Networks, Information & Social Capital

Abstract

This paper investigates how information flows enable individuals to generate social capital from their social networks. By combining social network and performance data with the information content encoded in email communication, we examine the long held but empirically untested assumption that diverse networks drive performance by providing access to novel information. We demonstrate empirically that diverse networks do provide diverse, novel information, and that access to novel information predicts performance. But whether diverse networks deliver novel information depends on a tradeoff between network diversity and relationship channel bandwidth: as networks become more diverse, communication over each channel contracts. As network diversity and channel bandwidth both enable access to more novel information, diverse networks provide more novel information (a) when the topic space is large, (b) when topics are distributed non-uniformly across nodes and (c) when information in the network changes frequently. Diverse networks are not just pipes into diverse knowledge pools, but also inspire non-redundant communication even when the knowledge endowments of contacts are homogeneous. Consistent with theories of cognitive capacity, bounded rationality, and information overload, there are positive but diminishing performance returns to novel information. Network diversity also contributes to performance when controlling for the performance effects of novel information, suggesting additional non-information based benefits to structural diversity. These analyses unpack the mechanisms that enable information advantages in networks and serve as a ‘proof-of-concept’ for using email content to analyze relationships among information, networks and social capital.