Fifteen years ago, he wrote a seminal book on “Structural Holes: The Social Structure of Competition.” That book argued that “structural holes” defined by gaps in connections among complementary resources in the competitive arena provide significant opportunities for entrepreneurial initiative. As he succinctly put it, “competitive advantage is a matter of access to holes.”Structural holes still form the centerpiece of Burt’s analysis but, in his new book, he focuses on two sets of activities required to generate value from structural holes – brokerage and closure.
As Burt makes clear, closure is typically not the direct result of efforts by individuals but instead is a by-product of interactions that naturally arise when dense networks of relationships form.
- Brokerage is the function performed by people whose relationships bridge across structural holes in social networks – they help to connect non-redundant flows of information.
- Closure on the other hand helps to build alignment among diverse individuals by creating rich connections with third parties that establish powerful reputation mechanisms.
Burt’s book explores the complex relationship between these two activities, especially the paradox of tension and interdependence. On the one hand, brokerage is about reaching out and embracing new flows of knowledge while closure is about focusing inward and enforcing conformity, rejecting that which does not fit. At this level, brokerage and closure are deeply at odds. On the other hand, brokerage cannot function effectively without the trust that closure creates.
