Tag Archives: brokerage

Entrepreneurs and social capital in China

Olav Sorenson

Does social capital operate differently in China? A long and vibrant literature on the concept of guanxi suggests not only that social capital might have a different character in China but also that it might prove more valuable there to employees and entrepreneurs alike. Drawing on unusually high quality data on Chinese executives, Burt and Burzynska (2017) explore the question of whether the same structural configurations of relationships appear associated with success in China as have been found in the West. Their short answer is yes. In this response, I comment on their article.

Management and Organization Review, 13 (2017): 275-280

(When) do organizations have social capital?

Olav Sorenson and Michelle Rogan

Interorganizational relationships connect people affiliated with organizations rather than corporate actors themselves. The managers and owners of organizations therefore do not always control these connections and consequently often cannot profit from them. We discuss the circumstances under which individuals (versus organizations) “own” these relationships (and therefore also the social capital generated by them). Three factors increase the odds of individual ownership: (i) the extent to which the resources valued by alters belong to the individual (rather than the organization), (ii) the degree to which alters feel greater indebtedness to the individual than the organization, and (iii) the extent to which relationships involve emotional attachment. We discuss the implications of the locus of ownership, argue that these distinctions can help to explain many results that appear inconsistent on the surface, and call for future research to pay closer attention to these issues.

Annual Review of Sociology, 40 (2014): 261-280

Bringing the context back in: Settings and the search for syndicate partners in venture capital investing

Olav Sorenson and Toby E. Stuart

Most existing theories of relationship formation imply that actors form highly cohesive ties that aggregate into homogenous clusters, but actual networks also include many “distant” ties between parties that vary on one or more social dimensions. To explain the formation of distant ties, we propose a theory of relationship formation based on the characteristics of “settings,” or the places and times in which actors meet. We posit that organizations form relations with distant partners when they participate in two types of settings: unusually faddish ones and those with limited risks to participants. In an empirical analysis of our thesis in the formation of syndicate relations between U.S. venture capital firms from 1985 to 2007, we find that the probability that geographically and industry distant ties will form between venture capital firms increases with several attributes of the target-company investment setting: (1) the recent popularity of investing in the target firm’s industry and home region, (2) the target company’s maturity, (3) the size of the investment syndicate, and (4) the density of relationships among the other members of the syndicate.

Administrative Science Quarterly, 53 (2008): 266-294

Brokers and competitive advantage

Michael D. Ryall and Olav Sorenson

The broker profits by intermediating between two (or more) parties. Using a biform game, we examine whether such a position can confer a competitive advantage, as well as whether any such advantage could persist if actors formed relations strategically. Our analysis reveals that, if one considers exogenous the relations between actors, brokers can enjoy an advantage but only if (1) they do not face substitutes either for the connections they offer or the value they can create, (2) they intermediate more than two parties, and (3) interdependence does not lock them into a particular pattern of exchange. If, on the other hand, one allows actors to form relations on the basis of their expectations of the future value of those relations, then profitable positions of intermediation only arise under strict assumptions of unilateral action. We discuss the implications of our analysis for firm strategy and empirical research.

Management Science, 53 (2007): 566-583