Social Networking Services are, at the least, decreasing the search and transaction cost for individual ties to organizations. But as early adopter tools they have yet to provide benefits to a mainstream and diverse user base and some tools discriminate by design.
In fact, in a recent working paper, Professor Arrow and Mr. Borzekowski conclude that
a worker’s net worth can have a lot to do with the worker’s network. In their model - and it is just a model, not based on empirical data - a person with one corporate connection would be expected to earn $19,570. By contrast, a person with links to five companies would be expected to earn $30,410. Ultimately, they conclude, “the difference in the number of ties can induce substantial inequality and can explain 15-20 percent of the unexplained variation in wages.”
Wages are set by more than supply and demand, the network is the market. The effect is more extreme when looking at income instead of just wages. Dave Pollard pointed out the power law that matters most:
So its encouraging that economists are catching up with network theory to make social capital a factor in policy considerations:
…The economists also suggest that network effects may help account for income inequality among races…If one hypothesized that the average African-American worker had links to 3.2 companies and the average white worker had links to 5.7, that would go a long way toward explaining the large wage gap, Professor Arrow said.
…THE hypothesis makes sense, said Jeffrey A. Robinson, assistant professor of management and entrepreneurship at New York University’s Stern School of Business. “Minorities are often disconnected from the web of social relationships that lead to hiring decisions…The challenge is to expand the role of social brokers - individuals, nonprofit and government agencies - that can facilitate connections to companies once people have the skills.”
But beyond the pace of policy, creators of social software that provide a brokering role for building skills and fostering new connections have a responsibility to society. There is no easy prescription, but design considerations may include how a tool serves those with less access (Meetup, mobility, brokers), ability to afford initial use and meritocracy for attention.
What design considerations do you see?
1. Danyel Fisher on August 29, 2004 10:25 PM writes...
To bolster this post, I saw a cite recently (I will dig it up upon request) that suggested that jobs with formal application processes are better for minorities and discriminated-against groups than jobs with informal applications.
That is, government jobs (for example), where your resume goes into a computer are more likely to hire a minority than research jobs, where a committee of people decide.
This is partially linked, I think, to racism--but more linked to networks. A student at a traditionally minority school may not have the same access to powerful networks, great connnections, and thus the initial "in" for the informally-collected jobs.
Permalink to Comment2. Will Davies on August 31, 2004 2:58 PM writes...
This is interesting material, Ross. The link between social networks and competitive advantage has been examined with great insight by Ron Burt at University of Chicago (see The Network Structure of Social Capital), and indeed it was the original inspiration for Bourdieu's coining of the term 'social capital'.
But social software? What I think is clear is that tools which help to disperse advantage will not be used by people who have advantage to lose. Tools which protect advantage, on the other hand, will be. Powerful people generally dislike email, and simply ignore it in favour of synchronous communication technologies (such as the telephone).
Meanwhile, social network sites which enable the user to exclude, and exercise discretion could have genuine economic uses - but because they help support inequality, rather than flatten it.
The greatest source of hope (IMHO) is that people will trade in economic advantage for reputation. If a wealthy person would rather be famous than rich, it's possible that they will share their most valuable thoughts on a weblog. This way they lose competitive advantage, but gain reputation. This is no different to the American tradition of billionaires giving away their fortunes to trusts - you lose financial capital, and gain reputational capital. Social software tools should seek to support the same trade-off.
Permalink to CommentWill