synonyms for “social networks” to describe, for instance families, ventures,

groups or even projects. According to Boos et al. “social systems” do have certain borders and

limits with respect to their environment. Only the ability to set these limits grants the ability

to establish internal structures, build long-term relationships and to develop a sense of

identity. Thereby Boos Exner and Heitger apply Luhmann’s understanding of social

systems292. “Social networks” are marked due to the absence of clearly defined borders.

Limits that occur within “social networks” occur rather by chance, are flexible and are not

controllable. The authors state that “social networks” in general are not controllable or steered

in one way or another. Networks are outside the realm of this kind of control centres and

instead have many knots, which, given great autonomy, utilise mutual links. (However, as we

will see later, there are many who argue for the ability to steer networks and even propose

strategies that will shape networks in a way that will obtain the desired results of the “network

manager”.)293

Boos et al. point out that even though “social networks” are not covered by the classical terms

of organisation theory (e.g. structures, competencies, power, extent of control, membership)

the terminology is not random. Not everything that is somehow connected can be called a

network. For the purpose of this work, the idiom “social networks” can be taken as an

equivalent for “people networks”. Boos et al. see a network as an intertwined net of

relationships, based on mutual interests and goals. This net is initiated by or surfaces through

(current) opportunities for a co-operation so as to meet the common goal. Furthermore,

networks reflect and possess the mobility and elasticity of relationships. The individual

291 See Birley, “The role of networks in the entrepreneurial process”, in Journal of business Venturing 1, 1985;

in Witt and Rosenkranz, 2002, p.2 292 See also chapter 2 “Theoretical preliminaries”, p.7 ff 293 See e.g. chapter 4 “Network analysis“, Burt, 1998, p. 50 ff; Ibarra, 1998, p. 125 ff; White, 1998, p. 41 ff;

Scheler, 2002; Uhrig, 2000, chapter 5 “Networking skills”, p.166 ff

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person within a network (or networks) is the entrepreneur of his or her relationship capital.

They describe the characteristics of social networks as follows:

1. A common intention, which means a given goal and orientation with respect to a certain

theme.294

2. Focused on persons, which means that the whole person is involved and the delegation of

others does not take place as it would in (hierarchic) organisations. Networks orientate

themselves according to roles (tasks) not functions (title).

3. Voluntary participation – since there are no means of coercion the authors state that there

are no rights or duties within a network. However, there are networks that establish or are

actively established in order to achieve a certain goal, which the authors also state as a

characteristic of this type of structure. Thus, the members need to oblige themselves to

certain tasks and duties as otherwise nothing would be achieved. Again, we are faced with

the problem of defining the term. Further, all members (should) trust each other to fulfil

their tasks.

4. Exchange principle – a relationship based on an exchange of e.g. information or activities

that will be carried out at an appropriate point in time.295

“Networking is a systematic form of maintaining contacts with friends, acquaintances,

business partners and mentors.”296 Similar to Hameyer and Krainz-Dürr Scheler (2003) states

that not all personal contacts can be referred to as networks. He argues that the contacts and

social interactions within families, friends, acquaintances and colleagues are not networks.

However, he does propose that each group process can be referred to as a construction of

interactions. In each group individuals interact and communicate with each other, creating an

intertwining of relationships. These, according to Scheler, could be named “networks”.

However, what modern networking refers to is a systematic and strategic approach in the

activities involved in creating new contacts and maintaining existing ones.

Scheler distinguishes between the daily interaction we have with a large number of people,

e.g. neighbours, family, friends, shop assistants or work colleagues, and our conscious

networking efforts. Further, he explains that the relationship construct – the network – of

relationships which we have resulting from our daily lives is a result of coincident, develops

294 See also Hameyer and Krainz-Dürr, 2000 295 Boos et al., 2000 296 Scheler, 2003, p.18

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automatically and unintentionally. Some of the contacts within these networks, for instance,

are our family into which we are born. Classmates also are not a matter of choice - they are

there in the school. Hence, according to Scheler, a main characteristic of this type of network

is that it develops without the need to organise the creation of the contacts. What is necessary,

nonetheless, is to subsequently maintain these contacts, which is up to the individual.

The systematic and methodological approach to networking, though, is what distinguishes it

from the type of contacts that occur as a matter of our day-to-day life. There are several ways

of “weaving the net” and “tying oneself to others”. The behaviour needs to be amended

appropriately depending on the situation and whom it is that an individual wants to meet and

interact with does. There are for example different behavioural approaches, skills and type of

communication employed and necessary with contacts within ones professional life as

opposed to contacts created during leisure time. Should a contact be created through a third

party, the behaviour may change according to the type of relationship a person has with this

third party. This agrees with Giddens’s concept of positioning, whereby each social agent

needs to understand how he or she is positioned in a given situation. Based on the positioning

an individual should know what the appropriate behaviour in that specific circumstance is.297

We will discuss the behavioural aspects of networking in chapter 6 of this paper. Scheler

states some guidelines according to which we can test whether a construct of relationship is in

fact a result of networking or not. He refers to them as the “6 elements of networking”, which

apply to all situations. According to him networking means:

1. “To actively create contacts and occasions to make the creation of contacts possible.

2. To be interested in others and to show empathy.

3. To lead conversations with others and enjoy it.

4. To collect information about everyone and everything.

5. To practice the exchange of help and information.

6. To maintain contacts and to keep them on a long-term basis.”298

Consequently, “Networking is a methodological and systematic activity, which means to seek

contacts to others. To maintain relationships and to do so on a long-term basis. All this

happens with the obvious intention of helping one another and to meet the personal interests

297 Giddens, 1984, chapter 2 “Theoretical preliminaries”, p.33 ff 298 Scheler, 2003, p.22

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of all involved.”299 However, it seems fair to suggest that it is not necessary to collect

information about everyone and everything. Rather one should collect relevant information,

which will aid the focal and other network partners. Further, it is not plausible to maintain all

contacts on a long-term basis. It seems more sensible to propose that an individual should

decide with whom he or she would like to maintain what type of relationship.

Westebbe (1999) looks at networks within the German health sector. In an attempt to find

new structures that would meet the challenges of the socio-economic changes, medical and

technological developments in Germany today the “Ärztenetze” (networks of physicians) were

developed. According to Westebbe, organisations with network properties are characterised

by a high level of autonomy of its individual knots. Through this each individual within the

network can work with a high level of independence, without being significantly restricted in

his or her working manners. He or she will be able to follow the network in order to realise

personal visions and goals. All network members are entitled to the same rights. Further,

network organisations can only function well as long as there is not just a formal agreement

regarding the goals, but members need to identify with them and share the same values.300

Westebbe moves on to different forms of networks, which are mainly specific to the medical

sector. A more general one are the “open networks” or “informal networks”, which according

to him operate well the conditions of (1) Voluntary agreements among the members, (2)

Specialisations , and (3) Quality management. This organisational form is employed in order

to improve the communication and co-operation within a certain geographic location or

region without turning to rigid organisational structures. 301

Westebbe turns to Sattelberger’s302 explanation of networks, which differentiates between two

types of organisational network structures, namely “mercenary organisation”

(Söldnerorganisation) and “value communities” (Wertegemeinschaften). A “mercenary

organisation” is held together by the common goal of reaping or increasing profits. The

duration of this type of net is short, since there is no connection, such as on an emotional

basis, between the mercenaries besides the common profit generating goal. Once this project

is completed members search or turn to the next promising venture. On the other hand “value

communities” are based on a common culture. They have longer life spans because they do

not aim for quick profit making opportunities. Rather they are interested in belonging to a

299 Scheler, 2002, p.26 300 See Sattelberger; (interview) in Westebbe, p.106 301 Westebbe, 1999 302 Sattelberger is the head of human resources at Lufthansa; in Westebbe, 1999, p.106

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specific group and in the common identity. Similarly, Hite and Hesterley (2001) refer to these

types of networks as “calculative-based networks” and “identity-based networks”303.

According to Sattelberger each network structure that is to survive on the market needs to

comprise of elements of both these forms of structures.

In essence, the advantage of “mercenary organisations” is its flexibility, while its

disadvantage can be seen in its volatility and its pure focus on profits. The advantage of the

“value communities” is its stability and the emotional ties, while its disadvantage is its lack of

flexibility304.

Fischer (2001, 2003), bases his work on “virtual organisations” on that of Powell’s. He does

not only compares network to markets and hierarchies305, but continues by presenting a wide

variety of real type mixing forms of these three ideal types. He firstly separates between

“market networks” and “firm networks”. The differentiation between these two types is made

on the basis of the respective coordination mechanisms. The coordination mechanisms are (i)

contracts based on prices, (ii) the authority to give orders and (iii) agreements made on the

basis of trust.306 Depending on the degree to which the respective coordination mechanisms

are used, will the type of network sway either toward being a market or organisation network.

However, he states that a clear distinction between the network types often proves difficult.

“… an exact differentiation between these two [market and organisational networks] is as

difficult to do as between the classical forms of organisation and firm networks, since here,

too, do the transitions flow into one another. Organisation networks are that area between the

virtual organisations and the hierarchical organisation form. [See diagram 3.1]. For instance

supplier networks (which are more or less influenced by hierarchical forms) and virtual

production unions (mainly based on trust) are types of a decentralised organisational

form.”307

303 Hite and Hesterley, 2001, “The emergence of firm networks: from emergence to early growth of the firm”; in

Bouncken, 2002 304 Westebbe, 1999. 305 Also see Gulati, Nohiria and Zaheer, “Strategic networks”, 2000; in Bouncken, 2002; Krebs and Rock, 1994 306 For further reference see Fischer, 2001, p.124 ff; Schuh et al., 1998 307 Fischer, 2001, p.144

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DIAGRAM 3.1: REAL AND IDEAL TYPICAL FORMS OF THE ORGANISATION IN THE TRICHOTOMICAL MODEL

{Source: Fischer, 2001, p.144}

He further distinguishes between static and dynamic forms of networks. “Static networks tend

to belong to organisational networks while dynamic networks sway towards market

networks.”308 With reference to networks he differentiates between four real types, namely

(i) “centralised sourcing network”, (ii) “network for large projects”, (iii) “long-term

network pool” and (iv) “ad-hoc service provision network”309.

As a unique type of network he analyses “the virtual organisation”, which is a “… special

type of organisational form, which is not suitable for all types of products and production

processes. The degree of virtualisation needs to be agreed upon with the respective co-

operation partners. Specifically for producing SMEs will the real form of a virtual

organisation not be a suitable organisational form. Rather hereby a co-operation in form of a

virtual factory or strategic alliances will be more appropriate.”310 However, he does state that

the properties of virtual organisations are important points of reference for SMEs as well. The

reason being that these can be used in order to understand and reflect upon ones own position

within the explanatory model of the organisation. Once entrepreneurs from the smaller or

308 Fischer, 2001, p.145 309 Fischer, 2001, p.147 ff; Fischer, 2003, p.55 ff 310 Fischer, 2003, p.56

Network

Market-like organisation

Organisation

Market networks

Firm networks

Virtual organisation

Market Hierarchy

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medium sized organisations understand their own position they could possibly choose to

move toward stronger co-operations.

Such a virtual organisation is a form of co-operation among legally autonomous individual

entities. In the extreme form these individual entities will be firms with no employees, i.e.

single entrepreneurs. With reference to Kahle311 the characteristics of virtual organisations

can be summed up as follows.

♦ “The contribution of (core) competences (in form of knowledge) through the partners.

♦ The operation is seen in form of projects and, thereby, is temporary.

♦ The partners that are to be activated are drawn from the pool of existing contacts. This

pool can also be extended with the addition of new partners.

♦ Reacting to costumer demand.

♦ A uniform presentation in front of costumers [– similar to a uniform corporate branding].

♦ Using sophisticated information and communication technology.

♦ Absence of hierarchical or larger management structures or functions.

♦ Trust in the partners is the basis of the co-operation.

♦ No set spatial structure but possibly geographical distances between the partners.”312

It will not be possible for small and medium sized companies to fulfil all these criteria.

However, Fischer emphasises that the lack of co-operation among these firms will reduce

their chance of survival. Hence, it is important that these firms try to fulfil as many criteria as

they can, i.e. that they increase their co-operation abilities.

Sydow (1991) refers to a strategic network as a network of preferred partners. This form of

networks has its origins in the Japanese car industry and concerns mostly first tier suppliers.

By reducing the number of suppliers costs are saved in terms of time, energy and ultimately

money. By establishing longer-term relationships with a small number of suppliers better

conditions and quality of goods and services may also be obtained. Additionally, as part of

such strategic networks, co-operations are entered with competitors. Thereby RND costs are

reduced.

He turns to Jarillo (1993) who states that “A strategic network is a ‘long-term’, purposeful

arrangement among distinct but related for-profit organisations that allows those forms in

311 Kahle, 1999 312 Fischer, p.57

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them to gain or sustain a competitive advantage vis-à-vis their competitors outside the

network, by optimising activity costs and minimizing coordination costs. … Trust is at the

very core of what a strategic network is, for it is the mechanism that lowers transaction costs,

thus, making the network viable economically.”313 “Although very decentralised, poly-centric

and outcome of collective strategies, a strategic network is usually lead by a focal or ‘hub’

organisation, although some other network organisations also participate in strategic

decision making processes. The inter-organisational relationships within the network are

complex and reciprocal, rather than cooperative, and relatively stable.”314

Like others Sydow speaks of a purpose. In other words networks are or can be established in

order to achieve a certain goal. Given his description of a strategic network, the condition of

fulfilling a purpose is an essential property. Unlike in other explanations he notes that there is

a leading unit within such network structures, which the author refers to as “hub” or “focal”

organisation. In the explanations of networks we have seen thus far, members were seen as

equals without there being a stronger or more dominant “knot”.

The author then turns to the question of what whether a strategic network can be considered a

firm or a market. Sydow himself, with reference to Thorelli (1986), refers to them as “Hybrid

organisational forms between markets and hierarchies”.315 Further he also quotes Eccles

(1981), who named strategic networks also “quasi-firms”.316 Sydow proposes that in networks

we find more structure compared to markets. Moreover, there is more interaction among the

members and there are “‘thicker’ information channels”317. According to him strategic

networks require higher levels of loyalty among the members and more trust is prevalent. As

opposed to market structures within networks organisations prefer to voice their concern and

find a solution rather than taking an exit strategy. Also, less emphasis is placed on prices.

