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This cautionary note illustrates one of the strengths as well as a weakness of the concept as
articulated. As a leadership dimension, the patterning of attention is an embedded, emergent
characteristic of the individual and collective attempts of leaders to influence others by
manipulating what is seen and analyzed. For the system as a whole, it seems likely that the
patterning would be related to the strategy endorsed by senior managers. However, firm
strategy and the patterning of attention at various corporate levels may be analytically distinct
(cf. Hunt, 1991).
The strategy of the firm might be clear in terms of the intent of the firm to stress specific
ends and means. For instance, the firm might attempt to emphasize short-term profits via
increases in efficiency. The information focus of executives may appear to be consistent with
this strategy. Below the top level one might find that other managers are actually more
focused on maintaining the status quo. For these managers, each may hope others will
institute the changes needed in a version of the ‘‘not in my back yard’’ syndrome. Thus, one
strength of the concept is that the strategy of the firm and its patterning of attention are
analytically separable at different segments up and across the firm. Neither the strategy nor
the patterning of attention is assumed to be consistent throughout a firm.
Following the conventional strategy literature, what we have called patterning of attention
below the top management leadership level others might call an aspect of strategic
implementation. An attempt to separate the patterning of attention at the upper levels from
the strategy and patterning of attention of lower managers serves to highlight the potential
inconsistencies among strategic intentions and strategic implementation. It is normally
assumed that implementation should be consistent with top management directives. In a
stable context, consistency seems to be desirable. In a much more dynamic context, the notion
that middle and lower managers should simply see what top management wants them to see is
archaic.
Our notion of contextual leadership is not limited to the simple imposition of influence
from the top down. The more dynamic the context, the more likely researchers will find active
dialog and discussion up and across levels to isolate what is important. Again, we return to a
central point. Leadership changes as the context changes. Here, we suggest that as the context
becomes more dynamic the collectively developed and shared patterning of attention up and
across may be instrumental in keeping the system viable. We have much more to say on this
when we move to the edge of chaos.
4.3.7. Network development and leadership
Perhaps, one of the most profound consequences of changes in information technology and
globalization has been the recognition that the firm and its executives do not operate as an
independent bureaucratic entity. It is not just that firms are influenced by their environments
or have choices selecting their suppliers and distributors. It is that the selection of the network
in which they operate and the membership of this network are not independent from the
choices concerning what remains inside the firm and how the activities inside the firm are
administered. There is a simultaneous choice of network, network membership, network
linkage, inside activities, and the management of inside activities. The convenient fictions
that a firm has fixed boundaries, floats as a cloud in its setting or simply makes independent
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choices regarding what to make and what to buy belie the complexity of the modern corporate
challenge for executives.
What is network leadership and development? We believe network leadership (cf. Brass &
Krackhardt, 1999), discussed in Table 1 and mentioned earlier, is another neglected aspect of
leadership. As with the patterning of attention, this dimension of leadership is not
independent of the setting. As before, we see this dimension as embedded within a setting
and it emerges as a socially recognizable pattern. While the external and internal networks of
each corporation are unique, we again posit there may be socially constructed common
dimensions. And these dimensions may have predictive power over and above the strategy
and the management of the firm.
One historical view of network leadership stems from extensions of the multiple influence
model of leadership (Hunt et al., 1983). Here, network leadership was defined as the
development and maintenance of interpersonal ties up and across individual position holders
within and outside the system (see also Osborn, 2001; Osborn & Strickstein, 1985). This
definition views network development as if each aspect of leadership were free of its context
and analytically derivable.
Following a social network view the composition, size, depth and breadth of an
individual’s network would be potential network leadership characteristics for organizational
position holders (cf. Burt, 1992; Oliver & Ebers, 1998). There also are issues of the depth of
an individual’s network relations similar to the in-group out-group relations found in the
leadership literature (e.g., Graen & Uhl-Bien, 1995). And it is also possible to characterize an
individual’s formal network on such factors as centrality, linkage capability and the like (e.g.,
Oliver & Ebers, 1998).
