Sunday, February 25, 2007

Brokerage and Closure

I've just been reading Ron Burt's book on Brokerage and Closure (Burt, R., (2005) "Brokerage and Closure: An Introduction to Social Capital", Oxford University Press), which is a great summary of his prolific research to date. He has some interesting graphs on p143 showing the extreme profits available to firms in high brokerage positions in Industries that have a high number of structural holes. In my own research work in the Global IT sector this seemed to hold true especially in the software and Internet sub sectors, in comparison to the hardware subsector where the industry is much more closed. Made me think that a plot of companies on an industry closure vs brokerage might be a very insightful map for future investors!

Saturday, February 17, 2007

Southern Cross Broadcasting takeover target

I was interested to read that the current edition of the Australian Financial Reviews SmartInvestor in its feature article on potential takeover targets has nominated Southern Cross Broadcasting. Recall the industry map on media owner companies (betweenness measure) had identified a single firm in a critical broking role. That was SCB!

To add some balance, it should also be noted that West Australian Newspapers was also nominated. This firm was not in a major brokering position but well positioned in one of the regional we can't claim betweenness centrality as the only indicator of a great takeover target, but at least it could be an indicator that no-one else is looking at!

Friday, February 9, 2007

Welcome to my Industry Network Maps Blog

Hi there,

I've just started up this blog to encourage conversation around what I am calling Industry Network Maps (INMs). Basically an INM is a network representation of a market place within a particular industry sector, be it manufacturing, finance, health, biotechnology, IT etc.. My interest in INMs has arisen out of my PhD research work, where I had built an INM of the global information technology sector in order to measure a firm's corporate social capital, using social network analysis techniques. The data for INMs can be "mined" from any source that you can access. The nodes usually represent firms or organisations. The links represent any association or links between firms. They may be alliances, joint ventures, sub-contracts, co-ownership and the like. This will often be dictated by the data that you can access. For my global IT INM I text mined thousands of business articles and journals over a four year period. I have done others using pre-existing data base sources.

My idea for INMs is to develop them as a market research source. My experience has shown that the INMs expose some hidden information that cannot easily be interpreted using traditional data warehouse methods. We also have the science of social network analysis to add some science to their analysis.

I have put some examples up on our web site:

I'd be interested to hear what you think.