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The Value of Social Network

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The goal of this project is to integrate financial capital, human capital and social network analysis to formally and quantitively define and model social capital. Our interest is to find out what are the real dollar value of social networks.


A study abstract


A large body of literature on social networks in organizations demonstrates that certain types of network topology are optimal. However, little researcher leverages the ample data created by people's electronic communications to refine and verify theories. This gap is problematic, because the literature on organizational networks suffers from the same deficits as much of the social network literature: both tend to be focused on small, static networks.

In this study, we mitigate this gap by collecting and mining the largest organizational social network ever collected. We find that not only does the population level topology of social network correlate with performance, one's social network has human capital and status that can be beneficial to one's work performance. This finding advances theories of social networks and information worker productivity by adding a new dimension to the understanding of the how information workers use their social network generate value. In addition to an individual's own human capital and network position, the human capital and status of her friends can be instrumental to her success.



Nine hundred and forty-eight dollars.

That's the annual dollar value of each person in your email address book at work, according to a novel IBM study published in the Winter Information Systems Conference in February 2009.

IBM researchers, together with researchers in MIT, were looking to scientifically determine how valuable electronic social networks are, such as those in a group that primarily communicates electronically. Using mathematical formulas, honed by observing the email traffic and financial success of 2,600 anonymized far flung IBM consultants collaborating on thousands of projects during one year, researchers found that not all email relationships were equal.

In fact, they found that people with strong email ties with a manager, or had a more diverse circle of correspondents, enjoyed greater financial success than those who were more aloof. Teams with an even mix of genders also performed well financially. Individuals have more diverse networks and thus have more people who are reachable within 2 social steps (i.e., your friends' friends' friends.) is valuable. Too intensive communications to the same people have negative impact, perhaps because of the repetitive redundant information exchange.

IBM researchers also discovered that the common expression of 'too many cooks spoil the broth' really is true -- with less success attributed to projects with too many managers. Another finding was that an someone whose behavior in emails reflected a 'gatekeeper' mentality (insisted on personally approving or enabling every request to other people or to useful information) was, monetarily, a 'less valuable' team member. However, a 'gatekeeping' project is valuable, when several other projects need to go through it to obtain key information.

The bottom line, according to researchers? Don't be annoyed if you get copied on a lot of email. It might just mean that you are a valuable member of a social network. By the same token, don't be flattered if you are constantly emailed to provide, but not receive, information or access to others. It might just mean that you're just another node on a colleague's electronic network, and become a gatekeeper/bottleneck in information flow.

The study suggests that today's generation -- accustomed to electronic social networking practically from the cradle, using instant messaging, texting, emails, Facebook, Myspace, and Second Life -- is well positioned for a workplace in which meaningful connections to multiple and diverse social networks spread over a wide area.

While you can't put a price on friendship, maybe you can put a price on that email buddy from your workplace, after all.

-- Ari Fishkind


Researchers:

Lynn Wu (Ph.D. Student, IBM Watson Research Center and MIT Sloan Management School)

Ching-Yung Lin (IBM Watson Research Center)

Sinan Aral (NYU Stern Business School and MIT Sloan Management School)

Erik Brynjolfsson (MIT Sloan Management School)


Publications:

Wu, L., Lin, C.-Y., Aral, S., and Brynjolfsson, E., " Value of Social Network -- A Large-Scale Analysis on Network Structure Impact to Financial Revenues of Information Technology Consultants ", Winter Information Systems Conference, Salt Lake City, UT, Feb. 2009.




Presentation Slides:

The Dollar Value of Social Network -- IBM Social Network Analysis Community Seminar April 3, 2009