Overall, an embedded perspective would recognize that collective as well as individual
aspects of network leadership would be salient. Analyzing the interpersonal ties involving the
corporation’s collective elite might use the same characterization of individual networks. The
potential importance of elite network characteristics has long been recognized in the form of
board composition and top management team demographics (e.g., Medcof, 2001; Miller,
Burke, & Glick, 1998;Young, Charns, & Shortell, 2001). Here, however, we tie the notion of
network leadership to information rather than demographics.
4.3.8. Network leadership as an informational dimension of leadership
Networks are a prime source and conduit for information. Clearly, the individual
information networks of leaders are potentially important. For instance, underlying the
so-called ‘‘strategic leadership’’ notions of Hambrick and his colleagues (e.g., Hambrick &
Mason, 1984; Hambrick et al., 1998) is the notion that human agency factors altering the
flow, quality, and quantity of information and information processing constitute the core for
analyzing the effectiveness of senior executives (e.g., Cannella & Monroe, 1997). While we
agree that information is a core, we suggest that researchers look beyond the confines of
the executive suite to examine aspects of the social networks developed by the corporate
elite.
The basic challenge is to isolate leadership (incremental influence) and leadership
effectiveness (incremental influence related to identifiable outcomes) from other aspects
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of networking attributable to specific position holders. While social network theorists
chart the characteristics of the network as a whole, the relevant aspects of the individual
based networks may only partially overlap those of the corporate unit. Not all of the
network linkages established and maintained by the CEO or other members of the
corporate elite may be relevant in explaining and predicting corporate outcomes. Here,
we borrow a page from the power/dependence literature and some leadership studies. It
also has long been recognized that within virtually any network some relationships are
stronger, more important and more consequential. This notion underlies the power/
dependence perspective in organization theory (cf. Pfeffer, 1981; Pfeffer & Salancik,
1978). It also is easily found in the leadership literature (ala in-group, out-group; Graen
& Uhl-Bien, 1995). Thus, we concentrate on the core network linkages only. As the
individual develops a network pattern, we assume s/he can differentiate more from less
important linkages.
Another challenge is the need to move beyond linkage itself as both the basis for
description and an implicit causal mechanism for tying network analysis to organizational
action and outcomes. For instance, the degree to which a network has ‘‘structural holes’’ as
well as the degree of centrality of a network has been linked to outcomes based on the nature
of the connections (cf. Brass & Krackhardt, 1999; Burt, 1992). For us, there is little doubt
that the character of connections among individuals in an elite network is important to the
members. Whether the character of the connections is particularly relevant for the
effectiveness of the system requires an explanation derived from a more specific causal
mechanism.
Focusing on contacts that could provide strategically relevant information provides a
decision rule for bounding the types of contact for studying network leadership. It places the
emphasis on the potentially relevant information from direct core contacts. It attempts to
separate image from substance and separate the concept of network leadership from the firm’s
strategy and its successful execution. For instance, a CEO may have extensive organizationally relevant network linkages. In the vernacular, the CEO may be well known and spend
considerable time developing external relations. Jack Welch of GE and Kenneth Lay of Enron
quickly come to mind. Just as quickly, we recognize that one guided a firm with a successful
strategy while the other did not. The failure of Enron is not easily attributable to the lack of
network leadership by its CEO or its corporate elite.
4.3.9. Network leadership and strategy
We think that leadership researchers should examine the strategically related information
aspects of the core network to determine the effectiveness of network leadership. The use of
information related to strategy as the causal mechanism linking network leadership to
corporate outcomes provides several advantages. It separates the intentions underlying
network development and maintenance from corporate consequences.
