Business

Why Spectrum Is Not Property: The Case for an Entirely New Regime of Wireless Communications Policy

One Sentence Summary:
"What we now know about the physics and architecture of RF communications contradicts the 'property' model of spectrum and this paper serves as a call to action to re-architect spectrum using a commons-based model."
Disciplines:
Business
Law
Technology
Economics
Findings:
  • While it is possible to create wireless communication networks in which available capacity grows with the number of users, currently regimes equate spectrum to property and use a property rights based regime to allocate and coordinate usage among multiple technology areas. The result is fixed capacity for each technology area.
  • Introducing cooperation in capacity regimes for wireless networks results in models in which capacity increases as users are added.
  • Models have been proposed in which capacity grows as the square root of the number of users.
  • The author suggests that there are good technical reasons to believe that cooperative networks can be created in which capacity scales proportionally with the number of users.
  • The available options within a particular cooperative wireless network would grow according to Metcalfe's (N^2 for pairwise transactions) and Reed's (2^N for options in forming groups) Laws.
  • The current Internet regime for wired communication was formed from 25 years of innovation in an open and experimental environment and differs significantly from the previous wired communications regime that grew under the control of the telecommunications provider.
  • The author calls for the development of an RF network regime using an open and experimental regime as a starting point to encourage cooperation and innovation in much the same way that the early Internet provided a starting point from which the current Internet was evolved.
  • The article does not discuss whether and how cooperative networks provide for the guaranteed coordinated access to capacity.
Keywords:
communication
technology
Author(s) / Editor(s):
Published in:
Internet
Date:
February 7, 2001
One Paragraph Summary:

The current regime for allocating and coordinating the use of spectrum across multiple technology areas uses a property based scheme to subdivide and fix the capacity available to each technology area. Cooperative regimes have been proposed which have the advantage of increasing available capacity as the number of users in a wireless communications network increases. In addition, the available possible pairing and grouping options of a cooperative network would grow according to Metcalfe's and Reed's Law respectively. The author concludes that spectrum does not behave like ordinary property and requires a regime that is commons based. Since no obvious regime exists, the author calls for the development of such a regime by starting with �a regime that allows wireless networks to interoperate and communicate in the use of “spectrum” in an open and experimental way, just as the Internet did —for wired digital communications.

One Page Summary:

Currently, spectrum in wireless networks is allocated using a property based scheme. This solves the problem of interference by providing coordinated access to capacity for users of multiple technologies at the cost of fixing the available capacity for each technology area. Recently, architectures have been proposed that use a cooperative strategy for capacity allocation. These have the advantage of increasing available capacity with the number of users. The author believes that cooperative wireless networks could be created that provide capacity that scales proportional to the number of users. In addition, a cooperative wireless network would have increased options with respect to Metcalfe's Law, the number of pairwise transactions that could occur would grow as N**2, and Reed's Law, the number of groups that could be formed would grow as 2**N.

The author argues that the scaling of capacity available in wireless networks indicates that spectrum does not behave like ordinary property and requires a different commons based allocation and coordination regime one that encourages cooperation among users in order to increase available capacity. No obvious regime exists today. However, the current Internet regime for wired communication was formed from 25 years of innovation in an open and experimental environment. The resulting regime differs significantly from the previous regime that grew under the control of the telecommunications provider. The author calls for the development of a cooperative wireless network regime by starting with an open and experimental regime that encourages cooperation much the same as the starting point for the current Internet regime for wired digital communications.

When Push comes To Pull: The New Economy and Culture of Networking Technology

One Sentence Summary:
Information and communication technology innovation have begun to transform commercial business and social institutions from a "push" technology approach (hierarchical "center out"), to a "pull" technology approach (networked -based and decentralized). This poses new challenges to social, political, and educational systems that are largely designed to support "push" economies.
Disciplines:
Business
Law
History
Cultural Evolution
Technology
Economics
Political Science
Sociology
Findings:
  • We are living in an epochal period of transition bridging two very different types of economies and cultures. We are transitioning from a "push" economy: that tries to anticipate consumer demand, and then creates a standardized product, and "pushes the product into the market and culture, using standardized distribution channels and marketing. We are transitioning to a "pull" economy: open and flexible production platforms that use network technologies to coordinate many different entities from disparate regions.. "Pull" economies produce customized products and services that serve localized needs (demand-driven), usually in a rapid manner.
  • "Pull" networks tend to build the capabilities of their networked partners, by providing performance feedback and sharing best practices among the network participants. "Pull" platforms therefore tend to better employ the enthusiasm of all of the participants.
  • The "pull" phenomenon is not confined to business/online commerce. The spread of common use of internet technologies is finding "pull" techniques being applied in entertainment, social life, politics, education, and government.
  • "Pull" models are going to change the way that governments create policy as more companies gravitate toward them.
Keywords:
capitalism
communication
complexity
cooperation
cultural evolution
group forming networks
hierarchy
intellectual property
interdependence
networks
norms
open source
property rights
reciprocity
reputation
social capital
trust
Author(s) / Editor(s):
Published in:
The Aspen Institute
Date:
2006
One Paragraph Summary:

