Why do so many organizations fail to utilize the social networks of individual members to respond to disruptions, innovate, and change? In this book, I develop a new perspective on this fundamental question in the study of networks and organizations that I call network agency theory. The central idea is that individual and organizational interests in networking can come out of alignment such that the network ties that individuals form are organizationally suboptimal, thereby reducing the organization’s capacity to achieve its most ambitious goals. The theory explains how network agency problems emerge, the role of digital technology adoption by organizations in amplifying misalignment, and the capacity of managers and the function of the executive to resolve agency problems and mitigate their impact. This book builds upon two decades of qualitative research in American, Asian, and European big-tech companies and new analytical and computational modeling to develop theory about network agency problems in organizational environments where digital technologies are prevalent.
The first half of the book describes four pathologies that emerge from seemingly prosocial networking behaviors pursued by individuals to enhance their social capital that are nonetheless organizationally detrimental, such as too many ties, ties that are too weak, entrenched brokers, and networks with high social capital inequality. My argument is not merely that organizational networks occasionally fall into these maladaptive states, but rather that they inevitably do so if individuals pursue their networking interests in modern organizational contexts without intervention. A central idea is that digital technologies including both enterprise software tools (e.g., email, Slack, Yammer, Zoom) and consumer and social media platforms (e.g., Twitter, Facebook, LinkedIn)—have decreased networking costs but increased networking incentives to such an extent that the creation and maintenance of maladaptive networks is likely. The overriding metaphor is that digital technologies produce “digital relationships,” where mere affiliations and brief contacts are reified and members collaborate on critical organizational projects without sufficient relational quality in network structures and with pernicious social capital distributions.
In the second half of the book, I discuss the organizational implications of network agency theory, including the persistence of social capital pathologies in the face of managerial interventions and its implications for organization design and governance. I describe a critical equilibrium in which organizations reconstitute disrupted networks to explain why managerial interventions in networks often fail—that is, networks often “snap back” to maladaptive states without continued managerial attention. I also offer a new interpretation of classical problems in organizational design (silos and bottlenecks) and strategic management (exploration failure and the prominence of inorganic growth modes) as a manifestation of network agency problems. To address these problems, a new function of the executive that focuses on strategic social capital practices in human resource management—hiring, socialization, and role formation—can be used to minimize future network agency costs. Finally, I argue that an inductive research agenda focused on theory building with cases, models, and experiments is best able to advance network agency theory.
Two types of readers may be interested in this book. For scholarly readers, who are the primary audience, I suggest beginning with Chapter 1, where I sketch the basic arguments and implications of the network agency theory I develop. The later chapters in Part I accumulate evidence for network agency problems; extend this evidence with arguments that generalize the theoretical mechanisms, typically culminating in analytic or computational models where these are formalized; and draw implications. Citations are kept to a minimum in the main text in order to avoid excessive interruptions, although numerous connections to the literature are made in the chapter endnotes and in the references. As the arguments are developed, it may be useful to follow along in Table 1, which summarizes the main predictions, mechanisms, and outcomes of the theory. In Part II, I unpack implications of network agency theory for organizational theory and strategic management. Chapter 6 presents evidence for the persistence of network agency problems in organizations and the impact of managerial interventions, which helps to clarify central agentic mechanisms and so might be generally interesting. Yet depending on their scholarly subfield, readers may wish to jump to chapters on strategic social capital and the work-from-home experiment, where I draw implications for human resource management, work, and technology; organizational design and boundaries; or entrepreneurship and innovation. Those interested in further developing or testing network agency theories may be interested in the Chapter 10, on research agendas.
I am hopeful that some practicing managers may find the book useful. For practitioners, I suggest skimming Chapter 1 and reading the other chapters in Part I with an eye to the resemblance of network agency problems to issues in their own organization. Short summaries at the beginning of chapters may aid in chapter selection. Practitioners may be particularly interested in Chapter 6, on the short- and long-run effectiveness of managerial interventions, while Chapter 7, on strategic social capital practices and organizational design may be useful for executives who have responsibility for policies to mitigate network agency problems. The science of network agency problems is in its infancy. Further research may generate diagnostic tools and interventional frameworks that help organizations overcome these persistent network sources of failure.