Knowledge Matters™

As promised a while ago here is a review of Professor Ronald Burt’s book “Structural Holes: the Social Structure of Competition ”, which was written in 1992. This is a seminal publication and a must read for anyone interested in network theory. The book has an academic flavour but is well written, with many easy to understand examples.

Burt’s central thesis is that structural holes in business networks are very important. A structural hole is a gap between two individuals. When the two are connected through a third individual important advantages accrue for the third individual, who may employ a tertius strategy .

Burt ascribes four signature qualities of competition to his structural hole argument (pp. 3-4) as follows:

• competition is a matter of relationships not player attributes;
• competition is a quality of emergent relationships;
• competition is a process, not just a result; and
• imperfect competition is a matter of freedom, not just power.

I find Burt’s argument compelling, especially given Burt’s evidence and rich examples, which are expanded in his second book “Brokerage and Closure: An Introduction to Social Capital ”. I also find his argument on social capital to be compelling – Social Capital “is a thing owned jointly by the parties to a relationship. No one player has exclusive ownership rights to social capital” (p. 9).

The structural hole thesis uses competition and social capital to develop a theory of network structural autonomy, where an individual can consciously weave the network to advantage. Burt then provides a series of network measures which have since found their way into specialist computer programs such as UCINET and NetMiner 3 .

Even though the book is now over 15 years old I found much to interest me. I believe the book is a must read for serious knowledge practitioners and network analysts. For me at least, structural holes matter!

Regards, Graham