Over the past 25+ years, change that has usually originated with technological innovation has led to new products, services, and human behavior patterns. These changes are reflected in business and industry, and the way that people entertain, govern, educate, and socialize among themselves. The change is from a centralized, command and control, bureaucratic, broadcast way of organizing, that tries to anticipate and create demand, to a decentralized and highly networked system that shares information about overall network performance and best practices among it's network, and meets local and specialized needs.

One Page Summary:

This paper is a summary of an Aspen Institute sponsored in-depth roundtable session, written from the perspective of one informed conference observer (Bollier). The participants are leading thinkers in the many complex areas this paper covers (economics, systems theory, human behavior, human futures, information technology evolution, etc) and are listed on page 57. A selection of their key insights shared in the paper are listed below:

A "push" economy is geared towards mass production, anticipating consumer demand, and routing resources to the right place at the right time, to create standardized and mass produced products. By contrast, a "pull" economy is based on open, flexible production platforms that are used to orchestrate a broad range of resources. Instead of producing standardized products, "pull" model companies are demand-driven, and assemble products in customized ways that serve specialized or local needs, usually using "rapid" or "on the fly" processes.

Several global corporations are moving towards "pull" methods, and away from "push" models; ie., Toyota, Dell, Cisco, Li & Fung. These companies employ different variations of Value Network models, that share information about overall network performance and best practices for serving specialized needs, among hundreds or even thousands of partner companies that make up the network. This creates an intra-network knowledge commons. Some companies also work closely with Open Source Software projects, thereby expanding their "pull" network, and expanding their knowledge commons into a broader Open Commons via Open Source Software project contributions. Thus, "pull" business models also tend to be Network Value-Increasing, and Commons-based business models as well.

"Pull" models can also be platforms for creating "increasing returns dynamics." This is due to "pull" models being based around loose and flexible networks that are already configured to scale as growth occurs. So, growth does not incur the huge overhead costs in administration that "push" models must contend with. Pull platform key characteristics include modular and loosely-coupled networks, open channels that better harness the passion and commitment of innovation communities. "Pull" platforms also will tend to influence public policy with regards to education and innovation, as more companies tend to gravitate towards the "pull" models.

The areas where "push" models tend to succeed in business are in areas where people do not know what they want, and prefer to shop from pre-made selections (Ikea, Home Depot). However, there are even "pull" models to found here, in the form of user-driven innovation, such as mountain biking, extreme skiing, hot rodding, etc. In these pro-amateur niches, customers don't necessarily know what they want, but do want to be a participant in the "pull" network that creates the product.

How do you tax a product that is made in 23 different countries? "Pull" models are going to change the way that governments create policy as more companies gravitate toward them. This will influence laws about intellectual property, education, taxation and more.

"Pull" economies are not just centered around finding creative ways to "outsource/offshore jobs" away from one place and to the places where "labor" is "cheaper". Successful "pull" models have encouraged and aided "insourcing", where more jobs are created, for instance in the United States by "foreign sources (a total of 7 million cited by this paper), than are out sourced (a total of 600,000+ cited by this paper). This is because pull models seek out, not just the "cheapest" labor, but the best ways to add value to the production networks. So, they can scale to many participants around the world, regardless of local labor costs, to find the best participants needed for specific specialized productions.

The social dynamics of "pull" models are highly centered around creating relationships of trust, sharing knowledge, and close cooperation among network participants. In "pull" models, non-market value creation (tacit knowledge, intangible value) is generally steered towards a commons-based model. A commons is used as a "collective governance regime for managing shared resources sustainably and equitably." Many of these commons are made possible by networked information technologies (the internet).

Bollier suggests that "if online commons are going to be useful to business, companies will need to do more work to develop protocols for identity and reputation management". This is because the use of the commons is based around trust. It also due to the need for ways to measure qualitative value in intangible assets beyond money, like knowledge, individual performance and value multiplication, and network wide performance/value multiplication.

Roundtable participants also noted that "pull" models will pose challenges to current education regimes that are centered around training people to participate in "push" economies. One of the participants mentions that " Computers, software tools, and Internet resources make possible some radically new styles of learning. By using pull-based systems, students can function much like businesses in the pull environment: They can access resources they don't control and put themselves into flows of activity, rather than just building inventories of static, objectified "knowledge."

