Business Management and Social Networks
As the world economy becomes increasingly more globalized, strategies for corporate management become much more crucial as they might make or break a company. Consequently, researchers have spent years studying the intersections between social trends within the corporate sector to find optimal approaches to the workplace.
Measuring the effects of a CEO’s social network on a firm’s economic health, for instance, can provide insight into what truly helps a company succeed. Studies have previously determined that the relationship between corporate performance and social networks remained linear; whether this trend was positive or negative, however, remained uncertain. For some, the social network of a member of a company’s board of directors helped grow the business as they learned new information from competing enterprises and had access to insider resources. For others, there was a negative trend: competing organizations shared partners in the same networks, diminishing the economic performance. These competing notions puzzled business professionals. The question remained: how can business managers optimize their social networks to benefit the economic health of their company?
That’s when researchers Sui-Hua Yu and Wei-Ting Chiu from Pittsburg State University published a new study providing a more detailed way to go about this management strategy. They found that the relationship between social networks and corporate management was non-linear. Instead, the trend fit more of a U-shape. For business managers, it is important to have a set number of people in their social circle that fit in their genre of business, however, once this number passes a threshold (which varies depending on the magnitude of the business, the industry, etc.), this relationship becomes negative: increasing this network results in a decline in the economic wellbeing of the company.
Yu, Sui-Hua, and Wei-Ting Chiu. “Social Networks and Corporate Performance: The Moderating Role of Technical Uncertainty.” Journal of Managerial Issues, vol. 25, no. 1, 2013, pp. 26–45. JSTOR, http://www.jstor.org/stable/43488156. Accessed 13 Sep. 2022.