It is quite natural for human beings to be part of a network. Our way of thinking today is permeated by network and we live in an era of networks. Facebook, Twitter and Xing have many millions of users. Within months services like Pinterest and Instagram became leading companies. Networks are not really new. For generations people invested time taking part in networking events meeting others. The importance of building connections is intuitively obvious to everybody (Sattel 2014). Scientists of different areas and disciplines deal with the subject of networks. Networks are everywhere in relationships between people but also in cancer cells, in the brain, in mathematic graphs as well as in technical devices and of course in global economies. Solely in business and economy the diversity of networks is just incredible (Barabási 2015). The technical progress in current time revolutionized the possibilities of networking. The transport is cheaper, the infrastructures supreme, mobile telephony and not least the Internet have a great impact on the flexibility and quantity of networks today (Mogensen; Erikesen). The next economic revolution shall be called networked economy. It is not about Big Data or devices, but much more about people. People are the ones who continue to use technology and take part in the global ocean of data (Sharma 2015). Therefore for better understanding of network economy, it is useful to start describing networks or some network theories with regard to interpersonal relationships or networks between people.
Table of Contents
1 Introduction
2 Networks
2.1 Six degrees of separation or the Small-world-property
Hotmail
2.2 Strong and weak ties
2.2.1 Strong ties
2.2.2 Weak ties
2.3 Structural holes
2.3.1 Information advantages
2.3.2 Control and innovation
2.4 Metcalfe’s Law and Positive Feedback Effect
Facebook and Co.
2.5 Enterprise 2.0 - Bull’s Eye
Blogs, Wikis and Chat
3. Conclusion
4. Outlook
Objectives and Topics
The primary objective of this work is to provide a comprehensive understanding of the network economy by examining core network theories, their interpersonal mechanisms, and their practical application within modern business environments and digital communication tools.
- Small-world property and viral marketing mechanics.
- Granovetter’s social network theory: Strong vs. Weak ties.
- Structural holes and their role in information advantage and innovation.
- Metcalfe’s Law and positive feedback effects in digital platforms.
- Enterprise 2.0 and the impact of collaborative digital tools on organizational efficiency.
Excerpt from the book
2.2.2 Weak ties
Weak ties, on the other hand, can be constructed more often, so groups of weak ties can be much larger than just a few dozen people. Additionally, in networks with weak ties, not all of them must be connected to one another: A knows, for example, B and B knows C, but A does not necessarily have to know C or feel connected to it. In this much larger network the participants are not very similar, so the group is more heterogeneous. Weak relationships do not show such characteristics of temporal and emotional intensity. Such weak ties correspond to occasional contacts between acquaintances, neighbors and working groups (Granovetter 1973, p. 1361). On the assumption of local, homogeneous, isolated groups, not the strong but only the weak ties represent the possibility of crossing group boundaries. The weak ties in this function provide the prerequisite for the flow of information between the groups.
Weak ties, when they occur as bridges, offer the possibility of the information flow between otherwise isolated groups. Since weak connections can also be transmitted within very different circles, the actors can receive and pass on new, valuable information to each other. According to Granovetter, the weak bridges integrate the different groups within a society (Granovetter 1973, p.1366). In summary Granovetter claims that weak bonds between hubs can bring greater advantages than strong, since the flow of unknown information can potentially increase. Strong ties point to close personal contacts, in which only known information circulates, while contacts beyond these circles introduce new, unknown information into the network, which in turn introduces new action corridors (Sparsam 2015, pp.129-162).
Summary of Chapters
1 Introduction: This chapter highlights the ubiquity of networks in human interaction and economics, establishing the importance of network theory for understanding the modern economic era.
2 Networks: This section presents a selection of significant network theories from the 20th and 21st century to explain how relationships and structures influence information flow and economic value.
3. Conclusion: The conclusion summarizes that network participation is unavoidable in the modern economy and briefly mentions additional concepts like social capital and the VCP process.
4. Outlook: This chapter forecasts the future of the networked economy, emphasizing the transition from mere efficiency to total connectivity and the resulting shifts in private and professional life.
Keywords
Network Economy, Small-world-property, Strong Ties, Weak Ties, Structural Holes, Metcalfe’s Law, Positive Feedback, Enterprise 2.0, Viral Marketing, Information Advantage, Digitalization, Collaboration, Social Networks, Innovation, Connectivity.
Frequently Asked Questions
What is the core focus of this publication?
The publication examines the scientific foundations of network theories and how these mechanisms shape the current economic landscape, particularly regarding human interaction and business strategy.
What are the primary thematic fields covered?
Key topics include social network analysis (Granovetter), network structure (Burt), quantitative growth models (Metcalfe), and the practical implementation of these theories via Enterprise 2.0 technologies.
What is the central research question?
The work seeks to explain how network theories—ranging from small-world effects to structural holes—facilitate a better understanding of interpersonal relationships and economic success in the digital age.
Which scientific methods are employed?
The author uses a descriptive synthesis of established sociological and economic network theories, supported by empirical experiments (e.g., Milgram) and business management case studies.
What does the main part of the book address?
The main section details specific network mechanisms such as strong/weak ties, the role of structural holes in innovation, and how digital platforms use positive feedback effects to scale.
Which keywords characterize the work?
The work is defined by terms like Network Economy, Weak Ties, Structural Holes, Enterprise 2.0, and positive feedback effects.
How does the "Small-world-property" concept facilitate viral marketing?
It utilizes the principle that information can spread globally through short, direct paths, as demonstrated by the rapid adoption of services like Hotmail.
Why is the concept of "Structural holes" important for managers?
Managers who bridge structural holes act as conduits for information between isolated groups, gaining information advantages and visibility that enhance their professional value.
How does Enterprise 2.0 change organizational culture?
It shifts the focus from hierarchical, central structures to autonomous, collaborative teams that utilize digital tools to share knowledge and leverage the "wisdom of the crowds."
- Arbeit zitieren
- Aldona Giesbrecht (Autor:in), 2017, Network Economy, München, GRIN Verlag, https://www.grin.com/document/463460