The Success of Open Source

One Sentence Summary:
Open source software, a form of social organization that configures intellectual property around the right to distribute, not the right to include, is a political economy and production system process, enabled by the Internet, that makes possible voluntary, distributed innovation and collective creation of complex public goods with neither the bureaucratic structure of the firm as we know it or the financial incentives of the market as we know them.
Disciplines:
Business
Law
Computer Science
Economics
Sociology
Information
Findings:
  • The GPL (General Public License) uses copyright law to configure property around the right to distribute rather than the right to exclude. The GPL, by preventing any users from adding restrictions that could deny these rights to others, extends the freedom to run programs, to study how they work, to modify them, to redistribute copies gratis or for fee, to change and improve them and to redistribute modifications. This "shifts the fundamental optic of intellectual property rights away from protecting the prerogatives of an author toward protecting the prerogatives of generations of users."
  • Together with the Internet as a coordinating medium and a shared set of norms that constitute a community, the GPL creates a system of value creation and a set of governance mechanisms that enable the distributed production, maintenance, and development of highly complex software code.
  • The motivations of highly talented programmers to voluntarily contribute include the opportunity to learn the programming craft, the pleasure of working on high quality code, reputation capital, and contribution to a battle against Microsoft and proprietary software in general.
  • As important as the code is the process by which it is built. The open source community's organizing principles include "criteria for entering and leaving, leadership roles, power relations, distributional issues, education and socialization paths, and all the other characteristics that describe a nascent culture and community structure."
  • "The open source process has generalizable characteristics, it is a generic production process, and it can and will spread to other kinds of production. The question becomes, are there knowledge domains that are structured similarly to the software problem?" "The key concepts of the argument – user-driven innovation that takes place in a parallel distributed setting, distinct forms and mechanisms of cooperative behavior regulated by norms and governance structures, and the economic logic of "antirival" goods that recasts the "problem" of free riding – are generic enough to suggest that software is not the only place where the open source process could flourish.
  • "The key element of the open source process, as an ideal type, is voluntary participation and voluntary selection of tasks." Coordination costs are dramatically lowered by self-election: each contributor chooses what to work on, when to start, and when to quit.
  • "Eight general principles that capture the essence of what people do in the open source process: Make it interesting and make sure it happens; scratch an itch (link private contributions to a public good); minimize how many times you have to reinvent the wheel; solve problems through parallel work processes whenever possible; leverage the law of large numbers; document what you do; release early and release often; talk a lot.
  • Open source production is social because it is a product of voluntary collective collaboration, political because structures and organizations allocate resources and manage conflicts, technical because the final product is software code that must work, and economic in a fundamental sense of understanding the way individual choices about what to do with limited time and energy aggregate to a macrolevel.
  • Motivations for contributing include the fun of programming, the opportunity to learn the craft of programming, an urge to contribute to the open source community, ego-boosting (but not bragging – the norm is that the work brags for you), and reputation. A simple but fundamental shared belief is "the notion that personal efficacy not only benefits from, but positively requires, a set of cooperative relationships with others."
  • Rishab Aiyer Ghosh reframed the collective action problem of contributing to open source software by using the image of a vast tribal cooking pot into which one person puts a chicken, another puts in onions, and they each take out a bowl of stew; ordinarily, stews are vulnerable to free-riders who take out but don't contribute, but the Internet makes digital products like software "magically" non-rival: "If a sufficient number of people put in free goods, the cooking pot clones them for everyone so that everyone gets far more value than was put in.
  • The system at a whole benefits from riders, who help invoke network effects by growing the user base; further, if even a small number of free-riders who use but don't create code report the existence of a bug or ask for a needed feature, the effectiveness of the production system increases.
  • Coordination is mediated by social norms: ownership customs enshrined in the GPL; decision-making and support ownership customs; and the technical rationality of "let the code decide."
  • "End-to-end innovation goes a step beyond simply reduced transaction costs. It enables parallel processing of a complex task in a way that is not only geographically dispersed but also functionally dispersed. End-to-end architecture takes away the central decision-maker in the sense that no one is telling anyone what to do or what not to do. This is the essence of distributed innovation, not just a division of labor. There are no weak links in this chain because there is, in a real sense, no chain. Innovation is incentivized and emerges at the edges,; it enters the network independently,; and it gets incorporated into more complex systems when and if it improves the performance of the whole."
  • Four organizational principles needed for distributed innovation: "Empower people to experiment." "Enable bits of information to find each other." "Structure information so it can recombine with other pieces of information." "Create a governance system that sustains this process."
  • "The notion of open-sourcing as a strategic organizational decision can be seen as an efficiency choice around distributed innovation, just as outsourcing was an efficiency choice around transaction costs."
  • Hierarchies and networks exist in a dynamic relationship over time; one form may come dominate, or each can coexist in appropriate niches. "Most interesting will be the new forms of organization that emerge to manage the interface between them, and the process by which those boundary spanners influence the internal structure and function of the networks and the hierarchies that they link together." Future turmoil at this interface will be political as well as economic.
  • Open source process most likely to work effectively when potential contributors can judge the viability of the evolving product, have the information they need to make informed bets that contributions will add up to something useful for all, are driven motives beyond simple economic gain and have a relatively long "shadow of the future," learn by doing and gain personally valuable knowledge, share a positive norm about the value of contributing to the process.
Keywords:
sharing economy
open source
peer production
Author(s) / Editor(s):
Published in:
Harvard University Press
Date:
2004
One Paragraph Summary:

The Internet and a decentralized means of social organization around a production goal make possible "distributed innovation" that radically reduces both transaction and coordination costs, making possible the collective creation of public goods. Although open source software production is the most successful example of this process, it is not the only one. Self-interest combines with a norm of sharing a public good that benefits all; learning, reputation capital, and solving a problem one already needs to solve ("scratching an itch") are individual motivating factors. Self-election eliminates the cost of hierarchical management – individuals decide what to work on. Free-riders contribute to positive network effects by increasing the size of the user base, and aggregate infinitesmal contributions into significant efficiency gains by occasionally reporting a rare bug or complaining about a missing feature.

The Cornucopia of the Commons

One Sentence Summary:
Dan Bricklin examines ways to induce a pool of users to contribute to a commons without extra effort, using the architecture of the commons (as in Napster's default to sharing in the way download directories are available) and leveraging user's self-interest.
Disciplines:
Business
Economics
Sociology
Findings:
  • Users must want to use the shared repository, i.e. it should contain things that are of value to them.
  • Adding to the commons must be a "a natural by-product of the user's work" i.e. users should be "adding to the value of the database without doing any extra work."
  • Sharing should be the default.
Keywords:
sharing economy
peer production
open source
hierarchy
communication
Author(s) / Editor(s):
Published in:
O'Reilly and Associates, Inc.
Date:
March 2001
One Paragraph Summary:

Dan Bricklin examines ways to induce a pool of users to contribute to a commons without extra effort, using the architecture of the commons (as in Napster's default to sharing in the way download directories are available) and leveraging user's self-interest. The key to understanding the success of Napster and other file-sharing technologies resides not in their 'peer-to-peer' nature but in the fact that they provide users with access to a database of desirable things and enable people to create a public good in the process of seeking their own interests.

One Page Summary:

Dan Bricklin examines ways to induce a pool of users to contribute to a commons without extra effort, using the architecture of the commons (as in Napster's default to sharing in the way download directories are available) and leveraging user's self-interest. The key to understanding the success of Napster and other file-sharing technologies resides not in their 'peer-to-peer' nature but in the fact that they provide users with access to a database of desirable things and enable people to create a public good in the process of seeking their own interests.

Bricklin identifies three ways to fill a database: organized manual, organized mechanical, and volunteer manual.

CDDB succeeded at motivating volunteer manual data entry because it leveraged the desire for users to have their data in the database so that CDDB-aware programs could access it, for example when a user would insert a CD into their computer.

Bricklin calls this "harnessing the power of individual selfishness."

Napster cleverly avoided manual data entry by automatically indexing anything in the user's 'Shared Music' directory. Thus "storing the copy in the shared music directory [was] a natural by-product of the user's work with the songs."

Sharing is the default. This results in users "adding to the value of the database without doing any extra work."

Smart Mobs: The Next Social Revolution

One Sentence Summary:
Smart mobs emerge when communication and computing technologies amplify human talents for cooperation and collective action of both beneficial and destructive kinds.
Disciplines:
Business
Computer Science
Technology
Political Science
Sociology
Information
Findings:
  • Technologies, the communication media they make possible, and the social practices that emerge when sufficient numbers of people use the media coevolve with forms of collective action in the social, cultural, economic, and political spheres.
  • Reputation, the lubricant of collective action, can be technologically mediated. EBay solves the Prisoner's Dilemma problem posed by unsecured transactions through its feedback system. A critical uncertainty about the future of smart mobs is the future development or lack of development of social accounting systems.
  • Like species that find and flourish in environmental niches, humans quickly explore and colonize new possibility spaces opened by media. At the same time, the tension between power and counter-power and power and knowledge that was elucidated by Foucault comes into play - those without wealth and power seek to gain, those who already have wealth and power seek to protect.
  • Media cartels and government agencies are seeking to reimpose the regime of the broadcast era in which the customers of technology could be deprived of the power to create and left only with the power to consume. The battles over digital rights management, spectrum regulation, trusted computing, copyright protection that are playing out in courts and treaty organizations are about this tension between power and counter-power.
  • Are the citizens of tomorrow going to be users, like the PC owners and website creators who turned technology to widespread innovation? Or will they be consumers, constrained from innovation and locked into the technology and business models of entrenched interests?
  • The nation-state, science, and capitalism emerged from the literacies enabled by the printing press. Forms of governance, knowledge, and commerce are already beginning to change; now, in the earliest stages of these changes, what we know and don't know about the social impacts of smart mob technologies has the power to influence the shape of these changes.
Keywords:
norms
networks
group forming networks
cultural evolution
cooperation
civil society
Author(s) / Editor(s):
Published in:
Perseus Books
Date:
2002
One Paragraph Summary:

