Markets and Networks

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Markets and Networks

• Podolny, Joel M.
• Networks as the Pipes and Prisms of the Market

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Introduction

• Theory
• 2 cases
• Critique of the Concept

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Two types of uncertainty

• 1) Egocentric uncertainty
• ???

Ego Alter
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Two types of uncertainty

• 2) Altercentric uncertainty
• ???

Ego Alter
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Structural Holes Egocentric Uncertainty

• Situation with high uncertainties for the
  producer
• Producer can lower this uncertainties through
  information
• Structural holes provide these information

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Status Egocentric Uncertainty

• Status can not lower egocentric uncertainty
• Status makes ego able to choose partners
• Choosing partners worthless, because of
  uncertainty about the outcome

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Case 1High Egocentric Uncertainty Low
Altercentric Uncertainty

• EXAMPLE new ENERGY-PROVIDER
• Egocentric uncertainty The market uncertainty is
  about the amount of consumers the company can
  get.

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Case 1High Egocentric Uncertainty Low
Altercentric Uncertainty

• The company has a network with structural holes
• has INFORMATION-ADVANTAGE in comparison with
  competitors
• can get energy to a better price, e.g. through a
  special relationship to east-european power
  plants and is able to buy very cheap energy
• Lowers his egocentric uncertainty, to get more
  consumers through a lower price or innovative
  products (energy renewable resources)

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Case 1High Egocentric Uncertainty Low
Altercentric Uncertainty

• has no high status and/or reputation
• no need for high status
• consumers have minimal risks through contract and
  the uniformity of the product

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Case 2Low Egocentric Uncertainty High
Altercentric Uncertainty

• EXAMPLE CATERING-COMPANY
• Altercentric uncertainty Imagine having a
  wedding. Need for a good catering-company and no
  second-chance.
• Risk to get a bad dinner.

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Case 2Low Egocentric Uncertainty High
Altercentric Uncertainty

• The company has a high status/high reputation
• Lowers his altercentric uncertainty, because the
  high status/high reputation signals that he will
  get a good dinner
• Advantage for the Catering-Company, because
  people decide to hire this company.
• The consumer saves resources, because he does not
  have to evaluate the quality of the company by
  his own

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Case 2Low Egocentric Uncertainty High
Altercentric Uncertainty

• has no network with structural holes
• no need for structural holes
• There is no uncertainty in building the product,
  which make it needful to have external information

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Critique of the Concept

• Are structural holes and status really
  COUNTERPARTS? (Podolny explains this only with
  one market situation)
• Is there a EVOLUTION from structural holes to a
  high status in the life of a company?

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• Thanks for your attention!
• Elgars
• Fleur
• Hande
• Jens
• Umit