Thus, leaders may develop extensive interpersonal ties that do not provide organizationally relevant information. It allows the researcher to specify the outcomes to be
predicted to determine leadership effectiveness from those emphasized in the corporation’s strategy. We think that this would provide more consistency in the results across
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studies. For instance, consider apparently inconsistent findings for network leadership
and efficiency. Some firms emphasize efficiency as a critical part of their strategy while
some do not. If efficiency were not an outcome expected from the strategy, we would
not expect to see network leadership related to it. Network leadership, as defined here,
would only be related to efficiency when it was a critical part of a corporation’s
strategy.
Consider an era of stability where the interest is in the outcomes of wholly domestic
corporations that are themselves parts of a very stable industry with a well-known technology
(our stability context in Table 1). Here, we suggest that the economist’s notion of learning by
doing might be particularly relevant (Christenson, 1997). A focus on network leadership at
the top would probably be a waste of time. In a dynamic context with changes in markets,
products, operating technologies and information technology, we share the view of many
researchers that firms need to develop new strategies to cope with the new reality (e.g.,
Brown & Eisenhardt, 1997). In these conditions learning by repeated doing is unlikely to be
successful. Learning from others may be instrumental in coping. In these conditions we
propose that both the individual and collective aspects of network leadership are particularly
relevant. Specifically:
Proposition 9: In dynamic contexts for more effective strategic leadership, the collective
pattern of core organizationally relevant interpersonal linkages across the corporate elite
should correspond to the information needed to refine and develop the strategy.
This overall proposition needs to be more carefully dissected. First, the firm must have a
recognizable strategy. If it does not, the link between network leadership and outcomes
cannot be specified for the lack of a relevant outcome variable. In simple terms, if you have
no idea where you are going, any path will get you there—even if it eventually involves the
demise of the firm. Second, the strategy needs to be sufficiently clear for the researcher to
isolate at least the relevant sources of the information needed for strategy refinement and
implementation. These two are minimal boundary conditions. Given these conditions, the
general proposition has several implications.
The first implication stems from our use of the term corporate elite. Not all elites of a firm
will be full-time employees, as our earlier definition suggests. The inclusion of the board is
quite clear and the impact of the board’s ability to bring information into the firm is well
documented. The inclusion of stakeholders is our attempt to recognize the organizational
design of some modern corporations that are replete with nontraditional configurations.
Included here would be representatives from apparently separate corporations, such as
auditors, lawyers, and executive consultants each of whom can bring valuable strategic
information into the firm. Also included would be heads of subsidiaries, partnerships, and
heads of distinct corporate units providing a specific functional contribution. For instance,
several firms are ‘‘hollow’’ when captive suppliers perform selected functions. For the
analysis of collective network leadership, we would consider these individuals as members of
the corporate elite. The emphasis on the elite also allows us to link our notion of network
leadership to some of the existing studies of ‘‘strategic leadership‘‘ (e.g., Hambrick &
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Finkelstein, 1987; Hambrick, Li, Xin, & Tsui, 2001; Hambrick et al., 1998). Following their
work we propose:
Proposition 10: In dynamic contexts, there is an inverse curvilinear association (inverted U
shaped) between more diverse strategically relevant information sources from a more
diverse corporate elite and the strategic achievement and flexibility of the firm’s strategy.
Thus, performance can suffer from too much or too little information from too many or too
few sources. In contrast to merely examining group composition, the psychological characteristics of top management team members or their ‘‘skills,’’ the above proposition emphasizes
the potential information content from a wider variety of sources. The proposition also
includes two restrictions. We are not suggesting that all firms benefit equally from network
leadership, as noted above. There also seem to be limits to the size and diversity of the
corporate elite. Here, we see the traditional trade-off between the ability to obtain information
and the ability to synthesize and use it. Diversity as used here increases ability to obtain
information. Yet, it also is well recognized that all systems have a limited ability to absorb
(use) diverse information (see Boal & Hooijberg, 2000). What is the limit and what is the
trade-off? We do not know. We simply speculate that it is there. And we encourage other
leadership researchers to help us find such limits.