The technologies that make smart mobs possible are mobile communication devices and pervasive computing - inexpensive microprocessors embedded in everyday objects and environments. Already, governments have fallen, youth subcultures have blossomed from Asia to Scandinavia, new industries have been born and older industries have launched counterattacks. The people who make up smart mobs cooperate in ways never before possible because they carry devices that possess both communication and computing capabilities. Just as speech, the alphabet, and other powerful media enabled humans to organize collective action in new ways, with people they weren't able to organize before, in places, scales, and paces they weren't able to organize before, the multimedia, wireless, high-speed, and computationally powerful devices that billions of people carry today are making possible new social, cultural, economic, and political forms of collective action.

One Page Summary:

Technology, history, and social impacts of technology are most often framed in terms of hardware, software, and finance, but communication technologies have the potential to change the way people think, communicate, and organize social groups. These impacts are sometimes framed by Moore's law (microprocessors and chips grow more powerful and less expensive over time), Metcalfe's law (the value of a technical network grows as the square of the number of nodes grows) and Reed's Law (when technical networks enable people to form social groups, the value of the network grows as two raised to the power of the number of nodes - much faster than just the rate of growth of technical networks). The group-formation enabled by the Internet makes it possible for people who don't know each other and who are located in different parts of the world to connect with each other in regard to shared interests - economic, social, cultural, and political. When communication technology enables people to organize collective action in these spheres, civilizations change. Now that the power of computing and communication has untethered from the desktop and leaped into billions of pockets, the forms of collective action are erupting in places and spheres of life where computation and communication had never reached before.

At the point where billions of people have access to personal communications and the instant information that the Internet provides, the aspects of cooperation and collective action discussed by Axelrod, Ostrom, and others comes into play - the capabilities of the emerging mobile mediasphere enable forms of collective action that were not possible before.

Moore's law means that the quantitative capabilities of chip-based devices grow so quickly that they translate into qualitative changes over periods of decades; today, billions of people carry devices that are thousands of times more powerful than the first personal computers, and cost a fraction of the price. At the same time, the users of these devices discover and exploit communication capabilities, social potential, political leverage, economic opportunities that were not dreamed of by those who designed, manufactured and sold the technologies. The technologies that make smart mobs possible are in the earliest stages of development, similar to the state of the personal computer in 1980 and the Internet in 1990. Yet the political demonstrations and electoral leverage that manifested in the Philippines, Korea, Spain, the USA and elsewhere - deposing governments and electing others - show the potentially disruptive power of smart mobs, even in their earliest stages.

At the same time, primitive ad-hoc computation collectives such as SETI@home and folding@home indicate new forms of computing emerging from the collective, voluntary efforts of millions of computer users. And GPS chips add the power of location-based services to the mix: people are mobilizing social networks and information in the immediate time and space.

Economically, the ability to gain profit by sharing with others, rather than only by competing - as manifested by Amazon, Google, eBay, open source software and other enterprises - is making a new kind of economic enterprise possible. Commerce is ancient, markets are as old as the crossroads, but capitalism is only about 500 years old, enabled by technologies such as joint stock ownership companies, shared liability insurance organizations, double entry bookkeeping. Now, the peer production methods exhibited by open source communities and other enterprises hint that humans have not stopped inventing new forms of economic collective action.

Six-Degrees: The Science of a Connected Age

One Sentence Summary:
Healthy social, technical, biological and professional networks are built on cooperative frameworks that enable them to quickly spread information and phenomena regardless of beneficial or malicious intent; this appears to be a deep structural characteristic of "small-world" or "scale-free" networks that have a relatively small number of hubs that enable extensive interconnectivity across large numbers of nodes.
Disciplines:
Biology
Business
Anthropology
History
Cultural Evolution
Computer Science
Technology
Physics
Economics
Political Science
Sociology
Psychology
Information
Mathematics
Findings:
  • 'Six-degrees' type separation spans social, physical, and mental distances.
  • Social networks have certain degrees of discord, but are recognized and utilized by people via group associations that make up our social identities.
  • For individuals, separations of more than two degrees nearly equate to being strangers.
  • For the transmission of ideas, fashion, or viruses, six degrees can nearly equate to being directly linked.
  • Throughout most networks, ideas promulgate via clusters who spread information or infection to other clusters through shared membership or proximity (or “shortcuts”).
  • Thoughts or ideas remain benign or contained until their natural growth reaches a critical threshold or phase transition; at this point they either die out or overwhelm the population.
  • Common networks can be simultaneously vulnerable and robust. This can be a strength, allowing the network to change and adapt to new information or threats. However these characteristics can also rapidly transmit contagions throughout the network and overwhelm it.
Keywords:
networks
interdependence
hierarchy
group forming networks
game theory
evolution
equilibrium
cultural evolution
cooperation
communication
Author(s) / Editor(s):
Published in:
Norton Press
Date:
2003
One Paragraph Summary:

