How to Extract Value from Your Position in a Corporate Network

In network theory, individuals positioned in-between unconnected other individuals are defined brokers and are usually supposed to take advantage from this position through an "arbitraging orientation" that actively exploits the opportunities given by informational asymmetries. In the case of real estate agents, for instance, exploiting the opportunities offered by the brokering position is all their role is about.

In an organizational set such as a corporation, though, it has been observed that different people obtain unequal returns from the same position and new research shows that most people prefer to adopt a "collaborating orientation", that links disconnected others in a manner that favors information-sharing, rather than an arbitraging one. Arbitraging brokers, though, perform much better.

"Benefits are not the automatic result of an individual's position in a network, but they also come from a set of behaviors aimed at pursuing the structural opportunities", lead author Giuseppe Soda, Professor of Organization Theory and Design at Bocconi University, Milan, says.

By conducting a survey of nearly 400 HR employees of a large consumer product company, scattered across five continents, the investigators collected network data and captured their strategic orientation through a scenario-based visual scale that invited them to choose between an arbitraging and a collaborating behavior when exposed to the same situation. They finally compared the data with employees' performance evaluations.

Collaborating was indicated as the preferred strategic orientation by 85% of the employees, arbitraging by 11.5% (3.5% of them opted for an intermediate orientation). Those who chose an arbitraging strategy were 14% more likely to have an above-average performance. Having a collaborating orientation, instead, makes a broker 16% less likely to have an above-average performance. The results suggest that consistency between one's position in a network and their behavior (i.e. when individuals exploit their broker position adopting an arbitraging orientation) yields extra personal benefits, while collaborating brokers seem to socialize the advantages of their position and suffer lower gains in personal performance.

"Another way to put the question", says co-author Marco Tortoriello, a Professor of Strategy and Organizations at Bocconi University, Milan, "is that one of the reasons why brokers have a higher performance is that they are often the source of new ideas: while the arbitraging broker preserves the ownership of such ideas, the collaborating broker dilutes his own contribution and can end up losing the ownership of the ideas. A more entrepreneurial approach to corporate life seems to pay off". The third author of the study, Alessandro Iorio, is affiliated to Carnegie Mellon University.

Giuseppe Soda, Marco Tortoriello, Alessandro Iorio, Harvesting Value from Brokerage: Individual Strategic Orientation, Structural Holes, and Performance, in Academy of Management Journal, published online before print, amj.2016.0123.