One implication of the proposition may disturb many leadership researchers and those
ideologically interested in corporate democracy and participation. In a dynamic context, the
proposition restricts the linkage between network leadership and organizational outcomes to
network linkages involving the corporate elite. It implicitly places more reliance on contacts
within the network of corporate elite members than with subordinate members of the same
firm.
There are several reasons for this restriction. Elites listen more to each other than to
nonmembers (Chattopadhyay, Glick, Miller, & Huber, 1999). For example, one of the
outside directors of Enron was confronted with apparently contradictory strategically relevant
information from two sources. An Enron VP indicated problems with the books and the
corporate attorney hired by the top management team suggested no problems. We do not
think it was unusual for this member of the corporate elite to listen to other elite members,
even though the members were less technically competent (see Lublin, 2002). There also is
evidence (Dutton, Ashford, O’Neill, Hayes, & Weirba, 1997) to suggest that subordinate
managers pitch self-serving ideas to fit what they believe top management thinks is
important.
A second implication is that simply developing a larger more extensive network is not, by
itself, proposed as being associated with higher performance. It is not contact alone. It is
direct linkages to individuals in a position to have information relevant to strategic adjustment
and implementation (cf. Brass & Krackhardt, 1999).
A corollary to the above implication recognizes that while the network can be developed
by the corporate elite, it may also be captured by it. Particularly in very rapidly changing
conditions, the degree to which the core network connections of the corporate elite are
restricted to the firm’s strategy, the more likely performance on the very outcomes specified
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by the strategy will deteriorate over the long term. Stability in network composition in
dynamic settings is likely to lead to disaster, as the information coming from the same sources
is less and less relevant. Changes in the environment and technology mean that new network
linkages will be needed. It also means that other network connections will need to be severed.
We have more to say on this when we consider the edge of chaos in what follows.
We are not particularly sanguine about the prospects for fundamental strategic change
within large established corporations without wholesale changes in the managerial elite. We
do not see a mechanism for such wholesale changes when the elite itself has so much
influence on the selection of the nominal bodies that ostensibly control it. Yet, we see an era
for many corporations where effective leadership is becoming more not less important. These
concerns lead us to examine the future in a different way. We turn to the emerging complexity
sciences to seek a way out of these apparent dilemmas.
4.4. Context 4: edge of chaos—complexity theory and dynamic systems (Table 1)
We change the context again and invite the reader to walk on the wild side. We contend
that this context is so different that it calls for a different theoretical perspective and language.
In this context organizations confront dynamism, nonlinearity, and unpredictability. The
context is not so dynamic, nonlinear, and unpredictable that organisms cannot survive (as in
chaos); but it does not permit firms to linger or seek even a dynamic equilibrium. They must
often move to a different ‘‘fitness’’ landscape or suffer the consequences. Fitness, not goals or
strategic accomplishments, becomes the criterion of interest. In this context, systems do not
evolve to merely adjust to isolated changes. The systems are involved in moving the systems
they deal with and themselves into uncharted new territory that may threaten their individual
existence but increase the general level of ‘‘fitness’’ and survival for those making the
transitions. They go where no one envisions or plans, not always because individuals want to
but because they must and the definition of fitness is outside the control of the system (for
instance, a bear cannot choose the characteristics constituting his/her fitness). This is the
world of the edge of chaos identified in complexity theory (e.g., Kauffman, 1993).
Complexity theory encourages us to see organizations as complex dynamic systems
composed of a diversity of agents who interact with one another, and thus promote novel
behavior for the entire system that also influences the environment of the system (Anderson,
1999; Marion, 1999; Regine & Lewin, 2002). Complexity theory relies upon a number of
inter-related concepts, in addition to fitness, to do this.