Author Duncan Watts helped found the science of network theory. In Six Degrees he describes the evolution of the science. This narrative covers each step in the philosophical evolution to provide the reader with the context as well as the numbers behind the findings. Starting with Milgram's six-degrees studies from the 1950s as a base, they investigate the small-world problem and identify the mechanisms by which networks operate. They conclude that the solution to the small world problem reveals a series of balancing acts. Depending on context, people are either extremely connected or perceptually fragmented; networks are robust or fragile; and ambiguity can create opportunity or be a harbinger of a network's demise.

One Page Summary:

Six Degrees begins in the beginning. Stanley Milgram's initial small world studies are analyzed. His findings in seeing if a group of people in Nebraska can get a letter to someone in Massachusetts are scrutinized. Milgram left a puzzle. Mathematically, six degrees of separation can be shown and intuitively it is appealing. But do social networks actually work that way?

Initially, Watts steps into the world of pure mathematic theory. Graph theory and random graphs are employed to build potential worlds in which connections can be made. These tools are detailed and their histories explained.

Watts and his colleagues then take the science to new levels, by introducing sociology, epidemiology, economics, and business models into this new multi-disciplinary science. Immediately, each new field of study brings with it new insights into network dynamics.

This convergence of disciplines reveals the social, transportation and technological networks that make up our world. These networks are, ultimately, made up of individuals. Individuals in turn relate back to the networks and define how they operate.

Socially, people relate to their network by clustering. Clusters are logical organizations of network elements. In a social context, we might cluster in terms of a religion, a favorite author, a school we are attending or an affinity for a type of food. Some of these have very close physical distance, while others have a social distance with members spread out over a large area.

Networks of this type are, to various extents, “scale-free” networks. If graphed these networks roughly follow a classic power law trend where the level of connectivity between two nodes in a network increases dramatically as more nodes are connected. Real-world scale-free networks tend to have highly connected hubs which rapidly, purposely, and efficiently transmit pertinent or pervasive content from one location to another. In social circles, these are networkers. In the airline network these are hub airports. In traffic they would be freeway interchanges.

Due to this architecture, the Internet and modern air transport have combined to greatly decrease the role of proximity in our social networks. This has had great impacts on commerce, tourism, cultural sensitivity and other social factors. However, it has also led to great risks in the transmission of diseases, sensitivity to distant economic fluctuations, and rapid spread of misinformation.

These dynamics create a type of network that Duncan calls simultaneously robust and vulnerable. Their strength and weakness is that, with rapid transmission from cluster to cluster, anything can move quickly from one location or group to another. He uses the example of Toyota, whose network of suppliers was organized in such a way as to quickly compensate for and recover from a potential economic catastrophe.

Stable scale-free networks do not rely on a rigid hierarchy to provide direction in times of crisis. Rather, the structure of the network itself can rapidly respond to an unforeseen situation.

Their network was arranged in such a way as to foster and reward communication. This communication helped cope with ambiguous or unplanned situations. Rather than paralyzing Toyota while people waited for a decision from a rigid hierarchy, the contractors in the network were able to analyze the calamity and provide a rapid response to it.

As mentioned above, this robustness also rapidly transmits malicious content as well. The Melissa Virus, SARS and Ebola are analyzed to show why the network did or did not transmit them and, when it did, how they eventually died out.

Watts ends this book by summarizing that the multidimensional nature of social distance is sometimes counterintuitive and subjective. People can feel close in a network sense to people they are physically distant from and, conversely, socially distant from people physically nearby.

He continues by warning that social and physical distances have shrunk. People can quickly travel from place to place and economies are highly interdependent. The sheer number of dependencies in the modern world may yield surprising results from seemingly insignificant actions.

He finishes by showing the stability of our networks with the example of how New York adapted to the 9-11 attacks. The City bounced back to semi-normal operations within a week. During the disaster, the best laid plans of emergency operations staff were scuttled by the utter unavailability of facilities and services designed to copy with disasters. The network will provide.

