INSEAD professor’s new book finds the central issue is the misalignment of individual and organisational interests about networking
Why do organisations fail to mobilise the social networks of employees to respond to disruptions, innovate, and change? INSEAD Professor’s new book finds that the central issue at hand is the misalignment between individual and organisational interests, causing network ties of individuals to become detrimental to the organisation's ability to achieve its goals. And although digital technologies like Slack, Zoom, or WhatsApp hold much promise in making networking activities more efficient, they actually exacerbate the situation.
Titled “Digital Relationships: Network Agency Theory and Big Tech”, Jason Davis, Associate Professor of Entrepreneurship and Family Enterprise at INSEAD, introduces a new perspective about networks and organisations. He explains through “network agency theory” how network problems emerge and the role of digital technology adoption by organisations in amplifying misalignment.
According to him, there are four common network pathologies which are seemingly prosocial but are actually organisationally detrimental:
- Too many ties result in connectivity overload: Employees are forming more ties than ever before, leading to overcommitment, divided attention, and languishing projects. The time and attention needed to maintain these ties only diminishes organizational performance. Digital technologies reduce the cost of forming and maintaining ties, which leads to further misalignment in networking interests.
- Weak ties lack intimacy and trust: Individuals often create weak ties for their own benefits. However, they are unable to mobilise them for organitional ends. Digital technologies that enable employees to maintain vast networks of weak ties amplify this effect.
- Entrenched brokers reduce collaboration: Managers are often advised to leverage brokers or become brokers themselves in order to facilitate interactions. But when brokers become entrenched in their position, the bridges they form become ineffective, and they are in fact linked to lower innovation outcomes in organisations. Brokers use digital technologies to maintain or even increase barriers to entry, monopolies and “brokerage cartels”.
- Social network inequality: In organisations with unequal networks, hubs (high status actors) act as bottlenecks that curtail rich interaction and information flow. Far from being a democratising force, digital technologies can favour those who are already hubs by allowing them to form and maintain ties even more easily.
Professor Davis said, “Although these findings may seem counterintuitive or surprising to those who have absorbed the lessons of ‘social capital’ and the individual benefits of networking, they can be best understood as an emerging new perspective. The key idea is that the networks that are in the best interest of individuals are not always in the best interest of organisations. As a result, executives and managers have a new responsibility to ensure networking that works for the common good, and not just for the benefit of a few individuals.”
He recommends a shift in the way executives approach people management through strategic human resource practices, as well as implementing lasting changes to broader organisational design.
Drawing on over a decade of qualitative research in US, Asian, and European “big tech” companies, the book also discusses the organisational implications of network agency theory, offers new interpretation to classical problems in organisational design and governance, relooks at the “theory of the firm”, and explores solutions to minimise future network agency costs in organisations.
"Digital Relationships: Network Agency Theory and Big Tech" is available for purchase here.