Oxford University Press
October 6, 2005
Social capital, the advantage created by location in social structure, is a critical element in business. Who has it, how it works, and how to develop it have become key questions as markets, organizations, and careers become more and more dependent on informal, discretionary relationships. The formal organization deals with accountability; everything else flows through the informal: advice, coordination, cooperation, friendship, gossip, knowledge, trust.
Informal relations have always been with us, they have always mattered. What is new is the range of activities in which they now matter, and the emerging clarity we have about how they create advantage for certain people at the expense of others. This is done by brokerage and closure.
Ronald S. Burt builds upon his celebrated work in this area to explore the nature of brokerage and closure. Brokerage is the activity of people who live at the intersection of social worlds, who have a vision advantage of seeing and developing good ideas, an advantage which can be seen in their compensation, recognition, and the responsibility they’re entrusted with in comparison to their peers. Closure is the tightening of coordination in a close network of people, and people who do this do well as a complement to brokers because of the trust and alignment they create. Brokerage and Closure explores how these elements work together to define social capital, showing how in the business world reputation has come to replace authority, pursued opportunity assignment, and reward has come to be associated with achieving competitive advantage in a social order of continuous disequilibrium.
Ronald S. Burt is the Hobart W. Williams Professor of Sociology and Strategy at the University of Chicago Graduate School of Business. His work is about the social structure of competitive advantage. Applications focus on manager networks (how people of diverse backgrounds create social capital and its effect on their careers) and the network structure of market profits (how the structure of producer, supplier, and consumer relations defines competitive advantage among producers). Recent research and teaching materials can be downloaded from his university website (http://gsb.uchicago.edu/fac/ronald.burt).
Professor Burt obtained his Ph.D. in Sociology from the University of Chicago in 1977 and held full-time appointments at the University of California, Berkeley, and Columbia University before returning to join the University of Chicago faculty in 1993. He was the Shell Professor of Human Resources at INSEAD beginning in 1998, and began in 2001 to work as the Vice President of Strategic Learning in Raytheon Company, directing the Raytheon Leadership Institute.