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«Inaugural-Dissertation zur Erlangung des Doktorgrades des Fachbereichs Wirtschaftswissenschaften der Johann-Wolfgang Goethe-Universität Frankfurt am ...»

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Usually, two persons A and B each have many contacts and a bridge between the two thus ―provides the only route along which information or influence can flow from any contact of A to any contact of B, and, consequently, from anyone connected indirectly to A to anyone connected indirectly to B‖. In other words, this means that new ideas or innovations can flow, or, in Granovetter‘s terms, ―diffuse‖ over these bridges which usually are weak ties and thus create shortcuts for the diffusion that is also able to reach more people over greater (social) distance. As mentioned before, an actor that is able to bridge these structural holes acts as a broker. However, weak ties are not only important for innovation, they also usually help in finding new employment opportunities and thus support (social) mobility.223 Granovetter calls this the ―strength of weak ties‖.224 By using ‗strong ties‘ of dense networks on the other hand, an actor can keep herself always up-to-date with investment opportunities. Strong ties also support co-operations as everyone in the network knows each other well. Sanctions are easy to enforce, as the level of information on everybody is high which makes monitoring costs low. Also, within dense networks ideas about proper behavior are more likely to come upon which makes deviation from existing norms as well as free riding harder. An individual has to invest time and financial resources to become part of those close relationships and to be able to use them as resource.225 Granovetter, 1973, p. 1361. Granovetter concentrates on positive, symmetric ties but of course networks may also consist of negative, asymmetric connections.

Bian, 1997, p. 367.

Granovetter, 1973, p. 1372f. However, please refer to chapter 6.4.3. and the section on blat. Here, usually strong ties provide job opportunities which overall has repercussions on the functionality of the network and ultimately, for the Russian society.

Granovetter, 1973, p. 1364ff., 1370, Burt, 2005, p. 11ff.

Burt, 2005, p. 97ff., Granovetter, 2005, p. 34.

Networks function as safety net in that they provide mutual assistance and support; it is also a survival kit for hardships. Additionally, it is an enabling structure to overcome obstacles for example of a bureaucratic state. It also compensates for defects and gaps in the legal and formal system.226 Social networks are multiplex in nature which means that social relationships within networks can be of different character which is typical for social networks in cultures like China and its culture of Guanxi. Corporate networks, in contrast, are one-dimensional in nature, which means that their members are only connected over one type of connection (typically work relations). Generally, Western industrial societies separate spheres and thus networks for different purposes, a notion that is foreign for example in China that is used to intertwining of spheres (see also chapter 6). In contrast, actors in one-dimensional networks switch between different social situations and their characteristic discourses. These differences in culture result in different network structures.227 To analyze the specifics and structure of social networks, a sophisticated technique of data analysis with the help of complex software has been developed. It is mainly used to map networks between companies but also within communities and aims to present the different roles and power structures within networks, personal and professional ties as well as centrality and cores of networks by simply counting connections of each member of the network. This enables them to locate people within networks and estimate the amount of knowledge and access to research they have. It is an approach that is often used for business and management studies and is concentrating on the instrumental functionality of a network.228 A highly controversial approach to network analysis comes from Hofstede as part of his research on inter-cultural management. Hofstede is most known for his studies on cultural preferences which he also applies to network analysis. Networks in his view result from the behavioral codes of norms and rules, which, in the case of China, he finds in Confucian values.229 Culture, in Hofstede‘s view, can be analyzed using five dimensions, that are defined by using certain variables derived from surveys (originally, his research was based on a global survey of IBM employees)230, namely individualism versus collectivism, longversus short-term orientation (originally called Confucian dynamism), masculinity versus Ledeneva, 2005, p. 7.

Walter, 2004, p. 93f.

Ledeneva, 2005, p. 13, fn 2, see also Stegbauer, 2008 and Stegbauer and Jäckel, 2008. This dissertation is purely theoretical and not empirical in nature. However, it also seriously doubts the success of quantitative approaches to network analysis in the case of Guanxi networks, as Guanxi is a more subtle and allencompassing concept than pure instrumental network connections.

Hofstede, 2005, Hofstede and Bond, 1988.

Hofstede, 1980.

femininity (performance-orientation), small versus large power distance and weak versus strong uncertainty avoidance (reciprocity). The factors that in Hofstede‘s view are able to explain Chinese network behavior are collectivism, long-term orientation, reciprocity and large power distance. Collectivism induces the creation of networks that connect small groups of people that have no direct economic function. These networks serve more the purpose to gain status and reputation for the entire group in a long-term perspective that is also necessary for reciprocal relations. This does not imply that each member of the network needs to be equal to other members. However, Hofstede‘s approach is highly contested as being a static approach that treats the culture of a nation as homogenous and uniform. He also compares cultures in assigning certain values to the respective dimensions that result in either ‗good‘ or ‗bad‘ behavior. It also fails to explain the creation of networks without resorting to social groups that are the foundation of the networks and thus offers an insufficient set of explaining variables. Also, resorting to Confucian values makes it also in this sense a rather dissatisfactory approach (please see the discussion of the relevance of Confucian values in chapter 4.4. and 6.3.).231 In contrast, qualitative network analysis, which is mostly used in anthropology but increasingly also in sociology, has a different methodological approach. It deploys expert or structured narrative interviews, network maps or other visualization, sometimes combined with quantitative methods. Qualitative analysis tries to be close to the individual actors and their perceptions and interpretations. It is a relational approach that goes beyond the individual and aims at the formal structure of connections such as dimension, the frequency of contacts or spatial distance between members of the networks.232 These formal aspects are often combined with functional characteristics to analyze the virtues of the network, such as an emotional, material or practical support function.233 Qualitative network analysis aims at a hermeneutic approach of an understanding of social reality in retracing its meaning and its context, or in other words, it is a controlled methodological perspective taking.234 By that it tries to eventually reach the subjective interpretations of reality of the actors and their individual priorities.235 Network analysis in general aims at a depiction of the structures of networks and their dynamics as well as their use for social integration. Network analysis as relational approach is situated between a micro and a macro level.