When comparing network structures to traditional hierarchies, Sydow notes that due to the

loose nature of the coupling within network structures “ … a network is ‘under-

organised’”.318

In a nutshell Sydow describes networks as “ … an inherently instable, fragile, and possibly

very complex open system of (satellite) organisations, led by a focal organisation.”319

313 Jarillo, 1993, p.149 314 Sydow, 1991, p.4 315 Thorelli, “Networks: between markets and hierarchies”, 1986; in Sydow, 1991, p.4 316 Eccles, “The quasi-firm in the construction industry”, 1981; in Sydow, 1991, p.4 317 Sydow, 1991, p.4 318 Sydow, 1991, p.4 319 Sydow, 1991, p.5

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In 1995 Sydow et. al. look at the insurance industry to study the industry specific

organisational networks. His views on organisational networks agrees with Mitchell320. In

their definition network actors can be individuals, groups, organisations, or collectives or

clusters of organisations. A prerequisite needs to be that their interactions are significant for

the creation, maintenance or discontinuation of the network relationships. Network

relationships themselves are characterised by a degree of social organisation. The authors

state that the mere fact that there are interdependency of organisations does not constitute a

network relationship. Network relationships are, on the one hand, a product of such network-

relevant operations by the members. On the other hand network relevant actions enable and

restrict network relationships. This view brings us back to Giddens’s theory of structuration.

The authors understand that a network which results as a consequence of social activities of

the members typically indicates a structure of relationships that embraces more than two

actors. They differentiate the network relationships between content (products or services,

information and emotions) and form (e.g., length and intensity of the relationships, frequency

of interaction and utilisation of media). The relationships of the network members are multi-

complex, meaning they consists of different forms and are not reduced to one single aspect.

Quite plausibly the authors state that only when the actors are organisations do we speak of

organisational networks. Within organisational networks the economic interest of the

members prevails. On the other hand, as we have seen throughout this chapter, within non-

organisational networks there are other motives which may dominate. Nevertheless, as we can

see from the following quote we find elements within the definition of organisational

networks which apply to other types of networks as well. “The relationships that are created

within organisational networks need to be referred to as inter-organisational relationships

and are mostly business relationships. An organisational network poses an organisational

form of economic activity, which comprise of complex and mostly reciprocal, more

cooperative than competitive and relatively stable relationships between legally independent

but economically interdependent organisations.”321

From the above, we can say that a network is the bundling of a variety of relationships that an

individual has with others. These relationships, like networks themselves, can vary in their

320 See Mitchell, “The concept and use of social networks”; in Mitchell (ed.), “Social Networks in urban

situations”, 1969; in Ibarra, 1998, p.166; this chapter, p.66. See also Sydow, et al., 1995, p.15 321 Sydow et. al., 1995, p.16

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form, nature and purpose. A relationship may be of a very close or of a loose nature, where

the individual involved in the relationships only communicate infrequently. Moreover,

relationships are dynamic and may change over time. The reasons for that are for instance,

changes in interests and priorities of the members, the end of a limited co-operation or

changes in geographical locations. We will turn to further explanations of the determinants of

networks in chapter 4, when looking at the evolution and development of networks.

Networks may be built and used strategically for specific purposes, but do not necessarily

have to do so. Networks may embody a component of structure, organisation and strategic

behaviour linked with social aspects such as friendship, trust and reciprocity The partners of

these network structures may be joined by sharing similar values or by belonging to the same

group, for instance.

Scheler points out that all this needs to take place without the intention of exploitation.322

Intuitively we can see that exploitative approaches might will succeed in the short-term and

may well reap some successes. In the long-term, however, the other network partners will turn

away from an exploiting individual.

In all cases we are faced with inter-personal relationships and, thus, all the (complex)

characteristics connected with them. These characteristics can be the communication, a base

of common interests, cultural backgrounds, goals, desires, as well as the fears and threats of

each person.

The individuals involved in the relationship are referred to as “network partners”. A personal

network needs to be viewed from the stand point of a specific individual - the “focal network

partner”, “network owner” or “ego”.

3.2 EXAMPLES OF SOCIAL NETWORKS TODAY

Networks today are as popular as ever. We have seen that networks can come in different

types and are used in order to meet an endless variety of needs and goals. In this section we

will present a number of today’s social networks in alphabetical order. The purpose of these

322 Scheler, 2003

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examples is to demonstrate the different shapes and forms such net structures can take, and

their diverse applications.

3.2.1 Business/Industry-specific Networks

Hereby we do not refer to company or firm networks, rather we refer to networks which are

aimed at the business arena. These networks offer a platform on which individuals from the

business world can meet, exchange information and lay the foundation for potential co-

operations. There are a very large number of such networks. Some are aimed at a specific

industry sector or a certain trade, while others focus on the business activity in a particular

region. A few are regionally bound while others are cross-national or even global networks.

Examples of such are information points for entrepreneurs, e.g. the “Euro Info Centres

(EICs)”323or the “European Enterprise Union (EEU)”324. Many countries have business

representations in foreign countries in order to promote trade between their home and the

host country, which are called “chambers” or “trade centres”. There are for instance the

“Israeli trade centre in Berlin325”, the “German-British Chamber of Industry and

commerce326”, “German American Chamber of Commerce”327 or “The Association of

European Chambers of Commerce and Industry”328. There exist also a number of Networks

for business founders, such as “Science for Life”329, “Business Plan Wettbewerb Berlin-

Brandenburg”330 or the “Existenz-Gründer-Institut Berlin e.v”331, which are sponsored by

public and private sectors to support business founders.

3.2.2 Gender specific networks

There are different gender-specific networks, some of which develop naturally while others

are institutionalised. A classic example of a purely female network are the tea-time gatherings

(“Kaffeekränzchen“). Through these meetings the women of a specific area came together and

could exchange information and tips.

323 It is a UK information service provider with local offices across the UK, providing a range of specialist

information and advisory services to help British SMEs develop their business in Europe. www.go-digital.info, 2003

324 A virtual business network with the aim to create business relations and co-operations with one another. Wikner, 2000

325 www.israeltrade.gov.il/germany, 2003 326 www.ahk-london.co.uk, 2003 327 www.gaccny.com/admingate/site/en/index.php?lang=eng, 2003 328 www.eurochambres.be, 2003 329 It is a German business competition aimed at the life science sector. 330 A regional business plan sector for Berlin-Brandenburg. 331 A German non-profit organisation offering help to founders of new companies, offering a variety of services.

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Another classic examples are the, so called, “Old Boys networks”. Segerman-Peck (1994)

argues that these are the most efficient networks. These structures offer very effective means

to provide for the professional success and development of its members. The “Old Boys

networks” refer to the network of past students of various British public schools. Until

relatively recently, this network was accessible for men only, given that most public schools

were single sex schools. This network is a very efficient news channel for a whole range of

issues and, of course, business related topics, such as a new business opportunity, job opening

and change in a company’s strategy or other relevant insider information.

These “Old Boys networks” are also very traditional, as in that they were “knitted” over

generations by the fathers and carried on by the sons. Often schools and universities would

only accept students if their ancestors had been students at that institution. Therefore, within

these networks, a sense of family or club privilege is created. It is often argued that members

of this network are not interested to share their information with outsiders or introduce

newcomers, except if they have a referral from an existing member. This notion of exclusivity

is a main source of criticism of networks.

Such Old Boy networks are not reduced to public schools but also exist among former

university or college students (Alumni), such as Oxford, Eaton and Cambridge. Alumni

usually hold regular meetings (mostly annually), and often publish a newsletter through which

information regarding the network members and the institution is spread.

Segerman-Peck states that today all types of male networks in Britain are referred to as an

“Old Boys Network”, so that the historic relation to the public school increasingly disappears.

Other examples of male only networks are “Lions Club international” and “Rotary

international”, which support international aid projects.

Likewise a relatively new term has evolved in the US, called “New girls networks”332, in

reference to the “Old boys networks”. Thereby a new name is found for female-only

networks, such as “the American Women in Berlin”, “the Women’s International Zionist

Organisation (WIZO)” or “the European Women’s Management Development Network

(EWMD)”. 333

Specifically with these types of networks the characteristics described by Luhmann and

Giddens can be seen. These social structures usually are operatively closed social systems and

332 Segerman-Peck, 1994. See also Birley and Cromie, 1992 333 For further discussions about gender differences and their respective social roles see e.g. Burkart and

Koppetsch, 1999

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do reproduce their own structural properties. Moreover, the importance of the duality of

structure and the self-differentiation process is (usually) actively regarded as essential, and

carried out pro-actively and consciously.

3.2.3 The Internet and Internet Discussion Forums

The internet is a vast collection of links, accessible to any person, where anyone whishing to

add links into this net can do so where (with the technological equipment to do so). A specific

type of network within this mega system is internet–based discussion forums. There are

forums for a variety of interest groups and issues, such as dieting groups334, or those

discussing environmental topics335 or issues surrounding ones pets336. These types of

networks, although arguably being a form of a social network, are not the object of our

analysis.

3.2.4 Multi Level Marketing

“Multi level marketing (MLM)” is a special concept for the sales and distribution of goods and

services, which has become very popular a number of years ago337. In this system the sales of

goods and services takes place via the personal contacts of the distributors of the products.

Companies employing the MLM approach make a two-fold use of social networks. Firstly,

often these companies do not use much other advertising than through “word of mouth”. Thus,

licensed distributors approach people they know, as potential clients and business partners.

This personal network is (or can be) extended through referrals. Should a customer be

satisfied with the product or service it is likely that he or she will refer other persons, whom

the distributor may not know.

This referral system is also based on the notion that friends and acquaintances are willing to

support one another. The reason being that friends are more likely to refer a friend to another

friend rather than recommending a shop or someone who they do not have a closer

relationship with. Secondly, MLM means to actually build and manage a network of clients

and business partners.

Examples of companies working with Multi level marketing are, “Amway” (a US-based direct

seller of nutrition, personal care, home care, home living, and commercial products), “AWD”

334 e.g. www.ediets.com 335 such as www.conserveafrica.org 336 e.g. www.mopsforum.de 337 Thust, 1997

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(based in Germany AWD is one of Europe’s leading independent finance consultancies),

“Mary Kay” (a US-based direct seller of cosmetic products), “NSA” (US and Swiss-based

producer of natural food supplements) and “Tupperware” (a US-based direct seller of food

storage, preparation and serving items)338.

3.2.5 Political arena

Personal contacts and social events are very important elements of the work within political

arena.339 On the one hand there are the official events and on the other hand there are social

events and institutions to support the interpersonal relationships among politicians. Examples

of such are the “Diplomats wives club”, where wives of diplomats and female diplomats meet

up on a regular basis in an unofficial atmosphere, which enables the maintenance of existing

and the creation of new contacts. Another example are sport events such as regular (usually

annual) inter-embassy football matches.

3.2.6 Religious or Cultural Networks

Every religious or cultural community is a network and offers a platform on which to live life

according to its religious or cultural philosophies, rules and tradition. Within these networks

individuals can meet other followers of their specific religious believes and cultural

backgrounds. Here, for example, they can discuss issues which they may not otherwise and

elsewhere be able to. Example of this type of networks are Jewish, Moslem, Christian and

Hindu communities, Mormons and Scientologists.

We also see groups of individuals from foreign countries that have settled down outside of

their home countries building networks. These groups help each other with their daily

challenges in the foreign country and provide a feeling of homeliness. Examples of such

groups are the Asian communities in England, the Turkish communities in Germany, the Arab

communities in France and the Italian communities in the USA.

Both are social systems in the sense of Luhmann, and Boos et al., having very clear limits340.

These limits enable the member of such communities to develop and maintain their identity

within society.

338 It is famous for its, so called, “Tupperware parties”, where the host(ess) invites a group of friends to her

home for the purpose of presenting range of products, which can be purchased at the end. This concept has been adopted from many other companies using the MLM distribution method.

339 See Armin, von, 2003; Knoke, 1990 340 See this chapter, p.70 ff

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3.2.7 Self-help groups

These types of networks provide members the opportunity to face specific issues or problems,

learn how to handle them and meet others who may experience the same hardships. Within

these networks individuals can receive professional support and use these addresses as a port

of support, which they may otherwise not be able to obtain from their friends, families and

other social contacts. Furthermore, for a variety of reasons individuals often may not be able

to speak to their close contacts about specific issues. They may also not be able to receive the

professional help they require from their social circles.

There are self-help groups for a variety of needs 341. Some of these groups are non-profit

groups while others are not. There are also Internet-based self-help groups. Examples of self-

help networks are “Abuse”(helping victims of a range of abuses, such as child abuse, rape and

domestic violence), “Anonymous Alcoholics” (helping individuals with drinking problems),

“Drug abuse” (there are a range of different groups aimed helping individuals who are

addicted to a range of drugs.), “Learning difficulties”, “Terror” (helping victims of war

terror), “Weightwatchers” (helping individuals to learn and practice healthy nutrition as well

as to reach their ideal weight).

3.2.8 Sports clubs and societies

Sports clubs and societies (e.g. music, debating or chess societies) are another type of network

promoting a specific activity. Hereby members are united through their passion for a specific

interest they pursue in their leisure time. Often these clubs and societies offer social activities

as well.

From the examples above we can also see that there are mixing forms of social networks,

covering more than one of the types of networks shown in this example section. For instance

the “EWMD”342 is at the same time a gender-specific network and one that seeks to promote

entrepreneurial activity.

Thus far we have seen time and again that there are numerous types of networks. All authors

quoted in this section acknowledge the fact that indeed there is a wide range of network

341 www.ukselfhelp.info, 2003 342 See this chapter, p.81

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structures and applications of them. This fact demonstrates and undermines the need to

differentiate and clearly define what we mean by the term networks within the frame of this

research effort. For this reason we will in the next step clearly define the characteristics of the

type of network we focus on in this research effort.

3.3 NETWORKS IN THEIR SETTINGS – DEVELOPING THE CONCEPT OF “STRATEGIC PEOPLE

NETWORKS (SPNS)”

The object of our analysis in the current research paper is a very specific construct of social

ties. In this part we will define explicitly what this special type of social form is, how it is

constructed, how it operates, what it is used for, why it evolves and how it differs from other

forms of exchange.

