A number of scholars have argued that if an actor’s partner in a network form of organization possesses considerable legitimacy or status, then the actor may derive legitimacy or status through the affiliation. This legitimacy or status may in turn have a number of positive economic benefits for the actor, ranging from survival to organizational growth to profitability. For example, in a study of daycare centers, Baum & Oliver (1992) find that a tie to a legitimate institutional actor, such as a church or governmental entity, has a positive effect on the life chances of an organization. In a study of the investment banking industry, Podolny & Phillips (1996) find that the higher the status of a bank’s management partners in underwriting syndicates at time t, the greater its status growth between time t and t + 1. This enhanced status, in turn, has positive economic advantages for the organization (Podolny 1993).
The above cited statement from page 8 of the linked research paper considers that the legitimacy of network nodes that I am related to increase the importance and trustworthiness of my information. I asked myself whether this is this still valid for 21st century organisations running on social networks? My answer so far: Yes and no! – I think taht my importance within the network is also a function of the legitimacy and status of my network nodes (aka members of my social graph) – but (!) the relation to this nodes must be an active and for everbody to be recognizable one and the legitimacy of my network nodes is not a function of position, title or academic degree but of their contribution to the network. And thus the legitimacy of my network nodes is not the key factor for my own importance and legitimacy – instead my contributions carry also much of the weight. (Related to this: Blog post by Gary Hamel “The Facebook Generation vs. the Fortune 500” – http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs-the fortune-500/) I am sure we will get into more depth on this at one of our keynote sessions at E20 SUMMIT about the organisational setup of E20 projects with JP Rangaswami, Franck La Pinta and Joachim Niemeier.
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