Bramall, 2009, p. 534-554, Krug, 2002a, p. 5f.

Hollstein, 2006, p. 11ff.

Hollstein, 2006, p. 14.

Hollstein, 2006, p. 17.

Hollstein, 2006, p. 21.

3.1.2.1. Corporate networks A corporate network is a strategic network that constitutes an organizational form of economic activity that has the aim to realize competitive advantages. It is characterized by complex reciprocal relations of at least two corporations that are more co-operative than competitive. These connections are relatively stable ties between legally independent but economically mostly dependent corporations.236 Corporate networks are often received as the most relevant organization form of the 21st century and as model developmental path for corporate rationalization processes. Co-operation and networks are conceived as the consequence of the crisis-laden socio-economic development trends that forced corporations to more or less voluntarily join strategic networks. They provide better means to react to the fast changing demands of a global market that required brief ‗just-in-time‘ product cycles, specialization, flexibility and innovativeness. The emergence of information and communication technology enhanced this process.237 Participating in a corporate network is received as an efficient model of facing these changes in the economy and as superior to market and hierarchies. Corporate networks are a form of network that is a strategic, medium-term project-related structure to co-ordinate enterprises. The objective is to reduce complexity, risk and uncertainty and by pooling resources facilitate collective learning processes and the accumulation of knowledge and ultimately the performance of the co-operating companies by synergy and rationalization effects.238 It thus found its theoretical outlet in NIE and especially in the transaction cost theory of Williamson who emphasized the reduction of transaction and control costs and thus an increase in profits (see also chapter 2).239 Networks combine the organizational advantages of market logic and the paternalistic structures of hierarchies. Networks create commitment, routines and controllability but also individual freedom of action for each participating corporation. The increasing stability of relations reduces risk and costs but increases the dependence of network partners and thus might again result in rigid structures. This casts doubt on the fact that networks are always ―lighter on the feet‖ as Powell claims.240 The requirement of networks of a certain level of mutual trust, reciprocity, altruism, shared values and goals often contradicts economic objectives which endangers the durability of networks. The relationship of autonoSydow, 1992, p. 79.

Castells, 1996.

Walter, 2004, p. 82ff.

Powell, 1990, p. 300ff. For an overview on different theoretical approaches to networks see also Powell and Smith-Doerr, 1994.

Powell, 1990, p. 303.

my and dependence in co-operations is sometimes considered as ‗paradox‘. It also means that networks are only viable in a certain context under specific conditions.241 Some authors even claim that networks are nothing else than huge corporations ―dressed in new costumes and armed with new technology‖.242 The co-operation needs to be of use for all partners but it can be of material as well as immaterial nature. The disadvantage of collaborations is that companies have to give up a certain degree of autonomy. However, as companies are often competitors in the same industrial sector, there is also a degree of ‗domesticated‘ competition within the network which is said to encourage innovation. This interpretation and the assumption that more than pure rational, strategic motives are to be considered, puts strategic networks not far from regional networks (see below). However, the most important incentive for cooperation is greater profitability and cost-efficiency which is achieved by the complementarity of specialization and systemic rationalization together with the integration of processes of the entire supply chain.243 Members of strategic networks therefore not only include the companies itself but also suppliers, logistic, transportation and financial institutions as well as research organizations and business associations. The intensity of the relations between these actors results in different network structures.244 Corporate networks existing on a sector level are mostly strategic in nature, which means they have a formal structure. Mostly, they are established around one central, ‗focal‘, corporation with international dimension but they can also be situated in a certain region.245 3.1.2.1. Regional networks ―We define (regional) networks…as (regional) clusters which develop an intensive, lasting and comprehensive multilateral co-operation, which utilize specific infrastructures and which, therefore, co-operate with relevant public, semi-public, and social agents….We define (regional) clusters as (regionally concentrated) groups of firms which are functionally interconnected (vertically as well as horizontally), including manufacturing and services, plus related (‗hard‘ or ‗soft‘ infrastructures and public, semi-public, or social agents Hirsch-Kreinsen, 2002, p. 113, 120.

Harrison, 1994, p. 12.

Hirsch-Kreinsen, 2002, p. 111, Walter, 2004, p. 85f.

Walter, 2004, p. 87.

Hirsch-Kreinsen, 2002, p. 110, Dörsam and Icks, 1997, p. 8.

financing and/or running them‖.246 A regional network integrates ‗hard‘ economic conditions with social and cultural relations for economic activity. The economic objectives of strategic networks between corporations are combined with the notion of the innovative milieu (see below) as they are additionally territorially, socially and culturally linked. The development of a region is the result of interaction between resources, technologies, enterprises and the socio-cultural interaction of the people in the region. The success of a region depends on the quality of its network structures (which, following Putnam‘s argument is a function of the competence of its civil society). It is also dependent on the cohesion of connections between individuals, the access to information, trust and reciprocity, consensus and recognition. A region is regarded as communicative space and socio-economic field of interaction.



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