3.3.1 What are SPNs?

The “Strategic People Network” is a construction of social ties, also referred to as network.

SPNs are networks because they fulfil Nohria and Eccle’s (1998) criteria of being a “…

structure of ties among the actors in a social system.”343 Furthermore, they have “… fluid,

more flexible, and dense patterns of interconnections that cut across various intra- and

interorganisational boundaries.” 344 This type of network also meets Sydow et al.’s demand

that the interaction of its members is significant for the creation, maintenance or

discontinuation of the network relationships345. SPNs are networks which have the aim of

fulfilling clear goals or vision346. Within SPNs all members actively aim to reach the same

goal at the same time together. Here we see a clear differentiation to other types of networks

where members cooperate but have their own goals which they strive to reach at different

times. In contrast to these other types of networks it is an essential part of the definition that

within SPNs there, firstly, are one or more goals which are the same for all members.

Hence, just as within virtual organisations347, within the SPN context the goals can be viewed

similar to projects on which all participants work together. Secondly, all members try to reach

this goal or goals at the same time with there being no time lag. Here we can relate back to

Giddens’s time-space concept. Within SPNs all members need to be within the same time-

343 Nohria and Eccles,1998, p.288, see this chapter, p.64 344 Nohria and Eccles, 1998, p.289, see this chapter, p.65 345 See this chapter, p.78 346 See Hameyer and Krainz-Dürr, 2000 347 See Fischer, 2001, p.156; Kahle, 1999

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space dimension when reaching their common goal. Once the goal has been reached the SPN

is successful. Thus, for the purpose of our work “success” is to be equated with the

fulfilment of the goal of the network.

The term “Strategic” was chosen in order to express the pro-active and purposeful

characteristics of this special social structure and its members. While the classical meaning of

“strategy” does not fully apply here, a number of aspects discussed in the literature348 can be

seen in the concept we refer to as “Strategic People Networks”.

SPNs are based on a specific goal that the members seek to reach, whereby they have a more

or less concrete plan, direction349 or perspective350 of what they intend to do and how to do

so351. Further, individuals may be motivated to enter an SPN in order to gain some form of

competitive advantage352. Thereby they may, for example, intend to access new resources

and/or enhance their existing ones353 (via the other social ties).

However, as Mintzberg explains, not all strategies that were initially developed (“intended

strategy”) need necessarily also be implemented in the end (”unrealised strategies”). Due to

internal and external developments, linked with the experiences made by the members,

strategies may also evolve along the way (“emergent strategies”). In the end strategies that

were planned and realised (“deliberate strategies”), the emergent and unrealised strategies

make up the total sum of “realised strategies” (see diagram 3.2).354

Giddens (1984) speaks of the analysis of strategic conduct. Hereby the focus lies on the

manner in which actors relate to and utilise the structural properties in the constitution of

social relations. This in fact is an important aspect of our research question and we will return

to it in chapter 6. Moreover, Giddens´s “Stratification model of the agent”355 gives an

explanation for why there (usually) are unrealised and emergent strategies. Due to certain

unacknowledged conditions of actions as well as unintended consequences of actions it will

not be possible to implement certain strategies the way it had originally been intended.

348 See e.g., Götz, 1998; Hansmann, 1985; in Götz, 1998; Johnson and Scholes, 1994; Mintzberg, 1994; Schulte-

Zurhausen, 2002; Sydow, et al., 1995 349 See Johnson and Scholes, 1999, p.10; Mintzberg, 1994, p.25 350 See Mintzberg, 1994, p.27; Sydow, 1991 351 See Mintzberg, 1994, p.23 ff; Schulte-Zurhausen, 2002 352 See Hansmann, 1985; in Götz, 1998, p.33; Jarillo, 1993, p.149, see this chapter, p.76; Johnson and Scholes,

1994, p.8 ff 353 See Johnsons and Scholes, 1995, p.8 354 Mintzberg, 1994, p.23 ff 355 See chapter 2 “Theoretical preliminaries”, p.35 ff

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Through continuous self-monitoring, as well as the rationalisation of action, given the

motivation to act, will the actors realise these (previously) unknown factors and make the

required amendments. In some cases certain adoptions to the initial plans will be made, while

in other cases it will not be able to follow these routes at all. Likewise, due to these unknown

or unintended factors the social agents will need to develop new, i.e. emergent, strategies,

they had previously not considered.

DIAGRAM 3.2: FORMS OF STRATEGY

{Source: Mintzberg, 1994, p.24}

The different forms of strategy also apply to the SPN concept. Let us consider an individual

(A) who wishes to form a specific SPN in order to achieve a certain goal (X) and approaches

one of his or her social ties (B). The intended strategy is the plan person A prepared in how to

approach his social contact and how to cooperate with B within the SPN. However, an

unintended consequence of their encounter may be a negative answer, due to an

unacknowledged condition on B’s side (e.g. lack of time or interest). In this case A’s

originally intended strategy becomes an unrealised strategy. However, in the process of self-

monitoring and the rationalisation of his motives he realises that he wishes to pursue his goal

(X). Let us further propose that B refers him to another contact (C) who turns out to be able,

willing and suitable to enter the co-operation. Now the two (A and C) devise a new strategy

(emergent strategy) with which they seek to reach their goal (X).

Realised strategy

Unrealised strategy

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Finally, from a practical perspective the word “strategic” is used because it is shorter

compared to naming it “A network of social relations which strives toward reaching one or

more mutual goals at the same time.”

Similar to Uhrig’s (2001) concept of the 3 levels of contacts356, we acknowledge that

individuals have a close circle of friends, family and close acquaintances. Secondly, there are

those ties to whom the individuals do not have as frequent interaction and the nature of their

ties is rather loose. In addition there are those ties that could potentially be accessed via the

existing ties. The sum of these two types of contacts can be referred to as “latent network”

(see diagram 3.3).

DIAGRAM 3.3: THE LATENT NETWORK

where = A, who is the focal network partner or network owner

= The network’s owner’s direct contacts

= The network’s owner’s indirect or potential contacts

356 See chapter 4 „Network Analysis“, p.128 ff. See also Cicero, 19913, Book I, xvi – xvii, xvii, xxvii – xviii;

Hesse and Schrader, 1999

Latent network = pool of existing and potential contacts

1

3

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40 38

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A

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We use the word “latent” due to the fact that in the sense of “Strategic People Networks” they

are not a network. Rather the sum of all an individuals existing and potential social ties (the

latent network or “relationship potential” 357) can be accessed in order to form the SPNs,

which usually comprise of a relatively small number actors (see diagram 3.4).

DIAGRAM 3.4: BUILDING SPNS FROM THE LATENT NETWORK

{Based on Fischer, 2001, p. 157}

From the graphical representation the latent network seems to have a finite number of

potential contacts. In reality, however, a person’s potential pool of social ties is sheer endless,

given that an individual has a critical mass of weak ties358. (This is in fact the cause of the

357 Fischer, 2001, p.157 358 See Granovetter, 1978, chapter 4 “Network analysis”, p.121 ff

1

3

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SPN1

1

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6

SPN2

Contacts that are part of more than one SPN

Latent network

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boundary specification problem in network analysis.359) Nevertheless, the actor also needs to

realise this “network potential” and be able to mobilise it, in order to realise and reap returns

on his social capital. If there are too many strong or redundant ties360, the focal individual will

not be able to access new contacts with potentially new information or other resources. These

new contacts in turn, could, if the actor was able to access them, act as new gate keepers to

further contacts to individuals with, yet, other additional information, resources and skills.

Nevertheless, the question of the critical mass of weak ties goes beyond the scope of our

research focus.

Diagram 3.5 further shows how the focal network partner A can use his personal contacts in

order to win a person for an SPN, with skills, knowledge or resources which none of his

existing contacts have.

DIAGRAM 3.5: ACCESSING NEW CONTACTS VIA EXISTING TIES

359 See chapter 4 “Network analysis”, p. 117 360 See chapter 4 “Network analysis”, p.123 ff

1

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For instance let us consider the formation of SPN 1, which consists of actors A, 10, 11, 36,

41and 46. Actor A seeks to reach a specific goal, which he or she cannot do alone.

Consequently actor A starts to form SPN 1 and is able to recruit his direct contacts 10 and 11.

However, there are still certain skills and resources missing in order to achieve the goal. Now

A turns to his existing contacts inquiring whether they either possess of these resources or

whether they know someone who does. Eventually A’s pool of contacts identify actors 36, 41

and 46 who together have all the necessary resources that A still requires. In this case A was

able to gain access to these three actors via his personal contacts. From diagram 3.5 we see

that there are more than one ways through which A could access actor 46. Let us assume that

A in fact reaches actor 36 via the following path:

A → 9 → 33 → 34 → 36.

Likewise, A reached actor 41 through actor 10. Finally, the contact to actor 46 was made for

instance, via the following path:

A → 10 → 11 → 45 → 46.

Diagram 3.4 graphically represents the routes through which the contacts were created.

Hereby, the indirect or potential contacts 25 and 34 become direct contacts, as they now

cooperate within the strategic people network (SPN 1). The same applies for the formation of

SPN 2 where A accesses contacts 29 and 23 via the existing ties. For instance, contact 23 may

be reached via individual 27, while person 6 introduces 29 to A.

At this point the question arises as to how the focal person will know whether and if so, which

one or more existing or potential ties within his latent network possesses over the resources he

requires. The knowledge about knowing whom to approach for a specific reason is referred to

as “knowing whom”, “know-who” or “Transactive Memory”. Transactive memory refers to

the knowledge about what others know. “Transactive Memory systems (TMS) comprise of the

individual memories and the communication processes among a group.”361 Hereby the

structural intertwining or networking362 takes place via the actors’ acquisition of knowledge

about the other actors’ knowledgebase (“meta knowledge”363).

361 Braun, 2004, p.51. Also see Klages, 2003; and Wegner, 1987 362 See Luhmann, 1972, and this chapter, p.68 363 Braun, 2004, p.51

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In his 2004 research Braun examines the degrees of efficiency, in terms of the transactive

memory and TMS of different organisational structures364 within companies. His findings

show that organisational set ups that sway toward smaller network structures (based on trust,

non-hierarchical) tend to have significantly more efficient TMS than structures leaning

toward larger and hierarchical constructions.

From that we can deduct that SPNs have the potential to be highly efficient structures for the

purpose of knowledge sharing because of their innate properties. This, however, will only be

possible when the communication within the network provides for the required processes

(encoding, storage, retrieval of individual knowledge; the storage and labelling of internal and

external knowledge; transactive encoding and transactive retrieval365).

Strategic People Networks can be used for a short-term or longer-term period. Once the goal

is achieved - the project is completed - the network in its form as an SPN rests - the ties

return to their latent state. This is a main distinction to other definitions of networks. For

instance Sydow states in his definition of strategic (firm) networks that they need to be

designed for the long-term366. The ties of one SPN may be activated to form the same SPN at

a later stage, either to achieve the same or a different goal. Likewise these latent ties may be

approached or they initiate a different Strategic People Network themselves.

Another criterion refers to the membership within such a Strategic People Network. A

member of one SPN may well be a member of another SPN. The membership of one SPN

does in no way hinder or prohibit a person the participation in a different one. This is

represented in diagram 3.3 by contacts A and 46, which are both part of SPN 1 and SPN 2.

Additionally, family members and friends may well be part of an SPN but do not necessarily

have to be. Let us consider a group of 8 individuals (A to H) who whish to enter the form of

co-operation as described here (SPN 1). Within this group F, G and H are related. In this case

these family members are part of the same Strategic Persons Network. In another case, H may

form another Strategic Persons Network (SPN 2) with individuals I, J, K and L, who are not

related to him or her. Likewise H may enter another SPN with persons A, B, K, L and M

(SPN 3), of which A and B are also members of the first SPN and no one is related to H (see

diagram 3.6).

364 Here we understand “organisation” as an organisational form and not necessarily as a hierarchical structure. 365 Braun, 2004, p.51 366 See Sydow, 1991, this chapter, p.76

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DIAGRAM 3.6: POSSIBLE COMBINATIONS OF MEMBERS WITHIN AN SPN

3.3.2 How are SPNs constructed?

SPNS are formed on a voluntary basis367, with the fundamental of common values368,

common interests369, trust and some form of sympathy for one another. All these elements are

essential for the formation of these special forms of networks.

The reason for their importance is two-fold. First, it is those properties which brings these

people together in the first place and which will make them consider the possibility of

cooperating and seeking to achieve a common goal. Secondly, there do not need to be official

(and) written rules, but there can be if the members wish to do so. SPN members do need to

367 See Westebbe, 1999, this chapter, p.73; Boos et al., 2000 368 See Luhmann, 1984, and Luhmann, 1995, in Horster, 1997; in chapter 2, „Theoretical preliminaries“, pp.17

and 21 ff, respectively. See also e.g., Bouncken, 2002; Heintel, 2000; Krainz-Dürr, 2000; Mercke, 1999, in Westebbe, 1999; Powell, 1990, Scheler, 2003; Uhrig, 2001; Westebbe, 1999

369 See Bar-Tal, 1990; Boos et al., 2000

G α

E D

C

I

F α

B

M

L

K

A

H αJ

α = indicates the family relationship of these members

= SPN 1 consisting of ties A - H

= SPN 2 consisting of H, I, J, K and L

= SPN 3 consisting of A, B, K, L, M and H

where A = focal network partner

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agree at what terms they wish to cooperate and what the explicit tasks for each one is.

However, these do not necessarily have to be written down.

Trust is an essential element for SPNs, as it is for other types of networks. While we

endeavour on the issue of trust in further detail in chapter 6370 it is important to state the note

at this point that trust is required for means of complexity reduction. Moreover only when

there is trust among the network members will they be prepared to share knowledge, and open

opportunities for synergy effects. By the same token, Uhrig points out that the knowledge and

information we have about a certain partner has to be handled responsibly – trustworthy - and

always with the best of intentions for that partner. In this way the focal partner’s trust is not

being abused.

Referring back to the notion of implicit rules within SPNs, it is obvious that only with the

required trust will the network partners keep to them and not display opportunistic behaviour.

This aspect receives more weighting due to the fact that there is no state intervention into the

operations of SPNs and, thus, no legal rules or regulations which apply explicitly to SPNs.

