Network analysis of 2-mode data

Network analysis is distinguished from traditional social science by the dyadic nature of the standard data set. Whereas in traditional social science we study monadic attributes of individuals, in network analysis we study dyadic attributes of pairs of individuals. These dyadic attributes (e.g. social relations) may be represented in matrix form by a square 1-mode matrix. In contrast, the data in traditional social science are represented as 2-mode matrices. However, network analysis is not completely divorced from traditional social science, and often has occasion to collect and analyze 2-mode matrices. Furthermore, some of the methods developed in network analysis have uses in analysing non-network data. This paper presents and discusses ways of applying and interpreting traditional network analytic techniques to 2-mode data, as well as developing new techniques. Three areas are covered in detail: displaying 2-mode data as networks, detecting clusters and measuring centrality.

Dynamic evolution in information sharing networks

This study examines the roll-out of a collaborative information repository or 'knowledge-base' in a medium-sized UK professional services firm over a six year period. Data from usage logs provides the basis for analysis of the dynamic evolution of social networks around the depository during this time. The adoption pattern follows an 's-curve' and usage exhibits something of a power law distribution, both attributable to network effects and network opposition is associated with organisational performance on a number of indicators. But periodicity in usage is evident and the usage distribution displays an exponential cut-off. Fourier analysis provides some evidence of mathematical complexity in the periodicity. Some implications of complex patterns in social network data for research and management are discussed.

Exact colorations of graphs and digraphs

A coloration is an exact regular coloration if whenever two vertices are colored the same they have identically colored neighborhoods. For example, if one of the two vertices that are colored the same is connected to three yellow vertices, two white and red, then the other vertex is as well. Exact regular colorations have been discussed informally in the social network literature. However they have been part of the mathematical literature for some time, though in a different format. We explore this concept in terms of social networks and illustrate some important results taken from the mathematical literature. In addition we show how the concept can be extended to ecological and perfect colorations, and discuss how the CATREGE algorithm can be extended to find the maximal exact regular coloration of a graph.

Models of core/periphery structures

A common but informal notion in social network analysis and other fields is the concept of a core/periphery structure. The intuitive conception entails a dense, cohesive core and a sparse, unconnected periphery. This paper seeks to formalize the intuitive notion of a core/periphery structure and suggests algorithms for detecting this structure, along with statistical tests for testing a priori hypotheses. Different models are presented for different kinds of graphs (directed and undirected, valued and nonvalued). In addition, the close relation of the continuous models developed to certain centrality measures is discussed.

Peripheries of cohesive subsets

Network analysts have developed a number of techniques for identifying cohesive subgroups in networks. In general, however, no consideration is given to actors that do not belong to a given group. In this paper, we explore ways of identifying actors that are not members of a given cohesive subgroup, but who are sufficiently well tied to the group to be considered peripheral members. We then use this information to explore the structure of the network as a whole.

Relational dimensions of corporate governance in translation: networked governance in China and India

The effectiveness of corporate governance mechanisms has been a subject of academic research for many decades. Although the large majority of corporate governance studies prior to mid 1990s were based on data from developed market economies such as the U.S., U.K. and Japan, in recent years researchers have begun examining corporate governance in transition economies. A comparison of China and India offers a unique environment for analyzing the effectiveness of corporate governance. First, both countries state-owned enterprise (SOE) reform strategies hinges on the Modern Enterprise System characterized by the separation of ownership and control. Ownership of an SOE’s assets is distributed among the government, institutional investors, managers, employees, and private investors. Effective control rights are assigned to management, which generally has a very small, or even nonexistent ownership stake. This distinctive shareholding structure creates conflict of interest not only between management (insiders) and outside investors but also between large shareholders and minority investors. Moreover, because both governments desire to retain some control—in part through partial retained ownership of commercialized SOEs, further conflicts arise between politicians and firms. Second, directors in publicly listed firms in both countries are predominantly drawn from institutions with significant non-market objectives: the government and other state enterprises, particularly in China, and extended families, particularly in India. As a result, the effectiveness of internal governance mechanisms, such as the number of independent directors on the board and the number of independent supervisors on the supervisory committee, are likely to be quiet limited, although this has yet to be fully evaluated. Third, because of the political nature of the privatization process itself, typical external governance mechanisms, such as debt (in conjunction with appropriate bankruptcy procedures), takeover threats, legal protection of investors, product market competition, etc., have not been effective. Bank loans have traditionally been viewed as grants from the state designed to bail out failing firms. State-owned banks retain monopoly or quasi-monopoly positions in the banking sector and profit is not their overriding objective. If political favor is deemed appropriate, subsidized loans, rescheduling of overdue debt or even outright transfer of funds can be arranged with SOEs (soft budget constraints). In addition, a market for private, non-bank debt is limited in India and has yet to be established China. There is no active merger or takeover activity in Chinese stock markets to discipline management. Information available in the capital markets is insufficient to keep at arm’s length of the corporate decisions. In light of the above peculiarities, China and India share many of the typical institutional characteristics as a transition economy, including poor legal protection of creditors and investors, the absence of an effective takeover market, an underdeveloped capital market, a relative inefficient banking system and significant interference of politicians in firm management. Su (2005) finds that the extent of political interference, managerial entrenchment and institutional control can help explain corporate dividend policies and post-IPO financing choices in this situation. Allen et al. (2005) demonstrate that standard corporate governance mechanisms are weak and ineffective for publicly listed firms while alternative governance mechanisms based on reputation and relationship have been remarkably effective in the private sector. Because the peculiarities are significant in this context, the differences in the political-economies of the two countries are likely to be evident in such relational terms. In this paper we explore the peculiarities of corporate governance in this transitional environment through a systematic examination of certain aspects of these reputational and relationship dimensions. Utilising the methods of social network analysis we identify the inter-organisational relationships at board level formed by equity holdings and by shared directors. Using data drawn from the Orbis database we map these relations among the 3700 largest firms in India and China respectively and identify the roles played in these relational networks by the particularly characteristic institutions in each case. We find greatly different social network structures in each case with some support in these relational dimensions for their distinctive features of governance. Further, the social network metrics allow us to considerably refine proxies for political interference, managerial entrenchment and institutional control used in earlier econometric analysis.