4.4.1. Complexity theory, bounded instability, and attractors at the edge of chaos
A key aspect of complexity theory is the notion of nonlinear dynamics yielding bounded
instability. In organizations it may be argued that there are basic ‘‘laws’’ illustrated by
decision rules of scripted relationships between organizational members in an institutional
arrangement. In this sense the system is deterministic, but there is human agency. Each time
an agent interacts with another the agent is free to follow, ignore or slightly alter the
institutional arrangement. There is bounded choice. Actions and interactions have consequences in the form of feedback loops via fitness. Where the organization faces a
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dynamic and unpredictable environment, the feedback is nonlinear. Small changes could
have very large consequences (the butterfly effect) for subsequent operations, for instance.
Agents in such a system must move around the nonlinear feedback loops if order is to be
maintained (e.g., Sanders, 1998).
Depending upon the extent to which agents change the roles and scripts there is a range of
more or less stable outcomes. In complexity theory when nonlinear feedback operates in a
state poised at instability, behavior is both stable and unstable, simultaneously. The behavior
is unstable and thus unpredictable over the long term, but it is stable and predictable in terms
of its qualitative structure or pattern, thus allowing predictable short-term outcomes. For
instance, specific weather forecasts are unpredictable in the long term but predictable within a
range in the short term (e.g., recognizable patterns of sunshine or rain). Behavior near
instability, then, follows a random, inherent, unpredictable path over time but does so within
limits. Behavior is boundedly unstable. Of course, the bounds may change and a new order
could emerge around a new set of ‘‘attractors.’’
An ‘‘attractor’’ is the end state toward which a dynamic system moves. The attractor may
settle into a steady state as the back and forth movement of a clock’s pendulum. Some
attractors, labeled ‘‘strange attractors,’’ may never settle into a steady state. In an organizational sense, strange attractors are a collection of variables that hold an inherently chaotic
nonlinear system, such as an organization, together and gives it shape. The strange attractors
provide coherence but never repeat over time.
Organizations at the edge of chaos, as in Table 1, are stable enough to maintain information
about themselves and their environment while being sufficiently vibrant to process that
information (Marion, 1999). They map their environment and interact with and become a part
of that environment (Marion, 1999). Different actors within a system resonate (impact their
own individual behaviors) with each other and may augment the capabilities of the broader
organization thus influencing an organization’s ‘‘self organizing’’ capabilities. Traditional
views of complexity theory such as the one by Kauffman (1993) thus argue that ‘‘order is
free’’ since it comes from the bottom up with no overriding central command. We agree that
‘‘order is free’’; but a desired order may well not be and, consistent with tenets of our
underlying philosophy, we do not want to forget the importance of human agency.
Of course, these characteristics are in sharp contrast to those of classical science, which
seeks order and stability as opposed to recognizing dynamism, nonlinearity and unpredictability (see Prigogine, 1997). Thus, examining leadership at the edge of chaos moves the
analysis from studying the combined impact of context and leadership on performance to
examining the co-evolutionary dynamics among the environment of the firm, its viability in
the setting and its collective leadership. It is important to stress the reverberating changes
from firm to environment as well as from environment to firm.
Contrast this view with the more traditional notion of transformational leadership. In much
of the leadership literature fundamental change is associated with the vision of a charismatic,
transformational leader who transforms both the institution and its members (see Bass, 1990
for a review). We are suggesting that order, cohesion and viability may emerge from the
middle and bottom. Rather than just focusing on top management and its choices, at the edge
of chaos one must look at the whole system and its leadership.
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Consistent with the arguments of Marion and Uhl-Bien (2001) and McKelvey (2000),
complexity science broadens the view of leadership as individual interpersonal influence to
stress collective influence processes for managing dynamic systems and interconnectivity
extending to the environment. This is precisely the role we have in mind for the two neglected
aspects of leadership-patterning of attention and network development. We argue that
patterning of attention can help deal with identifying salient information in such a way that
the information can be utilized within the system for adaptation to changing circumstances.