Another unique feature of SPNs is the fact that they are not documented. While, for instance,

within organisations the ties are based on contractual employment agreements within SPNs

the ties are invisible and not documented. The reason for that is that the relationships a person

has is his or her social capital about which the individuals usually do not want to give any

information. This aspect makes the empirical analysis somewhat difficult. However, we will

return to this point and a solution to this problem in the empirical section.371

Given that there is no leader as such and the relationships are relatively homogenous in terms

of power, communication and responsibilities, we can say that SPNs are polycentric

networks.372 While saying that the relationships are relatively homogenous among the

members it does not mean that the relationships that two members have is identical to all the

relationships that develop and prevail within the SPN. Quite on the contrary, it seems fair to

suggest that the relationships in terms of their intensity, length, mutual history, time invested

and shared activities will differ. For instance, we have mentioned above that a family member

may also be a member of an SPN. Clearly the relationship to a family member will differ

greatly from a relationship to a person whom one has been introduced to by a mutual tie for

the purpose of establishing that specific SPN (as is the case with actor A and actors 1, 25 and

370 Chapter 5 “Networking skills”, p.139 ff 371 See chapter 6 “Empirical research”, p.179 ff 372 See Bouncken, 2000

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34). However, what can be said is that with reference to responsibilities, rights, privileges and

membership all relationships within an SPN should be homogenous. All contacts have

relatively homogenous positioning in the Giddensian sense.

3.3.3 How do SPNs operate?

As in other forms of networks there exists mutual flows of exchange within the SPN. The

objects of exchange are physical and non-tangible assets. The communication can be assumed

to be frequent, not fixed (as opposed to top down), at least two-sided, recursive and equal (in

terms of equal rights)373. Information and other resources travel very short and uncomplicated

ways374. Reaction time is short and there is much room for flexibility and creativity. The

reason for shorter communication and decision paths could possibly be explained by the fact

that, within SPNs all members accept each others competence and trust each others abilities.

Hence, unlike in other structures, there is less need to validate the competences, suggestions

and decisions of others. Consequently, collective decision-making can be faster. Furthermore,

within network structures all actors are informed of the global strategy. Thus, everyone is able

to make independent partial strategic decisions in cases the others cannot be reached quickly

enough where fast decision-making is needed. It seems fair to suggest that the time it takes

and the number of steps taken within the decision-making process varies according to the size

of the organisation. Within hierarchical organisations usually more people are involved in the

decision-making process compared to SPNs. Secondly, often within organisations not all

decision-makers have a full insight into the global strategies. Such factors slow down the

process considerably.

On a related subject within SPNs there needs to be “a common language” spoken by all

members. In other words there needs to be some common grounds comprising of a set of

shared values on which this network structure is built. For instance Powell (1990)375and

Sattelberger (1998)376 show the importance of such a common basis for successful co-

operation among individuals. Fischer (2003)377 also mentions the importance of trust and

common values when talking about the concept of the “virtual factory”. With reference to

Luhmann such a common language is also a point of connection or “interface” in the

communication among the individuals. Similarly, such a set of common values, shared culture

373 See Ibarra, 1998, p.169, this chapter, p.66 374 See e.g., Braun, 2004; Luhmann, 1972; Wegner, 1987 375 See chapter 4, „Network analysis“, p.113 376 See Sattelberger; in Westebbe, 1999; this chapter, p.73 377 See Fischer, 2003, this chapter, p.75 ff

Network Definitions

96

or type of communication is an important element of the structural principles of any social

system, such as an SPN.378

Unlike Powell’s (1990) suggestion that effective networking requires actors to be within the

same area, members of the same SPN do not need to have constant geographical closeness. It

seems fair to suggest that in order to strive members need to meet face-to-face on a regular

basis. Nonetheless, they need not to be close to one another geographically all the time.

Specifically with modern communication technology information can be acquired and passed

on quickly379. Quite on the contrary, following Granovetter’s (1998) weak tie argument it

seems advantageous if the members were in slightly different geographical areas, in order to

avoid (too) many redundant contacts. On the other hand, however, as Krackhardt (1998)

showed, strong ties lead to good results specifically in trying times.

To resolve this dilemma it seems fair to suggest that effective ties can develop under the

condition under which the members of a network are separated geographically, yet have

frequent communication and regular physical meetings. As to the frequency of the “regular

meetings” it is not possible to state a set number. Rather it seems plausible to suggest that it

depends on the nature of the existing ties between the actors and the nature of the common

goal.

3.3.4 What are SPNs for and why are they used?

It is at first important to understand that we do not aim to propose that SPNs are the answer

to all economic and social questions. Rather we postulate that this special type of network

construct is able to fulfil certain functions that other forms of exchange cannot do.

Through this special kind of social set up members seek to engage in exchange and

communication. As stated by Granovetter (1998) networks are an appropriate form for

satisfying economic and non-economic needs380. Given that the basis of the co-operation

within SPNs is voluntary and that there needs to be some form of mutual sympathy for one

another, SPNs are suitable social constructs for the fulfilment of material and non-material

needs in the Granovetterian sense.

378 See also Bar-Tal, 1990; Leydesdorff, 1999 379 See e.g. Nohria and Eccles,1998 380 See chapter 4 “Network analysis”, p.105 ff

Network Definitions

97

The goals to be achieved within such forms of exchange are, in the first instance, ones which

the individual is not able to reach on his or her own. If he or she could reach a desired goal

alone there would be no need to invest in the establishment and maintenance of an SPN.

3.3.5 SPNs vs. alternative forms of economic exchange

Following the notion of self-reference and differentiation by Luhmann and Giddens we will

compare and contrast the social system of our interest (i.e. SPN) with two alternative

organisational structures, namely “organisations” and “markets”381. Subsequently, we will

provide an overview of the differentiation between SPNs, markets, organisations and firm

networks. Through this process we seek to clearly describe the type of social network in our

focus since “One can answer the question: how is recognition possible? by saying: through

the introduction of differentiation.”382. The reason being that “An observation is a

differentiating operation that describes something. …”383 and “… to describe something is

the act of recognition and understanding.”384

Markets

While there is a vast literature on the topic of markets385 it suffices for our purpose to focus on

the following characteristics of market structures: Powell (1990) states that, first of all,

contractual agreements are made to clarify the properties rights of all parties involved in the

market exchange. In case of conflicts the conditions laid down in the contracts are enforced

trough the power of jurisdiction. The means of communication is via prices and conflicts are

resolved by way of haggling. The degree of flexibility within markets is high, while the

degree of commitment and trust among the partners is low. The reason being that there are

many players who typically are assumed to have relatively little power.386

Organisations

Similarly, we find many different understandings and applications of the word

“organisation”387. In fact Picot et al. (2002) refer to the “organisation problem”, which in fact

381 See Powell, 1990. Also see Gulati, Nohiria and Zaheer, “Strategic networks”, 2000; in Bouncken, 2002;

Krebs and Rock, 1994 382 Luhmann, 1990a, p.34 383 Horster, 1997, p.74 384 Horster, 1997, p.74. See also, Klein, 2004 385 See e.g., Amos and Spencer, 1993; Casen and Noussair, 2001; Chrystal and Lipsey, 2004; Giordano, 1981;

Pitcher, 1997; Rump, 1988; Streissler and Streissler, 1994 386 See Powell, 1990, p. 301. See also Braun, 2004, p.83 ff, Krebs and Rock, 1994 387 See for example, Jost, 2002; Maturana and Varela, 1987, p.54; Picot, et al., 2002; Schulte-Zurhausen, 2002

Network Definitions

98

consists of (i) a coodination problem and (ii) a motivation problem. On the one hand it is

necessary to achieve an increase in productivity via the division of labour. Secondly, an

appropriate exchange and suitable use of (other) resources is required in order to obtain

maximum (or rather optimal) results. In order to do so it is imperative to provide the actors

with the necessary information regarding their role in the economic process. Moreoever, the

players will need to be motivated so as to carry out their expected tasks. The authors state that

the solution to this two-sided problem is called “organisation”388.

Schulte-Zurhausen (2002) views organisations from a process-orientated standpoint,

differentiating between the institutional, functional and instrumental notion of the

organisation389. From an institutional perspective390, organisations are seen as social systems

in the Luhmannian sense. Consequently, as a social system an organisation refers directly to

interpersonal relationships and the “human element”. Hereby the borders between the

organisation and the environment are defined consciously and purposefully. Nonetheless,

since organisations interact with their environment they are “open systems”. Although the

boundaries are clearly defined an organisation does not solely act in isolation with a purely

internal focus.

Moreover, the type of organisation we focus upon here is the formal or hierarchical

organisation.391 “Formal organisations are generally defined [characterised] through the

conscious orientation along a common goal, through planned coordination of performance

[tasks] or as a means of rational domination; through stated, specifically written rules [and

regulations]…”392. Formal organisations are typically impersonal, holding ‘official

expectations’ by the management. There usually is a division of tasks in the Smithian393 sense

and a hierarchical structure, based on authority.

As we have seen above networks are often used as alternative forms of exchange. Due to the

weaknesses of other forms, such as markets and hierarchical organisations, individuals turn to

SPNs in order to achieve a specific goal. Unlike in markets people are not treated as

anonymous, but rather are seen as unique individuals. The social aspect is, in fact, very much

a centre piece of this form of network. Diagram 3.7 shows how SPNs are to be positioned

within the different form for economic exchange and within network structures, while table 388 Picot et al. 2002, p.27 389 See Schulte-Zurhausen, 2002, p.1 390 See also Picot, et al., 2002 391 See Luhmann, 1972, p.29 ff; and this chapter, p.67 ff 392 Luhmann, 1972, p.31 ff 393 See Smith, 1993

Network Definitions

99

3.1 provides an overview of the main differences between Strategic People Networks and the

alternative forms for economic exchange.

DIAGRAM 3.7: SPNS IN THEIR SETTING OF ALTERNATIVE FORMS FOR ECONOMIC EXCHANGE

Only the sum of

specific ties Sum of all existing and potential ties

Strategic People Networks (SPNs)

Virtual organisation (e.g. Fischer, 2001; Schuh et al., 1998)

Social/ People networks

Firm networks – strategic networks (e.g. Jarillo, 1993;

Sydow, 1991)

Hierarchical organisations

Networks Markets

Alternatives for economic exchange

(Powell,1990)

Network Definitions

100

TABLE 3.1: COMPARING DIFFERENT FORMS OF EXCHANGE

ST

RA

TEG

IC P

EO

PLE

NE

TWO

RK

S (S

PN

S)

Trus

t, co

mpl

emen

tary

stre

ngth

, m

utua

l go

als

and

valu

es, n

o do

cum

enta

tion,

i.e.

“in

visi

ble

ties”

. No

gove

rnm

ent i

nter

vent

ion

or le

gal r

equi

rem

ents

. R

elat

iona

l, ve

ry fa

st

Com

mun

icat

ion,

no

rm

of

reci

proc

ity

and

repu

tatio

n co

ncer

n H

igh

Hig

h

Ope

n-en

ded,

mut

ual b

enef

its

Inte

rdep

ende

nt

Smal

l

Shor

t co

mm

unic

atio

n pa

ths,

quic

k ex

chan

ge o

f in

form

atio

n an

d ot

her

reso

urce

s. Sa

tisfa

ctio

n of

no

n-ec

onom

ic

desi

res,

incl

. em

otio

nal

need

s. A

dvan

tage

of

not

bein

g fo

rced

to

coop

erat

e w

ith

som

eone

, bu

t th

e no

tion

of “

wor

king

with

my

frie

nds”

. Po

ssib

ly w

ith o

ne g

uidi

ng p

erso

n, y

et n

o le

ader

w

ith

supe

rior

deci

sion

-mak

ing

pow

er.

Som

e do

cum

enta

tion

and

cont

ract

s. D

evel

opm

ent

of

SPN

s int

o ca

rtels

.

FIR

M N

ETW

OR

KS

Com

plem

enta

ry st

reng

th

Rel

atio

nal

Nor

m o

f re

cipr

ocity

– r

eput

atio

n co

ncer

ns

Med

ium

Med

ium

to h

igh

Ope

n-en

ded,

mut

ual b

enef

its

Inte

rdep

ende

nt

May

be

of a

ll si

zes

Goo

d fo

r ex

pens

ive

and

inte

nsiv

e re

sear

ch

effo

rts.

Intro

duci

ng

indu

stry

-wid

e qu

ality

st

anda

rds.

Le

vera

ging

on

co

llect

ive

buyi

ng

pow

ers.

Stat

us h

iera

rchi

es

Mul

tiple

par

tner

s Fo

rmal

rule

s

HIE

RA

RC

HIC

AL

OR

GA

NIS

ATI

ON

S

Empl

oym

ent r

elat

ions

hip

Rou

tines

Adm

inis

trativ

e fia

t -

supe

rvis

ion

Low

Med

ium

to h

igh

Form

al, b

urea

ucra

tic

Dep

ende

nt

Usu

ally

larg

e

Mas

s pro

duct

ion

Info

rmal

org

anis

atio

n (D

alto

n, 1

957)

M

arke

t-lik

e fe

atur

es:

prof

it ce

ntre

s, tra

nsfe

r pr

icin

g (E

ccle

s, 19

85)

FOR

MS

OF

EX

CH

AN

GE

MA

RK

ETS

Con

tract

– p

rope

rty ri

ghts

Pric

es

Hag

glin

g –

reso

rt to

cou

rts

for e

nfor

cem

ent

Hig

h

Low

Prec

isio

n an

d/or

susp

icio

n

Inde

pend

ent

Usu

ally

larg

e

Exch

ange

of

ho

mog

enou

s go

ods

and

serv

ices

; no

need

fo

r tru

st;

spon

tane

ous

coor

dina

tion

mec

hani

sm,

rela

tions

hip

ends

w

ith

the

trans

actio

n

Rep

eat t

rans

actio

ns (

Gee

rtz,

1978

) C

ontra

cts

as

hier

arch

ical

do

cum

ents

(S

tinch

com

be,

1985

)

KEY

FE

ATU

RE

S

Nor

mat

ive

Bas

is

Mea

ns o

f co

mm

unic

atio

n

Met

hods

of c

onfli

ct

reso

lutio

n

Deg

ree

of

flexi

bilit

y

Com

mitm

ent

amon

g th

e pa

rties

Tone

or c

limat

e

Act

or p

refe

renc

es

or c

hoic

e

Stru

ctur

e si

ze

Stre

ngth

s

Mix

ing

form

s

{Bas

ed o

n Po

wel

l, 19

90 a

nd S

ydow

, 199

1}

Network Definitions

101

Diagram 3.8 shows where Strategic People Networks are situated within the trichotomy

model by Fischer (2001).

