Network Dynamics andCooperation in Organizations

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› Rafael WittekICS/Department of Sociology

Question No. 41

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Under which conditions do social networks enhance durable cooperation?

A Plea for a Signaling Approach

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Standard network theory is ill-equipped to model network dynamics and cooperation, in particular for organizational settings

Signaling Theory is way more powerful.

Outline

› What is signaling, and why should we care?

› How does a Signaling Theory of Networks look like?

› How does Signaling Theory differ from Standard Network Theory?

› What kind of empirical evidence do we have?

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What is Signaling, and why should we care?

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H O M E C O M M E N T S P O L I C Y O U R B O O K S

Incompetence as a Signalling Deviceby HENRY on AUGUST 26, 2009

Scott has a great short piece at IHE on Gambetta’s book on communication among criminals, which inter aliasummarizes Gambetta’s theory of the signalling benefits of incompetence in Italian academia.

Gambetta argues that something similar takes place among the baroni (barons) who oversee the selection

committees involved in Italian academic promotions. While some fields are more meritocratic than others, he

says, the struggle for advancement involves a great deal of horse trading. “The barons operate on the basis of

a pact of reciprocity, which requires a lot of trust, for debts are repaid years later. …The most powerful figures

in this system, says Gambetta, tend to be the least intellectually distinguished. … “… and this is what is the

most intriguing, they do not try to hide their weakness. One has the impression that they almost flaunt it in

personal contacts.” … Gambetta argues that the cheerful incompetence of the baroni is akin to the mafioso’s

way of signaling that he can be “trusted” within his narrowly predatory limits.

“Being incompetent and displaying it,” he writes, “conveys the message I will not run away, for I have nostrong legs to run anywhere else. In a corrupt academic market, being good at and interested in one’s own

research, by contrast, signal a potential for a career independent of corrupt reciprocity…. In the Italian

academic world, the kakistocrats are those who best assure others by displaying, through lack of competence

and lack of interest in research, that they will comply with the pacts.”

Signaling is Hot.

Signaling has a proven track record in related fields.

Builds on parsimonious set of assumptions.

Resolves inconsistencies in current research.

Signals

Information about an underlying, unobservable ability of the signaler to fulfill the needs or demands of someone observing the signal

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Relational Signals

Cues about signaler’s intention to initiate and maintain a mutually rewarding relationship with the receiver of the signal

Deliberate and Non-Deliberate Signaling

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‘Signals given’ ‘Signals given off’

Relational Signaling in Organizations

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Interdependence: Consequences

1. Formal organization creates interdependence

• Workflow (task, outcome), authority

• Negative (damage potential) and positive externalities (surplus potential), e.g. career tournaments

2. Interdependence creates regulatory interest (“joint production motivation”)

• Individuals will primarily be concerned to manage their inter-dependencies (avoid damages, generate surplus)

3. Regulatory interest breeds relational signaling

• Individuals constantly assess the actions of others for underlying signaling implications

• Individuals anticipate on signaling effects of their own actions

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Signaling: Conditions

Conditions for game theoretical stability:

1.Actors vary in some underlying attribute (e.g. motivation, resource endowment)

2.Observers gain from accurate information about this variation in attribute quality

3.Signalers and recipients have partially conflicting interests (successful deceit would benefit signaler at the expense of recipient)

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Bliege Bird & Alden Smith (2005). Current Anthropology 46 (2)

Network Theories Compared

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Network Theories Compared

Standard Theory Signaling Theory

Attributes Compatibilities and complementarities between attributes (Assortativity)

Relevant only if they have signaling value (Honesty)

Ties Pipes for exchange of goods and services (Connectionism)

Prisms framing obligations and expectations (Framing)

Positions Influence behavior through creating structural constraints (Structuralism)

Influence behavior through reputation value (Reputation)

Theory of Action

Wide variety of psychological mechanisms (Ecclecticism)

Joint production motivation (Social Rationality)

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Empirical Applications

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Research Design: LIONS›Longitudinal Intra-Organizational Network Study

• Roster method

• Dyadic outcome: Influence (“Power reputation”)

›German Paper Factory

• Private, n=22 Engineers, 4 waves (1995-1997)

›Dutch Youth Care Organization

• Public, n=33 Pedagogues, 3 waves (2008-2010)

• Ongoing collaborative field study

Influence

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Influence through network ties

› Power attribution network: How much influence does each colleague have on the state of affairs in the site?