The patterning of attention also is expected to have an important influence on the setting of
the firm itself by altering what others do and how they treat the system. We further argue that
network development can alter the composition of the managerial elites as well as their
collective impact. And network development can interact with patterning of attention to alter
the fitness level of the system and its environmental cohorts.
4.4.2. Network leadership at the edge of chaos
A key contention here is that leadership changes as the context changes. We borrow from
McKelvey (1999) and Nicolis and Prigogine (1998) to argue that network leadership at the
edge of chaos provides linkages to ‘‘emergent structures’’ within and among organizations. At
the macrolevel of leadership of organizations (Boal & Hooijberg, 2000; Hunt, 1991;
McKelvey, 2000), complexity theory argues that the focus of leadership should be on how
to encourage the emergence of ‘‘distributed intelligence’’ (DI) (similar to the earlier
mentioned collective or distributed leadership), which is a function of ‘‘strategically relevant
and human and social capital assets—the networked intellectual capabilities of human
agents’’ (p. 1). Without networked intellectual capabilities, the system at the edge of chaos
is expected to dramatically lose fitness as it is incapable of marshaling the appropriate
resources to cope. Consistent with Marion and Uhl-Bien (2001), the networks include those at
lower-organizational levels so that aggregates and meta aggregates (emergent complexity
theory structures) can be formed up, down, and across relevant portions of the system.
4.4.3. Internal network dynamics at the edge of chaos
Complex patterns, unintended by the corporate leadership elite, can arise from comparatively simple rules to follow the strategy because the strategy is a higher-order social
construction subject to interaction among executives and their subordinates (cf. Anderson,
1999). We suggest that inertial forces for maintaining an established strategy collide with the
desire of lower-level executives to increase the fitness of their subsystems as they recognize
the necessity for adjusting to the edge of chaos.
As each executive acts on the most proximate local information derived from executives s/
he is connected with there appear to be strong tendencies to maintain the firm’s inertial thrust.
Strategic alterations by one executive would yield pressures for others to adjust. The further
down the corporate hierarchy and/or the more isolated the manager the more subject s/he is to
inertial forces. While the importance of inertia is well documented with some theorists
claiming it is an overpowering force (e.g., Hannan & Freeman, 1977), there also is ample
evidence that managers advocate improving their own operations (e.g., Dutton et al., 1997).
In many instances, these improvements call for alterations in the current strategy. Strategy
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change proposals may emanate from any organizational level. The Dutton and associates’
work suggests that (a) the degree to which the proposal is made by one attached to the
corporate elite, (b) the clarity of the strategy, and (c) the willingness of executives to listen
and understand the proposed issues are, among other factors, important in understanding the
degree to which strategic change emanates from below. Thus, we formulate two simple
decision rules.
First, lower-level managers and executives will propose alterations to the strategy,
particularly those that enhance the operations of their own units. Second, the more direct
the linkage to senior executives, the more initiatives there will be forthcoming. With more
initiatives there is a larger range of alternatives for adjusting the strategy. The larger the range
of alternatives the more likely there will be strategic adjustments. Note we have stopped short
of suggesting that these strategic adjustments will improve the fitness of the organization.
We should also note counter tendencies. With a clear historically successful strategy,
corporate elite leaders are less likely to adopt new proposals and more willing to opt for
staying the course. With more direct connections among the lower-level executives the more
likely they will reciprocally respond to one another. When top managers do move to
implement alterations in strategy, the probability of unanticipated consequences increases
as more implementing executives are directly linked. To those most concerned with
overcoming inertia, this implication may not sound disturbing. To those familiar with the
actions of firms at the edge of chaos, there is, thus, another way of suggesting that
comparatively small changes (i.e., the butterfly effect) can careen the system to resonate
around a different series of attractors. That is, the system may move dramatically away from
its current trajectory to an entirely different one.