DIAGRAM 3.8: EXTENDED TRICHOTOMY MODEL OF THE ORGANISATION

{Based on Fischer 2003, p.54}

We see that SPNs in fact are very similar to virtual organisations. The main difference to

virtual organisations is that within SPNs members can but do not need to belong to an

organisational institution. Moreover, SPNs seem to be specifically suitable for self-employed

or one-man firms, who can enter such types of co-operations in order to realise a specific

project that they otherwise would not be able to. Further, while Fischer brings examples of

production projects that are completed within virtual organisations, SPNs seem to be more

suitable for non-production ventures. Examples for suitable ventures for SPNs are, for

instance, the introduction of quality standards or the provision of services that require a lot of

information (and possibly a variety of very specific information). Another significant

difference to other types of networks, including virtual organisations, is that SPNs are not

documented.

Market-like organisation

Organisation

Market networks

Firm networks

Virtual organisation

Market Hierarchy

Network Org.

SPNs

Network Definitions

102

In addition, the name “virtual organisation” like many other terms used in the contexts of

different forms of organisations, focuses on the institutional aspect of this organisational type.

On the other hand, Strategic People Networks focus on the person within this type of co-

operation. Furthermore, some may argue that the term “virtual organisation” has a latent

negative sound to it. It may seem that a term is used to describe an organisational form which

is not qualified to be called a fully qualified – or “proper” – organisation. The term “strategic

people network” on the other hand hints at a potentially high-powered tool indicating that a

clear goal is to be and can be achieved.

Another form of networking which is very similar to SPNs is described by Zündorf (1994)

who observed that within producing SMEs “… innovative problem solving can be referred to

as the activation of problem-focused networks of specialised individual or corporate

actors…”394. However, while many of the underlying aspect of the type of networking he

examines are comparable to SPNs, our research object is not focused on innovation

procedures or on the boundary spanning activities of producing firms.

Below is a list of the main characteristics of Strategic People Networks:

♦ SPNS are used for goals that cannot be achieved by an individual alone.

♦ Members of an SPN have one or more common goals, which they seek to achieve at the

same time together.

♦ The goals to be achieved within SPNs are comparable to projects395.

♦ There is a focus on information provision and exchange

♦ The success of SPNs is the accomplishment of the set goal or goals

♦ SPNS are constructed from an individual’s “latent network”

♦ A person can be part of more than one SPN

♦ SPNs are formed on a voluntary basis

♦ SPNs are formed on the basis of trust

♦ There is a need for a common basis, in terms of mutual values, some form of sympathy

for the other partners and a “common language”

♦ SPNs can exist in the short- or in the long-term

♦ All members have homogenous rights, privileges and there is no power asymmetry

♦ SPNs are usually not documented 394 Zündorf, 1994, p.255 395 See Kahle, 1999, and this chapter, p.76

Network Definitions

103

♦ There is a fast information flow

♦ There is fast decision-making

♦ All partners are able to make partial strategic decision-making

♦ There are mutual flows of exchange (communication, tangible and non-tangible assets)

♦ No need for constant geographical closeness

♦ The opportunity to fulfil economic and non-economic needs

♦ The social aspect is at the centre whereby the focus lies on the person

The aim of this chapter was to derive at a clear definition of our specific social system,

Strategic People Networks. The manner in which this was done followed Luhmann´s Systems

theory, though the differentiation of SPNs to alternative forms of economic exchange and by

explicating the difference of this type of network to other kinds of net structures.

Due to the fact that the goal of the current research paper is to observe and understand the

operational aspects, motivations and driving forces of our research object we will turn to a

range of analytical methods employed in network research in the following chapter.

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104

Chapter 4. NETWORK ANALYSIS

The phenomenon “network” has been widely researched396, whereby the two prominent

theoretical methods used in economics are the “resource-based view”397 and the “transaction-

cost approach”398. The former focuses on the additional resources, increasing utilisation of

existing ones and other added values members may access or realise due to the co-operation

within networks. Examples of these are access to information or other resources, as well as

synergy effects that lead to increased utilisation of resource capacities, which are to translate

into higher rates of returns (for all involved).

The transaction-cost-approach examines the degree of transactions costs that can be saved due

to network operations. Secondly, the manner in which cost savings can be realised are looked

at. Within network structures transaction costs can be saved in terms of time and money,

thanks to shorter decision making processes for instance. The underlying factors leading to

these shorter decision processes are mainly trust, faster communication and the ties’ ability to

make partial strategic choices in the interest of the entire net.

These two approaches are not mutually exclusive views on networks. Rather, as we will see

below, we can find references, both, for opportunities for increasing resources and reducing

transaction costs within these structures.

The aim of this chapter is to answer the questions “Why are networks used?”, “What are

networks used for?” and “How and why do networks develop?”. Additionally this section is

designed to provide an understanding of the different analytical approaches that are used to

study and evaluate structures of social ties. This insight should aid us in finding the right

focus for the study of SPNs and enable us to choose the appropriate evaluation methods for

the empirical research section.

4.1 WHY NETWORKS?

The main reasons for why social network structures receive increasing attention and

popularity can be seen in the following:

396 For an overview of the different approaches see e.g. Ebers and Amalya, 1998; Sydow, 1991 397 See e.g. Alt et al., 2001; Bouncken, 2002; Galaskiewicz, 1979; Tsang, 2000; Zündorf, 1994 398 See e.g. Albach, 1993; Aldrich, 1982; Jarillo, 1993; Tsang, 2000; Weyer, 2000

Network Analysis

105

(1) Everything is a network. Based on the work of Maturana and Varela (1987) Capra

proposes that everything in our world is organised in forms of networks, be it the most

primitive cell, human society, sub-groups within society, companies or the global

economy. Based on the latest scientific discoveries in the fields of life sciences and

management, he developed a systemic model which combines the cognitive and social

dimensions of life. It shows that life on all levels is inseparably united through complex

networks. He argues that “One of the most significant insights that the systemic method

offers is that networks is a pattern which is characteristic of all life. Everywhere where we

see life we see networks.”399 Furthermore, Castells (1996) claims that the latest

information technology revolution has created a new economy. This new economy

structures itself around information flows, power and wealth within financial networks. He

also notes that a new type of network activity can be seen, which shaped society into a

new organisational structure, referred to as the “network society”400.

(2) Networks offer a means for orientation in a multicultural and fragmented society,

which is typical of todays western world. Networks are especially relevant in our fast

moving times due to their ability to cross borders of social systems. Secondly, they are

used as substitute social constructions where family structures are dysfunctional. Due to

the growing individualisation, people are not only “individualised” but also isolated and

emotionally impoverished. Additionally, where previously a set of morals and values

would be passed on through the generations via the family, today there is a prevalent lack

of such structural properties in form of values. Moreover, family structures and traditions

pose a source of certainty, security and stability, which dissappears with the increasing

distancing of the social agent from such structures. This in turn leads to growing

uncertainty and instability of the “individualised person”.401

For these reasons networks are a welcome alternative where a “well-functional” family is

non-existent (or not accessible to the individual for various reasons).

(3) Link between economic and non-economic motives. Many see the need to include non-

economic drives in the analysis of economic activities, due to the fact that the social agent

is assumed to aim at satisfying both these basic needs at the same time. “It is thus common

399 Capra, 2002, p.26. See also Maturana and Varela, 1987, p.56 400 Castell, “The rise of the network society”,1996; in Capra, 2002 401 Burkart, 1994, p.114. This is not to imply that individualisation in general is damaging and poses a danger

that needs to be extinct. Rather this passage aims to point out the problems connected with the growing indvidualisation, which in turn lead to a growing popularity of network membership.

Network Analysis

106

for economic relations that begin in a neutral, impersonal way to develop non-economic

content as people try to actively prevent economic and noneconomic aspects of their lives

from being separated.”402 Network analysis enables the combined examination of these

two types of motivations. However, since these actions are often subconsciously driven it

will be difficult to find explicit statements or measurable observations to prove these

underlying motivations.

(4) Similarly, embeddedness, is another aspect that has been neglected in classical economic

analysis. However, since individuals do not act in isolation but always within the realms

of some social context “Economic action (like all action) is socially situated and cannot

be explained by reference to individual motives alone. It is embedded in ongoing networks

of personal relationships rather than carried by atomised actors.”403. Due to the emphasis

on interpersonal interaction members of networks, such as SPNs, are and should be aware

of their embeddedness and act appropriately. This “appropriate behaviour” is discussed for

instance by Giddens’ stratification model of the agent404 as well as by various authors who

refer to the social skills of actors405.

(5) Networks are widely perceived as the key to personal and professional success. It has

been repeatedly stated in the literature that it needs the “right” social contacts in order to

strive professionally as well as to receive satisfaction within one’s personal life406. This

can be argued on the basis of points (3) and (4)407. Within social net structures, such as

Strategic People Networks, the players are seen to actively seek to find the most suitable

and, thus, strategically optimal partners for their network. The objectives to be achieved

within SPNs are not exclusively business related. Hence, other goals such as of a social

nature or in the area of culture can be sought within SPNs.

(6) Networks help to overcome problems related to hierarchical structures. Networks offer

fast solutions where traditional organisational problem solving processes fail due to their

heavy and bureaucratic nature. A hierarchical organisation structure can only operate its

402 Granovetter, 1998, p.26 403 Granovetter, 1998, p.25. See also Giddens, 1984, in chapter 2 “Theoretical Preliminaries”, p.33 ff; Powell,

1990, p.312 404 Giddens, 1984, in chapter 2 “Theoretical Preliminaries”, p. 34 ff 405 See chapter 5 “Networking skills”, p.134 ff 406 See e.g. Kogut, 2000; Scheler, 2003 407 See e.g. Baskerville, 1993; Boos et al., 2000; Burt, 1998; Collins and Pancoast, 1981; Hesse and Schrader,

1999; Kremer, 2000; Scheler, 2003; Wikner, 2000; Uhrig, 2001

Network Analysis

107

powers and strengths, and provide security when it succeeds to establish information

processing communication points where decision-making competencies are collected, too.

As soon as the information situation crosses a certain degree of complexity this

information processing decision-making points do not operate hierarchically, but rather at

random. Consequently, hierarchies loose their competence and trustworthiness. Hence,

Heintel (2000), states, the curse of hierarchies is that after a certain point they cannot cope

with their self-created complexity. He argues that “… in order to be economically sound,

it requires organisational forms to be based on other principles, such as social, ethical

and emotional ones. The problem lies in the fact that the former often does not aid to

foster the latter and even often destroys it.”408 Cost-saving potential of network

structures, in terms of lower transaction costs (administration and time), as well as a

reduction in complexity and uncertainty are seen as very valuable attributes of these

social constructs.

(7) Networks are seen to allow smoother and faster information flows, fostering knowledge

creation, learning processes, creativity and innovation. By permitting room for creativity

networks allow for the process of individualisation. Boos et al. (2000) propose that

networks function at their best in turbulent times and can be seen as an answer to chaotic

situations. New things can easily be tested within networks, because there is no sense of

durability. However, a lack of durability may also be viewed as a great disadvantage since

durability provides a sense of security. By means of deduction, security is not provided

through networks given the assumption that networks do not grant durability. In any case,

there seems to be a consensus in the literature about the propensity of learning and

innovation of social networks409. It will be interesting to see in how far we find empirical

reference to the degree of SPN activity and level of environmental uncertainty in the

research part (chapter 6).

(8) Organising efforts. Hereby the focus lies on how relationships and contacts to others can

have a significant influence on the ability and success or failure of an entrepreneur’s

efforts to organise a certain venture. Network partners are useful when searching for

408 Heintel, 2000, p.12. See also e.g. Boos et al., 2000; Fischer, 2001, 2003; Henschel, 2001; Schwertfeger,

2001; Sydow, 1991; Powell, 1990; Wikner, 2000. See also chapter 3 “Network definitions”, p.98 ff 409 See e.g. Boos et al., 2000; Bouncken, 2002; Burt, 1998; Braun, 2004; Capra, 2002; Fischer, 2001, 2003;

Fischer and Maschler, 2002; Goyal, 2003; Heintel, 2000; Henschel, 2001; Klages, 2003; Kogut, 2000; Koschatzky et al., 2001; Powell, 1990; Schulhof, 1999; Sydow, 1991; Wikner, 2000; Witt, 2004; Witt and Rosenkranz, 2002; Zündorf, 1994. See also chapter 5 “Networking skills”, p.158 ff

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employees or co-operation partners, when locating (other) resources and accessing

information410. The individuals within the network, or rather the quality of their

professional knowledge, their ability to access certain information, their relationships to

others and the types of individuals they are in contact with; directly influences the

possibility of the focal networking partner’s opportunities to access these resources.411

Deductively this means for successful SPN operations that its members need to be very

adept in approaching others, in gaining the relevant information quickly and being able to

motivate others to provide them with access to the required (different types of) resources.

Clearly we can see that this is directly related to social skills, which we will look at in

more detail in the next chapter412.

(9) Network analysis helps to explain strategic considerations within strategic alliances.

Strategic alliances have usually been explained as strategic steps taken in order to increase

competitive advantage, lower transaction costs that otherwise would occur when resorting

to the market, or by taking a resource-based approach. Nohria (1998) states that these

classical explanations lack reasoning for how these alliances intertwine to form these

networks of relationships. Further, the classical organisational theories do not explain how

the strategic conduct of the partner firms is shaped and constrained as a result of the

relationships within the networks that were built over time during the process of alliances

and co-operations. Kogut et al. (1998) show that specifically firm alliances established

over time are a result of their position within their networks in the past. Consequently,

they argue that the decision to co-operate is influenced by, and in turn influences, the

relationship network in the industry413.