› 0 = none, 10=very much

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Power Attribution Network

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10.511

9.498

7.683

7.5

7.415

6.746

6.222

5.597

4.433

3.544

3.466

2.882

2.674

2.635

2.413

1.865

1.855

1.732

1.656

1.461

1.153

1.059

0.977

0.938

0.907

0.635

0.612

0.512

0

10.511

9.498

7.683

7.5

7.415

6.746

6.222

5.597

4.433

3.544

3.466

2.882

2.674

2.635

2.413

1.865

1.855

1.732

1.656

1.461

1.153

1.059

0.977

0.938

0.907

0.635

0.612

0.512

0

A

B

A power attribution from ego to alter is present if ego perceives alter to be rather influential or very influential. The height and the width of the nodes differ based on one’s tenure and strategy use, respectively. A node labeled “A” is the manager; node “B” is the behavioral scientist – the second most important person in terms of the position in the formal hierarchy of the current organizational setting.

Influence through“agency”

› Influence tactics

› Compliance gaining strategies

› Power strategies

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Influence: Predictions

Standard Theory

›Structural advantage breeds influence

›Strategy breeds influence only in combination with structural advantage

Signaling Theory

›Structure breeds influence only if position is visible

›Strategy breeds influence indepen-dently of structural advantage

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Paper Factory: Influence Strategies

“There are many ways how people deal with cooperation problems. How appropriate do you, personally, consider each of the following behaviors?”

1. resignation

2. retaliation

3. bilateral arguing

4. public negotiation

5. asking opinion of others

6. complaining to a superior

›Rating: -100 per cent “inappropriate” to +100 per cent “appropriate”

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Estimate SE Sig.

Control variables 24.85 5.74

1. Network rate parameter (period 1) 24.85 5.74

2. Network rate parameter (period 2) 34.38 10.09

3. Network rate parameter (period 3) 22.64 4.72

4. Shape out-ties (linear) 0.15 0.23

5. Shape out-ties (squared) -0.50 0.05 ***

6. Dummy period 1 -0.34 0.08 ***

7. Dummy period 3 0.04 0.08

Endogenous network effects

8. Popularity of alter 0.02 0.01 **

9. Reciprocity -0.28 0.34

10. Transitivity 0.13 0.19

Exogenous network effects

11. Trust 0.32 0.05 ***

12. Formal position (direct superior) 0.14 0.21

13. Communication 0.07 0.04 +

Actor (alter) attributes - strategy use

14. Direct - Bilateral arguing 0.03 0.09

15. - Public negotiation -0.01 0.12

16. Indirect (horizontal) - Asking opinion of others -0.10 0.07

17. (vertical) - Complain to superiors -0.17 0.08 *

18. Passive - Retaliation -0.96 0.23 ***

19. - Resignation 0.10 0.09

Other alter characteristics

20. Average trust received -0.55 0.22 *

21. Average trust received from superiors 0.31 0.10 ***

22. Formal status (number of subordinates) 0.17 0.05 ***

Informal influence through time. Valued ties analyses, Paper Factory

Source: Labun, Wittek, Steglich, Wielers(2011). Power networks: The effects of reputation, social embeddedness and power strategies. Manuscript.

Those who complain to superiors are perceived as less influential

Direct influence strategies have no effect on perceived influence

Youth Care Organization: Influence Strategies

› “How likely is it that you use each of the strategies to influence others (colleagues and manager) at work?”

1. socializing selectively (“Knowing the right people”)

2. coalition formation / upward appeal (“Trying to obtain the informal support of higher-ups”)

3. positive manipulation / ingratiation (“Having a feeling for when and how you can bring up certain issues”)

› 7-point Likert scale (1=very unlikely, 7 very likely)

› Cronbach’s α = .72

› Adapted from Kyl-Heku and Buss (1996) and Kipnis, Schmidt and Wilkinson (1980)

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Power Reputation

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Source: Labun, Wittek, Steglich, Wielers(2011) Pathways to Power Reputation: The Interplay between Structural and Visibility Mechanisms. Manuscript.

Influence: Exponential Random Graph Model (Youth Care Organization)

Those who have many ties are perceived as more influential

Those who experience much structural constraint perceive any others as more influential

Power Reputation

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Source: Labun, Wittek, Steglich, Wielers(2011) Pathways to Power Reputation: The Interplay between Structural and Visibility Mechanisms. Manuscript.

Influence: Exponential Random Graph Model (Youth Care Organization)

Those who exhibit strategic influence behavior are perceived as more influential

No interaction effects between structure and strategy use

Conclusion

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Signaling in Social Networks: Towards a Research Agenda

› Promising approach for the study of network evolution and cooperation

› Generates predictions for wide variety of problems (Costly Punishment, Representative Voice, Knowledge Sharing, CEO Compensation…)

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