As a group, internal collective network leadership reflects the dynamic interconnections
among the human agents of a system. The system emerges from interactions and resonances
(the release of potential energy through interactions) of individuals. The behaviors of the
individuals tend to correlate (share resonances,) with each other because of the interactions
and to catalyze (speed up a process or make things happen that otherwise would not). The
energy contained in the resonance triggers a process called autocatalysis (the probability of
occurrence of some property, event, or object increases as a function of the number of such
concepts already present, i.e., such concepts serve as their own catalysts and are selfbreeding) where a new order quickly forms. These micro dynamic network forces create the
system order that is self-organizing. Autocatalysis begins when the behaviors mutually
stimulate each other and these mutual stimulations lead to another cycle (cf. Marion, 1999).
In complexity theory terms, these internal interactive network linkages may evolve combinations of linkages representing a system, and systems may combine to form what have been
called higher-order aggregates or ‘‘ensembles’’ (cf. Marion & Uhl-Bien, 2001). Network
leadership, then, naturally forms to provide bottom-up coordination and nonlinear adaptation.
Hence, we suggest,
Proposition 11: The more direct linkages within the top leadership and the more the direct
linkages with and among subordinate managers, the more likely the system will undergo
adaptive strategic alterations and influence its environment.
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4.4.4. External network dynamics and network diversity
A chief difficulty with the complexity theory view from the perspective of more typical
leadership and strategic views involves the central role of hierarchy within the corporation.
Neither leadership nor strategy theorists may want to accept the notion of bottom-up
coordination yielding nonlinear and essentially nonpredictable future conditions. There is
the often-implicit assumption that organizational networks are simply hierarchical with
nonreciprocal influence relationships or that network relations follow work flows (see
Shrader, Lincoln, & Hoffman, 1989). Essentially, both groups see a steering mechanism
yielding predictable conditions where externalities are filtered from the top of the system
down. In contrast, we think complexity theorists implicitly downplay the differential
influence relations within and across organizations and tend to impute a singular teleology
to organizations in order to emphasize the nonlinear unpredictable dynamics.
We suggest that subscription to the hierarchical and work-flow linkages to chart network
leadership is too restrictive. Instead, we suggest that as the setting of the firm becomes more
complex so too should the interconnections among organizational members and among the
firm and the members of its immediate environment (or interorganizational field as depicted
by Warren, 1967). Analytically, these increasing interconnections translate into examining a
series of stakeholder network connections.
Internally, such network connections would include the conventional dimensions to
characterize direct ties and indirect ties. Included here are the degree of cohesiveness and
the number of cliques within the system (see Wasserman & Faust, 1994), the average degree
of centrality among the corporate elite (cf. Freeman, 1977), density, and structural holes (see
Krackhardt, 1992). For the firm’s interorganizational field, these include the collective pattern
of external ties involving the executive leadership echelon (see Ahuja, 2000).
Across these networks, we suggest a new aspect of network characterization we call
network diversity. Across a range of dimensions salient to the firm and its interorganizational
field, we suggest that the networks may be more or less diversified. The easiest way to see
this diversification is to borrow from those studying the demographics, e.g., age, education,
functional experience (ala Miller et al., 1998; West & Schwenk, 1996) of executive echelons
to note that increasing similarity in senior management appears to yield consistency (the
opposite of what is needed at the edge of chaos).
Beyond demographics, we suggest that the collective notion of network diversity
incorporates the proportion of direct ties involving individuals within organizations with
different nations, societal functions, and industries. The most constrained network would then
involve ties to individuals within the same nation, the same societal function and the same
industry. Constrained networks would be expected to generate consistency, but here it is in
the face of the edge of chaos. We suggest that the viability of the system would be threatened
by strategic consistency in a changing era; also, a constrained network would lack sufficient
information to craft a new strategy and insufficient contacts with a variety of social actors to
influence the immediate environment of the system.
After a period of denial and decline we expect top management to attempt a strategic
renewal. The chances of adopting a pattern of changes needed to increase fitness appear slim
even with a raft of proposals stemming from lower-management levels. We expect increasing