With respect to organisational or formal networks social networks are seen to bring about the

following benefits:

(10) New competition, referring to the increase of competitiveness among small firms,

specific regions and certain industries. Hereby, “old competition” is taken as the model of

large and hierarchical organisations, whereas “new competition” is characterised through

410 Burt, 1998; Gitomer, 2000; Granovetter, 1998; Hesse and Schrader, 1999; Nohria, 1998; Schaudwet, 2002;

Schulhof, 1999 411 See e.g. Boos et al., 2000; Burt, 1981, 1993; Gitomer, 2000; Heimer, 1998; Schwertfeger, 2001; Zirkel, 2001 412 See chapter 5 “Networking skills”, p.134 ff 413 Kogut, 2000; Kogut et al., 1998; in Nohria, 1998, p.12; Nohria, 1998. See also e.g. Powell, 1990: Sydow,

1991, 1995

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the co-operation within networks of firms. The co-operations can be of different natures,

such as, lateral and horizontal among or within the networks. Nohria argues that “… these

firms [Japanese kieretsu] are seen to have organisational characteristics that make them

more like networks or organic organisations, and are hence better suited to the dynamic

contemporary business environment” 414. He further argues that in his view only those

organisations adopting a network structure will have the chance of surviving in the long-

run.

(11) Technological developments, specifically in the area of communication enable

quicker and more extensive flows of information with no geographic or time limitations.

This, in turn, enables more fragmented, distributed and flexible production processes and

methods, both, internally and with external partners, such as suppliers and customers415.

These technological developments, thereby, foster co-operations in form of formal

networks.

(12) Networks are seen to help to explain the distribution of power within (hierarchical)

organisations. Classical explanations for the distribution of power within organisational

theory generally focuses on the individual’s personal character traits, socio-economic

profile, previous position in the organisation (including horizontal and vertical

differentiation of labour), attitudes and values, control over critical resources (e.g. capital

and social approval) and control over critical contingencies (e.g. tasks interdependencies

and functions as intermediary). In addition to these, however, it has always intuitively

been known that connections, or the lack thereof, also have an influence on the position

and, thus, on the power an individual may obtain within an organisation. Hence, Nohria

argues, that a persons position within a network may be a source of power in itself,

independent of other factors416. Thereby, “ … network analysis may provide a systematic

approach to understanding and analysing this intuition. … it may aid to understand the

strategies individuals should take in order to gain power and take control”417. On a related

issue White (1998) argues that formal networks within organisations are constantly under-

414 Nohria, 1998, p.13. See also e.g. BarNir and Smith, 2002; Nohria, 1998; Witt, 2004; Witt and Rosenkranz,

2002 415 See e.g. Ebers, 1994; Monse and Reimers, 1994; Neuburger, 1994; Nohria and Eccles, 1998; Picot et al.,

1998; Powell, 1990 416 See Burt, 1998 this chapter, pp.114 ff and 123 ff; See also Kogut, 2000, p.413 ff 417 Nohria, 1998, p.9. See also e.g. Burt, 1998; Heimer, 1998; Krackhardt, 1998; White, 1998

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going changes, whereby people join and leave in order to realise “agency”418. White

defines agency as providing “one standard path to control which can build up into

organisation and formal network. Agency is primordial, however; it is not just an aspect

of management in formal organisation.”419 In Whites view, management is an ever-on-

going process, involving the combination of new and existing network in order to extend

and reinforce agency420.

(13) Network analysis is seen as giving an insight into the evolution of institutions as a

result of social interaction. Granovetter states that economic and all other institutions do

not establish automatically in a given form influenced by a series of external factors.

Rather they evolve out of a series of social interactions (among the founders and other

individuals, e.g. investors, authorities, potential employees and partners)421.

(14) And finally we turn to the development and maturing of network analysis within

academia. As networks received growing attention by academics from a wide variety of

fields, a growth in literature occurred. This in turn inspired other scholars as well.

Consequently, new journals were founded, and the “interest in the concept of networks is

not longer limited to a small group of sociologists. It has expanded to include students of

organizations in such applied, interdisciplinary settings as business schools.”422

4.2 HOW NETWORKS OPERATE

As we already have established above networks are self-referential autopoietic social systems

with their very own modes of operations, forms of interactions and structural properties,

thereby differing from other forms of economic exchange423.

Due to their nature as social systems their mode of operation is communication424. A social

network is seen to enable better communication among its members, compared to other

forms of economic exchange. This is due to many factors. First of all within these net

418 See Giddens, 1984, in chapter 2 “Theoretical Preliminaries”, p.35 ff 419 White, 1998, p.94 420 See this chapter, p.116 421 Granovetter, 1998 422 Nohria, 1998, p.3. See also Ebers and Oliver, 1998; Powell, 1990 423 See chapters 2 “Theoretical Preliminaries” and 3 “Network definitions“ 424 Luhmann, 1990, p.30; Horster, 1997, p.47; in chapter 2 “Theoretical Preliminaries”, p.12 ff

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structures information needs to travel shorter paths425. Additionally, high levels of trust

among the social ties as well as reputation concerns426 reduces the hesitance to exchange

information and share knowledge, thereby encouraging dynamic and reciprocal

communication flows427. We can see that we are faced with a circular dynamic. While high

levels of trust are seen to enhance communication, more interactive communication, in turn,

seems to enhance trust. This seems to be specifically the case with respect to reciprocal flows.

As long as network members see that all members practice the notion of give-and-take they

will have confidence in the other social ties and be ready to continue the active exchange of

information and knowledge. Should the social agents feel that reciprocity is not practiced by

all, they will be increasingly hesitant to share their knowledge and information with these

individuals, aiming to circumvent their opportunistic behaviour. This may be especially the

case due to the voluntary nature of the participation428 in the net. From this we can see that

in order for networks to communicate, and in fact to operate, successfully, it is essential that

the members ensure reciprocity429.

The question arising now is whether what is exchanged reciprocally between the network

members is of an approximately equal worth430. The problematic arises when trying to define

the value of the reciprocal actions. One approach is to analyse the distribution of rents, which

can be taken as a model for the degree of reciprocity or fairness within a network. Kogut

(2000) explicates two different viewpoints on the distribution of rents within (organisational)

networks. He turns to (i) Coleman’s (1990) distinction between autonomous and global

viability within co-operations, arguing that rents need to be distributed in a fashion that

ensures network participation. (ii) Burt, on the other hand, implies that rents will always to the

network member posing a structural hole.431

425 See Luhmann 1972; this chapter, p.116 ff 426 Boos et al., 2000; Fischer, 2003; Gulati, 1998, in Bouncken, 2002; Luhmann, 1968; Powell, 1990; Sydow,

1991; Westebbe, 1999 427 See e.g. Bouncken, 2002 428 See e.g. Heintel, 2000 429 See e.g. Boos et al., 2000; Bouncken, 2002; Brown,2002; Collins and Pancoast, 1981; Dyer and Hatch, 2004;

Gitomer, 2000a; Heintel, 2000; Hesse and Schrader, 1999; Kahle and Bouncken, 2002; Powell, 1990; Scheler, 2003; Sydow, 1991; Sydow et al., 1995; Uhrig, 2001; Wikner, 2000. See also passage on relationship quality and reciprocity, this chapter, p.128

430 See also Cicero, 1913, Book I, xvii on mutual interchange of kind services, this chapter, p.129 ff on relationship quality and reciprocity

431 Kogut, 2000, p.414 ff For the purpose of this paper we will not engage in a detailed discussion about the advantages and disadvantage of either approache It suffices to acknowledge the different view points and their application in appropriate instances.

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Nonetheless, within social networks the emphasis does not solely lie on monetary aspects, but

on non-economic motives as well432. The valuation and monitoring of the allotment of these

other elements is somewhat more trying. However, it seems fair to suggest that if the network

members did not feel that their own needs and goals are satisfied within the network they

would try to change the nature of the exchange or leave the network.

Secondly, given that the emotional aspect plays a main role within networks it could well be

that even if the material worth of the exchange for partner A may be lower than that for

partner B, actor A may still happily stay within the network because his emotional attachment

to the network and emotional satisfaction derived from it is very strong. By the same token,

Granovetter (1998) explains that individuals will always try to satisfy their non-economic

needs when engaged in economic activities433. Hence it could well be that this network may

grant an individual the opportunity to satisfy (some of) his non-economic needs and this may

be of a higher value than may be measured in quantitative terms. The satisfaction actor A

receives from this network may be of a higher value to him or her than the value of the

physical exchange. Moreover, it seems fair to suggest that the importance does not lie as

much in whether the exchange that takes place is of equal value. Rather it seems more

plausible to suggest that the needs and expectations of each member need to be satisfied.434

Hence, the process of exchange within networks is to be understood in a social context as

well, and not on a purely economic and rational basis.

In order to ensure an optimal communication clear communication structures and codes need

to be established so as to derive at a common language435 that is understood by all who need

to understand the communication content. This in turn will enable clear and efficient flows of

information436, enabling partial decision-making, i.e. strategic manoeuvring437 of the

individual for the good of the entire network.

Moreover, another important aspect of communication with respect to networks is that these

social constructs in fact enable interpersonal communication and interaction, which is a

basic need of any person and is lacking in other organisational structures438. Modern

technology enables us to organise our daily operations more quickly, as well as increasingly

432 See this chapter , section 4.1, p.106 ff 433 See this chapter, p.106 434 See also Boos et al., 2000; Bouncken, 2002; Powell, 1990 435 Habermas, Jürgen, 1981, “Theorie des kommunikativen Handelns”; in Leydesdorff, 1999, p.11. See also e.g.

Capra, 2002; Westebbe, 1999; Wikner, 2000 436 Luhmann, 1972, p.191, in chapter 2 “Theoretical Preliminaries”, p.68. See also Krainz-Dürr, 2000 437 See Giddens, 1984, in chapter 2 “Theoretical Preliminaries”, p.55. See also Fischer, 2003 438 See e.g. Boos et al., 2000; Bouncken, 2002; Fischer, 2003; Granovetter, 1998; Heintel, 2000; Powell, 1990

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reducing the need for face-to-face interaction between people. This leads to fewer

interpersonal interactions resulting in emotional impoverishment of many. Social networks

offer the possibility to interact and satisfy ones emotional needs, by placing the individual

into the focus of attention as opposed to the function, as is done in other structures. It seems

that this is a main reason for the ever growing popularity of these social constructs.

Social networks are based on inter-personal ties, which require the ability and willingness of

member ties to build and maintain relationships. In order to do so social agents interacting

within net structures need to be interested in social relations439 and possess high levels of

social skills. Hence, it can be said that “… the establishment of networks is social

management”.440

Similarly to the requirement for a common language, there is a need for a common base upon

which the network structure rests. This common base can be in form of a mutual goal or

direction, parallel socio-economic background, shared interests and values of the individuals.

Furthermore, members need to have some form of sympathy for each other441. Based on

Powell (1990) we can say that within networks transactions take place through individuals

who are bound to each other through reciprocal, preferential and mutually supportive actions.

Moreover, the co-operation within these social structures is of a partnership nature, where all

members are seen as equals. Each actor enjoys the same rights and privileges as the others

without there being power asymmetries within the system. This, combined with dynamic and

interactive communication as well as reciprocity, is seen to enable compromises and consent

finding among the persons involved. This notion of partnership, based on mutual respect,

reciprocity and trust, is seen as another fundamental aspect of network stability442. Based on

these characteristics a process of revision can take place. During this development members

reflexively revise the tasks at hand, their motivation for action and the possible solutions, as

well as seeking to empathise with the other partners in the search of mutually satisfactory

solutions443.

While ego can potentially benefit greatly from well-practised networking activities, he will

probably have to embark upon the difficult task of trying to satisfy the very different needs 439 See e.g. Cole, 2003: Shaw, 1997, in chapter 5 “Networking skills”, p.142 ff; Scheler, 2003 440 Krainz-Dürr, 2000, p.23. See also e.g. Baskerville, 1993; Cooper and Ayman, 1998; Gitomer, 2000a;

Goleman, 1998, 1999, 1999a; Scheler, 2003; Schwertfeger, 2001 441 See e.g. Bouncken, 2002; Heintel, 2000; Krainz-Dürr, 2000; Powell, 1990, Scheler, 2003; Uhrig, 2001;

Westebbe, 1999 442 See e.g. Boos et al., 2000; Bouncken, 2002; Brown,2002; Collins and Pancoast, 1981; Dyer and Hatch, 2004;

Gitomer, 2000a; Heintel, 2000; Kahle and Wilms, 1993, pp.28 ff, 31; Powell, 1990; Scheler, 2003; Sydow et al., 1995; Uhrig, 2001; Wikner, 2000

443 See Giddens, 1984, in chapter 2 “Theoretical Preliminaries”, p.6 ff; Heintel, 2000

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and wants of his or her network members444. Hereby he or she will have to balance them out

and may even have to practice some form of prioritisation. This in turn requires high levels of

social skills.

A network is perceived as a flexible and creative operating environment, where individual

and collective creativity and innovation is promoted. Fischer (2003) reminds us that “Only

with a continuous, trusting (and thereby open) communication which is focused on the

creation of knowledge can the value adding process be carried out efficiently, flexible and

innovatively. Without such communication will the communication take place in given [rigid]

paths and make it almost impossible (except in the beginning) to create innovative and

flexible solutions.”445

Similarly, information and knowledge management structures need to ensure optimal

information flows, and enable access, creation and exchange of knowledge within the net and

its members. This will also enable strategic manoeuvring by the individual member for the

good of the entire network.446

One of the most prominent and popular aspects of networking is the utilisation of contacts,

seeking to enhance one’s “relationship capital”447. Moreover, Burt (1998) proposes that

competitive advantage can be reaped from the structure and an individual’s location within

his or her personal network. He even goes as far as saying that, ceteris paribus, “ … success

[is] being determined less by what you know than by who you know.”448. This statement is

rooted in his perception that competition is about securing productive relationships and not

about physical attributes.

In order to utilise their social contacts the social agent needs to establish their network(s) in a

strategic fashion. Thereby the actor has to ensure that the construction (structure, size,

density), the type of ties (weak ties, strong ties, type of social contact) as well as their own

positioning within the network structure reflects the properties that will be of a strategic

444 Powell, 1990 445 Fischer, 2003, p.59. See also Bouncken, 2000; Heintel, 2000; Powell, 1990 446 See e.g. Bouncken, 2002; Burt, 1998; Fischer, 2003; Fischer and Maschler, 2004a. See also chapter 5

“Networking skills”, p.158 ff 447 See e.g. Boos et al., 2000; Bouncken, 2002; Burt, 1998; Hesse and Schrader, 1999; Uhrig, 2001; Scheler,

2003; Witt and Rosenkranz, 2002; Witt, 2004; Powell, 1990 448 Burt, 1998, p.59

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advantage to ego449. The nature of these will or should differ according to the prevailing

requirements of the network owner.