Silent Theft: the Private Plunder of our Common Wealth

One Sentence Summary:
Without a concerted effort against it, the trend of privatization and enclosure threatens to sacrifice the environmental, political, cultural, and information commons that communities rely on for their long-term health and prosperity.
Disciplines:
Business
Law
Economics
Political Science
Sociology
Findings:
  • Excessive corporate control over information restricts the potential rewards of collaborative research ventures. New laws concerning the copyrights of digital files that favor privatization and corporate control defy the open decentralized paradigm from which the Internet emerged.
  • The dangers of total enclosure can be avoided if we no longer blame government intervention in all cases. Markets structured through government regulations and nursed with public-sector investment often end up being the most vigorous markets of all in the long-term.
Keywords:
public goods
property rights
privatization
intellectual property
hierarchy
cooperation
capitalism
Author(s) / Editor(s):
Published in:
New York: Routledge
Date:
2004
One Paragraph Summary:

Enclosure limits social investment and environmental protection, encouraging short-term profits for the largest companies. Privatization only delivers a fraction of the benefit that commons provide for the public. The resources at stake include public lands, natural systems, government research, cultural traditions, historical knowledge, and the gift economies that can be found in academia, open-source movements, Internet groups or local communities. Enclosure supports monopolistic control of resources by large firms, working against consumer rights. Economic evaluations of the situation often ignore the sacrifices of enclosure because the time scale is too short or there is a moral impact that defies quantification. The imposition of market values in all spheres of public life threatens the public-minded ethic of gift economies by directing the attention of all parties towards money and property rights. Moves towards enclosure, like allowing firms to buy exclusive rights to portions of genetic codes or a water supply, undermine the intrinsic value of these resources to communities and stifles the competitive diversity that would ensure more efficient use.

Neither Market Nor Hierarchy: Network Forms of Organization

One Sentence Summary:
Network forms of organization, with reciprocal patterns of communication and exchange, are alternatives to hierarchically or market based governance structures; they are more suited to describing companies involved in an intricate latticework of collaborative ventures with other firms over extended periods of time.
Disciplines:
Business
Anthropology
Findings:
  • Network forms of organization, with reciprocal patterns of communication and exchange, are alternatives to hierarchically or market based governance structures.
  • Network organizations: More social than markets and hierarchies, they are dependent on relationships, mutual interests, and reputation. They are less guided by a formal structure of authority.
  • Successful networks involve complementarity and accommodation. Reputation, friendship, interdependence, and altruism are integral. The most useful information comes from people you have dealt with in the past rather than from the formal chain of command. Taking a long term perspective enhances reciprocity.
  • Reduction of uncertainty, fast access to information, reliability, and responsiveness are paramount concerns that motivate participants in network organizations.
  • Know-how, the demand for speed, and trust are critical components of successful network organizations.
Keywords:
hierarchy
networks
Author(s) / Editor(s):
Published in:
Research In Organizational Behavior, Vol. 12, pages 295-336
Date:
1990
One Paragraph Summary:

Hierarchies are suited to transactions that involve uncertainty, recur frequently, and require substantial “transaction-specific investments”. Markets are suited to exchanges that are straightforward, non-repetitive, and require no transaction specific investments. Networks are best at describing companies involved in an intricate latticework of collaborative ventures with other firms over extended periods of time.

One Page Summary:

Network forms of organization, with reciprocal patterns of communication and exchange, are alternatives to hierarchically or market based governance structures; they are more suited to describing companies involved in an intricate latticework of collaborative ventures with other firms over extended periods of time.

Hierarchies are suited to transactions that involve uncertainty, recur frequently, and require substantial “transaction-specific investments”. Markets are suited to exchanges that are straightforward, non-repetitive, and require no transaction specific investments.

These “alliances” aim at creating indebtedness and reliance over the long haul: your current collaborator will be your competitor in other domains (or in the same domain) over time. In markets, the strategy is to drive the hardest possible bargain in the immediate exchange. Commitment is low.

Network organizations are more social than markets and hierarchies, they are dependent on relationships, mutual interests, and reputation. They are less guided by a formal structure of authority. Successful networks involve complementarity and accommodation. Reputation, friendship, interdependence, and altruism are integral. The most useful information comes from people you have dealt with in the past rather than from the formal chain of command.

Conflicts are resolved by haggling in markets; administrative fiats in hierarchies; norms of reciprocity and reputational concerns in networks.

Markets offer choice, flexibility, and opportunity. Prices determine production and exchange. Hierarchies are well-suited for mass production and distribution. Networks are more flexible than hierarchies. Transactions occur through networks of individuals engages in reciprocal, preferential, mutually supportive actions.

Reduction of uncertainty, fast access to information, reliability, and responsiveness are paramount concerns that motivate participants in network organizations.

Know-how, the demand for speed, and trust are critical components of successful network organizations.

