Researchers have found that balanced professional networks are more important than individual talent when it comes to high-risk decision making.
The study, published in the journal Nature Communications, is the first longitudinal study to prove several key tenets of structural balance theory (SBT), which consists of four primary rules for relationships among individuals– a friend of a friend is a friend, a friend of an enemy is an enemy, an enemy of an enemy is a friend and an enemy of a friend is an enemy.
Through a two-year study of day traders, the researchers found that workers gravitate toward a state of balance in their relationships and performance improves when there is a high level of balance.
“This data shows that companies reap the benefits when conflict among employees is reduced, there are certain types of conflict that can’t resolve themselves. This work can help managers identify those conflicts and actively step in to resolve them, ultimately leading to better performance,” said Brian Uzzi, Professor at Northwestern University in the US.
For the study, researchers analysed day traders’ instant messages from 2007 to 2009 to determine the relationships among traders and compared those relationships to performance data for individual traders, controlling for factors, including market volatility and work days.
They found that the traders with the highest level of balance in their networks also made the best trades, regardless of the objective level of talent of any individual trader. “We suspect that conflict in networks monopolizes some portion of workers’ mental energy,” Uzzi said. “Resolving that conflict frees up mental energy to make better decisions and perform at a higher level,” Uzzi added. (IANS)