Relating this issue back to the exchange of information Burt states that individuals with

networks structured in a manner to allow fast and relevant information flows will be able to

reap higher returns on their social capital. “A player with a network rich in information

benefits has (1) contacts established in the places where useful bits of information are likely

to air, (2) providing a reliable flow of information to and from these places.”450 For instance,

individuals will know of profit generating opportunities before others, and have the necessary

information and other resources in order to carry out certain ventures. The author categorises

these information benefits into “access”, “timing” and “referrals”451.

Different network measures have been developed in order to try and quantify and evaluate

structures of social ties. Of interest are aspects such as the network shape and size, the

position of the individual actor within the net, as well as the overall degree of connectedness

of all members. There are also measures focusing on the qualitative aspects of the ties. 452 Due

to the importance of these variables in the empirical studies of network structures we will

look at these in a little more detail in the next section453.

It is important to recognise that “network design” is not static, but needs to be continuously

revised in a reflexive manner. A whole host of factors will influence the current networking

needs of social agents. These can be new information about the environment, as

unacknowledged conditions turn into knowledge and actors learn about unintended

consequences of their doing. Further, the goals, directions and needs of ego, or the entire

network may change for different reasons. In all these cases the social agents need to revise

their motivations and rationalise their actions by reflexively monitoring their own actions as

well as those of the other network members, and indeed of social agents outside the network,

too454.

449 See e.g. Boos, et al., 2000; Bouncken, 2002; Burt, 1998, Granovetter, 1978, 1982, 1998; Hesse and Schrader,

1999; Krackhardt, 1998; Sydow, 1991; White, 1998 450 Burt, 1998, p.63 451 Burt, 1998, p.62 452 For an in-depth discussion of the network measures see, for example, Albach, 1993; Aldrich, 1982;

Bouncken, 2002; Brass and Burkhardt, 1998; Burt, 1998; Burt and Minor, 1983; Ebers and Oliver, 1998; Galaskiewicz, 1979; Granovetter, 1978, 1982, 1998; Kahle and Bouncken, 2002; Krackhardt, 1998; Luhmann, 1972; Marsden, 1989; Weyer, 2000; White, 1998

453 Chapter 4.3 “Network measurements” on p.116 ff 454 See Giddens, 1984, in chapter 2 “Theoretical Preliminaries”, p.29 ff; Powell, 1990; Sydow et al., 1995. See

also Mintzberg, 1994, on strategy development in chapter 3 “Network definitions”, p.85 ff; Uhrig, 2001; Westebbe, 1999, p.106 ff

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Additionally, as White (1998) has stated above455, the process of reorganisation never stops,

because the struggles for control and power (within hierarchical organisations) never end,

which agrees with Luhmann´s argument for the need for continuous re-structuring in order

to achieve system stability456.

4.3 NETWORK MEASUREMENTS

As we have said above in order to (quantitatively) evaluate these network structures we can

use a range of measurements457. The most prominent parameters referring to the construction

of the network are shape and size. With reference to communication networks458 Luhmann

describes four basic network shapes, namely (1) centralised, radial or wheel patterns, (2)

linear, (3) circular and (4) unstructured networks 459 (see diagram 4.1).

DIAGRAM 4.1: TYPES OF NETWORK STRUCTURES

{Source: Luhmann, 1972, p.198}

Wheel patterns have the highest degree of centralisation and, thus, experience the biggest

communication asymmetries out of these four network types. Since there is one central tie

whom all other ties are connected with, the communication flows need to travel via the central

dyad. The more partners are added to this structure, the slower the communication processes

will become because the central tie will be increasingly overloaded with information460. These

are the formal communication structures of hierarchical organisations, where communication

flows are set equal to the structure of authority.461

455 See this chapter p.110 456 Luhmann, 1984, p.382 ff For further discussions of the dynamics of networks see e.g. Bouncken, 2002;

Capra, 2002; Kahle and Bouncken, 2002; Westebbe, 1999; White, 1998; Witt, 2004; Witt and Rosenkranz, 2002; Powell, 1990; Sydow, 1991

457 See this chapter p.114 458 See Luhmann, 1972, p.19 ff, in chapter 3 “Network definitions”, pp.63, 67 ff 459 Luhmann, 1972, p.198. See also Braun, 2004, p.60 ff

460 See also Braun, 2004, p.61; Fischer and Maschler, 2004 461 Luhmann, 1972, p.191 ff See also chapter 3 “Network definitions”, pp. 63, 67 ff

(1) centralised, radial or wheel

pattern

(2) linear (3) circular (4) unstructured/ no structure

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Linear communication structures are prone to miscommunication, because information needs

to pass many people, which poses a likelihood that changes to the message occur along the

way. Additionally, the speed of exchange is slow within linear constructs. Serials are in fact

linear structures whose two ends meet. In this pattern all members have equal numbers of

interfaces to other ties.

Communication networks without set structures hold the opportunity of fast flows, due to the

fact that all partners can access all others directly, and the resultant high(er) degrees of

“density” 462. Within social networks it is this type of communication structure we usually

find and which enables the fast and flexible exchange of information and knowledge among

its participants. With reference to the empirical section of this paper, we need to attempt to

investigate in how far the communication flows within SPNs represent this unstructured or

“structure-less” construction.

Braun (2004) reminds us that although mixing forms of communication networks can be

found, they are, in fact, all based on these four main types463.

The size of a network is the total sum of ties of all network members. While this formula

seems very simple, in practice the definition of network sizes is problematic, due to the

boundary specification problem.464 When engaged in practical research it is usually difficult

to define or identify which social actor stands within the network and who is outside. This is

mainly due to the complexity of (a) identifying what in fact a network is and (b) to ensure that

all the appropriate members are indeed observed and included in the “count”. For this reason

Laumann et al (1983, 1989) call for the need to specify “… rules of inclusion for different

network elements. Such rules pertain both to the selection of actors or nodes for the network

and to the choice of types of social relationships to be studied.”465

In fact one of the main tasks of this paper was to undoubtedly specify the research object by

establishing a clear definition of Strategic People Networks, which we have done with the

help of Luhmann´s “Systems Theory” and Giddens´s “Theory of Structuration”466. Still, it

remains to be seen whether this clearly defined type of network can be easily recognised and

examined in the empirical analysis.

462 See this chapter, pp.124 ff 463 Braun, 2004, p.61 464 See e.g. Laumann et al., 1983, 1989; Sydow 1991, p.14 465 Laumann, et al., 1983, p.18 466 See chapter 2 “Theoretical Preliminaries”

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In order to analyse an individual’s social capital, his or her positioning within the network is

measured467. In order to do so the “centrality” measure is applied. This parameter attempts to

estimate in how far ego is located in the centre of the focal network. While there are

numerous measures of centrality468 the three most prominent ones are (1) “degree”, (2)

“closeness” and (3) “betweeness”. The (1) degree measure of centrality is the total sum of

adjacent links ego has with other ties. Freeman conceptualised it as a measure of activity,

given that it involves only direct connections.

In order to include indirect ties as well, the (2) closeness measures of centrality are used. This

variable describes the distance between ego and his network partners. However, this gap is to

be understood in terms of symbolic space, indicating the accessibility and arguably the

emotional attachment of ego to his social ties. The calculation involves summing up the

lengths of the shortest routes (“geodesics”) between one focal tie to all others. “This measure

can be interpreted to represent efficiency (extent to which an actor can reach all other actors

in the shortest number of steps) or independence (being close to all other actors, a person is

less dependent on intermediaries).”469

In the literature the differentiation is made between an actor’s “outdegree” and “indegree”

measures of centrality. The former reflects a person’s involvement or embeddedness in the

network. The latter represents the level of appreciation ego receives from within the net, i.e. a

measure of prestige.470 Nonetheless, since this measure does not take into account the

complete network it is not representative for real-world activities. In practice networking

efforts do not take place solely with one’s direct ties, on the contrary, active efforts are made

to reach new contacts and access resources via existing ties471.

The degree of centrality and, the speed and flexibility of communication flows within the

net structures are negatively correlated. As ego’s degree of centrality rises the network ties

will be increasingly forced to communicate with the other partners via ego. In an extreme case

(ego-centrical or star configuration) this will lead to a centralised communication network in

the way it can usually be found in hierarchical structures472.

467 Weyer, 2000, p.45 468 See e.g. Brass and Burkhardt, 1998, p.195 ff, Weyers, 2000, p.46 ff 469 Brass and Burkhardt, 1998, p.195 470 Brass and Burkhardt, 1998, p.194; Weyer, 2000, p.45. See also e.g. Kahle and Bouncken, 2002; Krackhardt,

1998 471 See section on weak ties and structural holes, this chapter, p.122 ff 472 See this chapter, p.116. See also Brass and Burckhardt, 1998, Kahle and Bouncken, 2002; Weyer, 2000

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As we can see the issue of centrality, and thus, positioning is directly related to the aspect of

a person’s power within networks. Since centrality measures weigh “ … an individual’s

centrality by the centrality of those whom he or she is directly linked connected. … one’s

centrality is increased by … being linked to highly central other.”473 Furthermore, Brass and

Burkhardt (1998) explain that if we follow the accepted genre that centrality and power are

highly positively correlated, then we can assume that an individual’s power increases through

links with powerful others. Yet, the authors explicate that the connection to powerful others

does not automatically increase ones own power in all situation. Nonetheless, it can be safely

said that a connection to powerful actors grants ego a high probability of having access to

useful information. In this manner ego himself can potentially turn into an excellent source of

information for others in the communication network.

From the discussions of many authors on the relationship between centrality and power it

seems that centrality is viewed somewhat ambiguously. While on the one hand the benefits

for ego from having a high degree of centrality are potentially very high, the resultant power

over the other network members is seen as adverse for the network as a whole. While an in-

depth discussion about the issue of “power” lies outside the frame of this research paper, it is

necessary to consider the meaning of power at this point. On the one hand, highly centralised

communication structures cause or increase transaction costs within the network. However,

Giddens understands “power” as “transformative capacity”, i.e. “enabling”. In the

Giddensian sense a “powerful tie” is a social agent who is able to interact in social

processes, which in fact makes him an “agent”474. From this perspective increasing degrees of

centrality, and the resultant gains in power, may mean that an individual is now able to

participate more and, thereby, can contribute more to the network. With reference to our

SPNs this means that as ego’s degrees of centrality increases, so might his abilities to

contribute to the common goal, and, hence, the benefits for all members within the Strategic

People Network may rise as well.

The (3) betweeness calculates the extent to which actors fall in between pairs of other actors

on the shortest path between them (see equation 4.1) and thereby act as “bridges”475 between

them.

473 Brass and Burkhardt, 1998, p.192 474 Giddens, 1984, p.14, in chapter 2 “Theoretical Preliminaries“, p.35 ff 475 See this chapter, p.119 ff

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j

n

i

B EQUATION 4.1 476

where

n = number of nodes in the network

i,j and k = individuals i,j and k; and i < j

gij(k) = number of geodesics, i.e. shortest paths between nodes i and j in the network that include k.

gij = the total number of geodesics, i.e. shortest paths between nodes i and j in the network.

Should k lie on the shortest paths between each pair (in our case i,j) then k has a high

betweeness centrality. Consequently, an individual with a high betweeness centrality can act

as a gate keeper, middle man or negotiator between others. In a network context, individual k,

given a high betweeness centrality, would be the gate keeper for information flows within the

network.

Network structures can be characterised according to their level of density,477 which is the

degree of connectedness of all members with all others within the construct. As the degree of

density among the network grows, communication becomes faster as members can

communicate directly with one another without having to utilise “bridging ties”. However,

Scott (1998) proposes that a “complete graph” where all ties are connected to all others is

almost non-existent. Nonetheless, structure-less set-ups, which are the patterns Luhmann

proposes for communication networks478 in order to foster optimal exchange, can be expected

to display high levels of density.

Numerous networking guides encourage the reader to establish as many social contacts as he

or she is able to (“business card hunting”), in order to build as large a network as possible.

Yet, based on the insight we gained in the previous sections of this paper we can say that such

an approach has little chance of leading to successful networking efforts.479 Firstly, the

opportunity costs of investing time and other resources into the creation and maintenance of

the relationships need to be considered. Secondly, we find that networks usually consist of

different types of ties. It may well be the case that actor A may have built a smaller network

476 Krackhardt, 1998, p.223 477 See also Kogut, 2000, p.414 478 See this chapter, p.68. See also Kahle and Bouncken, 2002, p.398 ff 479 See also chapter 5 “Networking skills”, p.166 ff

Network Analysis

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compared to actor B but, due to the structure of the net and the qualities of the relationships

within the net, A may reap higher returns on his social capital than B.

A main contributor to network analysis is Granovetter (1978) who distinguishes between

“strong” and “weak” ties480. According to him the degree of tie strength is a function of (1)

the amount of time actors spend together, (2) the emotional intensity of the relationship, (3)

the level of intimacy, understood as mutual confiding; and (4) the reciprocal services which

characterise the tie. According to this function a “strong tie” is one where there is frequent

interaction between the individuals, (relatively) high emotional involvement and confiding as

well as well-balanced out reciprocity. Likewise “weak ties” will display low levels of these

parameters.

Due to the high frequency of interaction, and exchange of information and other resources

between strong social ties, it is assumed that the level of knowledge of these ties is (almost)

the same. Further, it can be assumed that due to the high tie strength the social circles of these

players will be very similar481. Consequently, the likelihood of obtaining new information or

access to new resources via strong ties is almost negligible482. For this reason Granovetter

emphasises the importance of including weak ties in one’s social network. He sees the

“strength of weak ties” in their ability to introduce people to one another who previously

had no contact. Thereby, via his or her weak tie, ego can access new resources by being

introduced to new contacts, which he would otherwise not have known. Due to the fact that

the weak tie acts as an agent or bridge, Granovetter refers to the “bridging tie” or “bridging

effect”. In fact one of the greatest and most popular advantages seen in network operations is

the chance of reaping benefits from bridging ties, i.e. accessing new social capital via weak

ties483.