Examples of network forms:

  • Craft industries (construction, publishing, film and recording industries)—facilitated by loyalty to the profession and to project teams. Informal trading of proprietary expertise is common among members of a profession in different organizations.
  • Regional Economies and Industrial Districts (German textiles, Silicon Valley)—Rich array of support services. Pooling resources on basic research through consortia and trade associations. Encouragement by local government. Proximity to centers of higher education.
  • Strategic alliances and Partnerships (Oil and gas, chemical and pharmaceuticals, commercial aircraft)—share risk and expense. Cooperative relationships with suppliers. Gain fast access to new technologies or markets. Needs to deal with anti-trust concerns.
  • Vertical disaggregation. (Downsizing, outsourcing)—Increased flexibility in responding to technological change and commodifcation of products.

Know-how, the demand for speed, and trust are critical components of successful network organizations.

  • Know-how and detailed knowledge of the abilities of others who possess similar or complementary skills thrive in networks. Exchange of competencies is more likely to occur in networks; exchange of tangible resources is more likely to occur in market transactions or among units in a hierarchy.
  • Demand for speed is facilitated by a network’s strengths in offering fast access to information, flexibility, and responsiveness to changing tastes. Information flow through a network is freer and richer than in more tightly controlled markets or hierarchical organizations.
  • Trust develops when there is a high probability of future association. There is a higher probability of cooperation and also a willingness to punish those who do not cooperate.

Bandwidth and Echo: Trust, Information, And Gossip in Social Networks

One Sentence Summary:
Network closure produces echo, gossip that reinforces dispositions rather than increasing information flow or the kind of trust that increases social capital.
Disciplines:
Business
Sociology
Information
Findings:
  • Bandwidth hypothesis: "The bandwidth prediction is that ego's opinion of alter is correlated with third-party opinion, and networks evolve toward a state of balance in which people bound by a strong relationship have similar opinions of others."
  • Echo hypothesis: "Echo results from etiquette biasing the information that third parties disclose to ego. [...] The echo prediction is that stronger third-party ties foster more intense ego opinion such that relations adjacent in a network need not be balanced in their direction (I trust friends of my friends), so much as their intensity (I have an opinion, positive or negative, of my friends' friends)"
Keywords:
trust
group forming networks
social capital
networks
complexity
communication
agent-based model
Source:
Edited by Alessandra Casella and James E. Rauch, Russell Sage Foundation
Author(s) / Editor(s):
Published in:
Pre-print for a chapter in Networks and Markets: Contributions from Economics and Sociology
Date:
2001
One Paragraph Summary:

The competitive advantage that social networks create is called social capital. Empirical evidence shows that brokerage between interdependent groups that specialize on different things creates more social capital than simply a high number of relationships among individuals (i.e. network closure). However, brokers depend on trust, and trust is frequently viewed to require network closure. The problem with this view is that with increased network closure the value of brokers diminishes which in turn creates less social capital. Part of solving this problem is to figure out whether network closure really does produce the kind of trust that increases social capital. Burt shows that trust created by network closure might be ill-founded.

One Page Summary:

The competitive advantage that social networks create is called social capital. Empirical evidence shows that brokerage between interdependent groups that specialize on different things creates more social capital than simply a high number of relationships among individuals (i.e. network closure). However, brokers depend on trust, and trust is frequently viewed to require network closure. The problem with this view is that with increased network closure the value of brokers diminishes which in turn creates less social capital. Part of solving this problem is to figure out whether network closure really does produce the kind of trust that increases social capital. Burt shows that trust created by network closure might be ill-founded.

The relationship strength between ego and alter correlates with the amount of trust between ego and alter. In a social context ego also receives gossip about alter, i.e. information about alter via third parties. The bandwidth hypothesis states that gossip nework closure increases information flow reinforcing and fine-tuning trust relationships beneficial to social capital. The echo hypothesis states that gossip network closure does not so much increase information flow but reinforces dispositions. This is due to a commonly observed etiquette in informal conversations where third parties only reveal information about alter to ego that concur with ego's opinion of alter. The motivation for this etiquette are civility, efficiency, and the important role gossip plays in creating and maintaining relationships.

Analysis of survey network data of three study populations consisting of senior managers in a leading manufacturer of electronic components and computer equipment, of staff officers in two financial companies, and a bankers in the investment banking division of a large financial company shows that trust can develop within negative third-party ties ("an enemy of my friend is my enemy" or "a friend of my enemy is my enemy"), and distrust can develop within positive third-party ties ("a friend of my friend is my friend" or "an enemy of my enemy is my enemy") which is consistent with the echo hypothesis but not with the bandwidth hypothesis.

"Strong connection through third parties increases the probability of social reinforcement such that network closure creates echo, not accuracy. [...] Therefore, network closure does not facilitate trust so much as it amplifies dispositions, people cannot learn of what they do not already know" which negatively impacts social capital.

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