Structural Holes: The Social Structure of Competition

by Ronald S. Burt

Ronald Burt describes the social structural theory of competition that has developed through the last two decades. The contrast between perfect competition and monopoly is replaced with a network model of competition. The basic element in this account is the structural hole: a gap between two individuals with complementary resources or information. When the two are connected through a third individual as entrepreneur, the gap is filled, creating important advantages for the entrepreneur. Competitive advantage is a matter of access to structural holes in relation to market transactions.

Genres: Sociology, Nonfiction, Business

323 pages, Paperback

First published October 31, 1992

Reviews

[Michael Bethany · Rating 4 out of 5]

Excellent theory explaining why some individuals/groups/organizations (players) perform better than others economically, in the marketplace, and in social environments. simply stated, these players understand how to better exploit structural holes found in networks. Structural holes are the network gaps or chasms between entities. By brokering relationships between these disparate entities, some players are able to manipulate the structural holes to their individual benefit, which aggregates from the micro level of the individual to the macro level of the group or organization. The end result is timelier access to information and network referrals than the competition. Burt (1992) brilliantly explains the mechanics behind this social phenomenon and supports his theory significantly with much analysis and case study. A great read for anyone wanting to understand how social capital is built and used for benefit.

[Arjun · Rating 4 out of 5]

Social Network theory is interesting but suffers from a major chicken and egg problem. That is, am I powerful because I am in the middle of my social network or is it my inherent power that got me there? How do we separate those effects? For those of you who are interested but want a formal treatment, read Matt Jackson's graph theoretic approach to this work in Economics.

For people with better things to do, just read it and don't think to much about it.

[Jenn · Rating 5 out of 5]

If you enjoy this primer on social networks, I can send you on your merry way with much much more. : )