Nevertheless, as Granovetter points out, especially within social networks, it is unlikely that

there is only one way in which a specific person can be reached. The reason being that it is

plausible to suggest that an individual, A, will know more than one person who will also have

a tie with person Y (“overlapping social circles” or “overlapping circles of friends”484). If we

480 A third but neglected type of tie is the so called “absent” or „nodding tie”, which characterises a relationship

where “… two people ‘know’ each other by name [and] need not move their relation out of this category if their interaction is negligible.” Granovetter, 1978, p.1361

481 Although it is assumed in the literature that strong ties will have identical social circles, realistically this is unlikely.

482 “... except under unlikely conditions, no strong tie is a bridge.” Granovetter, 1978, p.1364 483 See also Burt, 1998, on “redundant” and “non-redundant ties” and “structural holes”, this chapter, p.124 ff 484 Granovetter, 1978, p.1362. See also e.g. Scott, 1998, p.123

Network Analysis

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assume that, e.g., person A knows individuals B, C and D, who all have ties with Y, Y could

be introduced to A via all these mutual contacts. Hence in this case neither B, C nor D can be

referred to as bridges since they are not the sole routes between A and Y. However,

Granovetter argues that in practice there may indeed be local bridges. He explains this

graphically as shown in diagram 4.2.

DIAGRAM 4.2: LOCAL BRIDGES

where --- indicate weak ties, --- indicate strong ties

{Source: Granovetter, 1978, p.1364}

If we take the example of the tie A-B we can see that strictly speaking it is not a bridge,

because alternative paths, such as A-E-I-B or A-F-E-I-B could be taken. However, A-B is the

shortest route between point B and F, C and D. This makes route A-B the most efficient path

as well. Therefore Granovetter specifies that “I will refer to a tie as a ‘local bridge of degree

n’ if n represents the shortest path between its two points (other than itself), and n >2.”485 The

route A-B in diagram 4.2 is a local bridge of degree 3, since the shortest alternative path A-E-

I-B requires three steps (step 1: A-E, step 2: E-I, step 3: I-B).

The author explains that the significance of local bridges rises within social networks as a

connection between two parts of the network poses the only route. The higher the degree of

the local bridge, i.e. the more steps needs to be taken on the shortest alternative route (for

many people), the higher the significance and importance of the local bridge will be.

Furthermore, he points out that “a bridge in the absolute sense is a local one of infinite

degree.”486 From this follows his statement that “… only weak ties may be local bridges.”487.

With respect to Strategic People Networks, we can see how essential the presence of weak

ties in the latent network is. SPNs are established by strategically finding willing and able 485 Granovetter, 1978, p.1364 486 Granovetter, 1978, p.1365 487 Granovetter, 1978, p.1365

A C

F

E

D

GB

J

I

H

Network Analysis

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partners from a pool of social ties from the latent network. It is realistic to state that ego will

not always have all the relevant resources for his venture at hand. In order to access

appropriate potential partners or (other) resources for the co-operation within an SPN

structure it requires bridging ties who can introduce the focal network partner to these

relevant contacts.488 We can also refer this process as accessing “secondary” or indirect

network ties, where “primary ties” are direct contacts489.

Nonetheless, despite his strength-of-weak-ties argument, Granovetter does not entirely ignore

the important role of “strong ties” and states that “Weak ties provide people with access to

information and resources beyond those available in their own social circles; but strong ties

have greater motivation to be of assistance and are typically more easily available.”490. That

shows that those people we are closer to and have stronger relationships with are, in general,

more likely and willing to help us.

Furthermore, Krackhardt (1998) states that “stronger ties” are usually more accessible than

relatively weak ones. Moreover, individuals who have strong and mutual emotional bonds

seem to be more likely to assist and support, specifically in times of high uncertainty,

compared to weaker ties.491 Krackhardt argues that “strong ties” are specifically important in

crisis situations, having a strong positive influence on actors. He suggests that, in general,

individuals resist and are uncomfortable with change and uncertainty. “Strong ties” grant a

base of trust that can provide a certain comfort and in this way reduce this resistance. In turn

the grounds for the realisation of changes can be facilitated. Consequently, Krackhardt

proposes that change is not facilitated by “weak ties”, but rather by certain “strong ties”. The

author uses the word “Philos” (Greek for friend)492 to describe a particular type of tie, that

satisfies the conditions of (1) Interaction – in order to be “Philos” network partners need to

interact so that there is a high chance that the network partners will exchange and thereby

have access to the same information. Sometimes the information exchanged may be

confidential; (2) Affection; and (3) Time – “Philos” need to have a mutual history, i.e. their

relationship needs develop over time. Therefore, two network partners cannot instantly be

“Philos”. Although Krackhardt does not use the term “Philos” as a synonym for Granovetter’s

“strong ties”, he states, that “Philos” relationships constitute of “strong ties”.

488 See chapter 3 „Network definition“, p.89 ff 489 See Burt, 1998, this chapter, p.125 ff 490 Granovetter; in Krackhardt, 1998 491 Krackhardt, 1998 492 Krackhardt, 1998, p.218

Network Analysis

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Similarly to Granovetter, Burt (1998) emphasises the importance of social capital and the

potential benefits that can be gained in terms of access to new information and other resources

via one’s social network. In this context he specifically stresses the need of including “non-

redundant” ties into one’s network. Networking partners are “non-redundant ties” when they

grant access to new people, and, as a result, bring new information and other resources to the

network. By the same token, a networking partner is considered “redundant” when they bring

the same social capital (contacts) to the focal networking partner.

In this context the author differentiates between “sparse” and “dense”493 networks. In sparse

networks there are no relations between the individual contacts, other than with the focal

networking partner. In contrast thereto, there are strong relationships among the contacts in a

dense network. Hence, if we are faced with a sparse network with a given number of

networking partners, there are as many nonredundant partners for the focal networking partner

as there are contacts in the network. Then again, should we consider a dense network where

all the networking partners know each other and do not know any other individual outside this

network, then all but one networking partner are redundant, since they each lead to the same

people. Consequently, we can see that the information benefits of the sparse network are high,

since the focal networking partner obtains different information from each contact. The

opposite applies to dense networks where there is little informational value to be gained

because it can be assumed that all partners always know the same information. As a

consequence no information benefit is granted in dense networks (see diagram 4.3).

DIAGRAM 4.3: BURT’S SPARSE AND DENSE NETWORK STRUCTURES

Burt calls the spaces in between non-redundant contacts “structural holes”494. It is a

relationship between two contacts that do not know each other (yet) but are connected to each

other via their mutual contact - the focal networking partner. “It will be convenient to have a

493 Burt, 1998, p.65 494 Burt, 1998, p.65; See also Kogut, 2000, p.413 ff

(a) sparse network

Focal networking partner

(b) dense network

Focal networking partner

Network Analysis

125

term for the separation between nonredundant contacts I use the term ‘structural hole’.

Nonredundant contacts are connected by a structural hole. A structural hole is a relationship

of nonredundancy between two contacts. The hole is a buffer, like an insulator in an electric

circuit. As a result of the hole between then, the two contacts provide network benefits that

are in some degree additive rather than overlapping.”495 Consequently, ego can experience

information benefits from utilising structural holes496.

Krackhardt (1998) points out that betweeness is also an indication of information non-

redundancy of the information source. Thus, a person who is connected to otherwise loosely

or disconnected individuals within a network has access to a variety of, i.e. non-redundant,

information. As a consequence, this individual will have a higher degree of betweeness

centrality than others.

Further, a similarity between Granovetter’s local bridges and betweeness centrality measure

can be seen. While being a local bridge is a tie property, its numerical value (degree) is equal

to the shortest alternative route between the two nodes (A and B) connected by the bridge if

the bridge was removed (see diagrams 4.4 and 4.5 below).

DIAGRAM 4.4: LOCAL BRIDGES AND BETWEENESS CENTRALITY

- LOCAL BRIDGE

495 Burt, 1998, p.65 496 See also e.g. Kahle and Bouncken, 2002; Kogut, 2000, p.413 ff

Local Bridge between A and B

C

D

A

B

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DIAGRAM 4.5: LOCAL BRIDGES AND BETWEENESS CENTRALITY - SHORTEST ALTERNATIVE ROUTE

Should the other nodes, e.g. C and D, be tied together through direct ties, then the degree or

value of the local bridge between A and B will be relatively low. The higher the degree of the

local bridges a person is connected to, the higher is that person’s betweeness score. Both, the

degree of local bridges and the betweeness centrality measure the degree to which individuals

can reach unconnected nodes of the networks.

Given the limitations on resources, such as time, effort and money, an individual needs to

economise on his or her networking efforts. Therefore, according to Burt, an efficient

approach to networking means to focus on creating non-redundant ties497. He also

demonstrates that focusing on a primary contact may reduce the costs of maintaining

relationships, given that benefits stay constant. This primary contact should be likely to be

willing and able to work for the focal networking partner. Through the primary contact the

relationships to other individuals should be maintained indirectly, thereby reducing costs.

Diagram 4.6 shows ego (A) within a 7-dyad network. The six network partners can provide

ego with useful information and other resources. In the first instance (diagram 4.6.a) A has

direct contact with these individuals (“primary contacts”). However, the costs of maintaining

all six relationships may be (relatively high). We now assume B has good relationships with

the other five and a close relationship with A, so that ego can “utilise” B for the maintenance

of the relationships as opposed to carry the costs him or herself. The costs to B may not be as

high, since he may be a friend or work colleague of the others, and as a result the maintenance

of the relationships poses less efforts for him. In the new structure (diagram 4.2.b), A has kept

the direct contact with B, while now C, D, E, F and G have become secondary contacts,

whom A can reach via B. The costs have fallen for A, while the benefits have remained

constant, assuming he can still receive the information as and when needed.

497 Burt, 1998, p.67

Shortest alternative route between A and B

C

D

A

B

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DIAGRAM 4.6: INCREASING EFFICIENCY WITHIN NETWORKS

In essence, Burt states that in order to achieve an efficient and effective network, there should

be a maximum of nonredundant primary contacts enabling access to clusters of secondary,

ideally non-redundant, contacts. Thereby, both, quality and quantity are provided. The

number of primary and secondary contacts contributes to the quantitative aspect while

redundancy, and, thus, diversity adds to the quality of the network. Redundancy provides

greater information benefits and in turn maximises the rate of return on the focal networking

partner’s social capital. With networks that increase in quantity as well as quality, the focal

networking partner becomes increasingly more attractive as a network partner to others,

which will make his networking efforts easier. Nonetheless, strong ties also are of importance

to ego and, thus should not be neglected. Consequently, it can be said that optimal strategic

and efficient networking means taking a well-balanced approach in the creation and

maintenance of different types of ties, while always being focused on the network goal(s) in

a reflexive manner.498

The types of social relationships can also be categorised somewhat differently. Uhrig (2001)

divides contacts into three levels, namely, (1) Level 1 contacts – referring to the direct

environment (ego, family and friends), (2) Level 2 contacts – the focal network partner’s

contacts, and (3) Level 3 contacts – family members, friends, colleagues and other contacts

of ego’s contacts (see diagram 4.7).499 The better the relationship with the partners on the first

two levels are, the more likely it is to gain access to the potential contacts on level 3, i.e. the

higher the chances are of realising bridging effects. Other authors use similar classifications

for the different types of ties, whereby specifically Adam Smith (1977) gives an in-depth

498 See also Kogut, 2000 499 Uhrig, 2001, p.134

B

D E

F C

G

A

(a) A has six primary contacts

A

F

E

D

G

C

B

(b) Increased efficiency by reducing the primary contacts to one and accessing the other 5 via the primary contact B

Network Analysis

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explanation of the different emotional attachments involved within the different kinds of

relationships500.

DIAGRAM 4.7: LEVELS OF RELATIONSHIPS

{Source: Uhrig, 2001, p.134}

Kahle and Bouncken (2002) explain that the types of ties differ according to the relationship

quality that marks their bond with ego. While the relationship quality embraces different

aspects, it is a central property of any network because it characterises the bond between the

members, which will directly influence the business relations as well.501 Further the authors

explain that the relationship quality is directly and positively related to the degree of

reciprocity among the network members502. In fact, Cicero (1913) claims that the degree of

strength and longevity of any social relationship roots in reciprocity. “… Another strong bond

of fellowship is effected by mutual interchange of kind services; and as long as these

500 Smith, 1977, p.371 ff See also e.g. Allan, 1993, p.1; Cicero, 1913, Book I, xvi – xvii, xvii, xxvii – xviii;

Hesse and Schrader, 1999; Nohria, 1998; Scheler, 2003; Winker, 2000; and chapter 3 “Network definitions”, p.88 ff

501 Kahle and Bouncken refer to networks of SMEs, which are clearly business-orientated. Since SPNs do necessarily have to strive toward a business-related goal, but can do so, the authors explanation of relationship quality also applies to SPNs.

502 Kahle and Bouncken, 2002, p.399 ff

You

Children

Friends Siblings

Spouse

Customers

Suppliers

Partners

Pawls

Subordinates

Colleagues

Families of customers

Friends of

suppliers

Aunts & uncles

Spouses of business partners

Parents of subor-dinates

Suppliers of colleagues

Level 1

Level 2

Level 3

Network Analysis

129

kindnesses are mutual and acceptable, those between whom they are interchanged are united

by the ties of an enduring intimacy.”503

In the above section we have turned to a variety of analytical aspects of networks. By doing

so we sought to gain an understanding of the operational concerns of network structures. It

was highlighted why these social constructs experienced somewhat of a renaissance in recent

times and what, according to the literature, the favourable conditions for network operations

are. In the next step investigative matters surrounding network analysis – the available tools

and their limitations – were discussed. These insights should aid us in the subsequent

empirical study of our research object.

The topics covered here can be viewed as providing us with awareness about the macro level

of social networks. In order to be able to carry out the research fully we will now turn to, what

can be referred to as the micro level of social networking. These are the “networking skills”

that social agents require in order to enhance their chances of successfully operating within

these specific types of social systems.

503 Cicero, 1913, Book I, xvii. See passage on reciprocity, this chapter, pp.111 ff

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