Network development over time

understanding of network evolution which will be completed with a discussion of related and unrelated variety, functional and redundant diversity, and complex adaptive cycles.

3.3 Network development over time

3.3.1 Network theories

Before discussing later work on network analysis, innovation and changes in contextual conditions, this section introduces and assimilates network theories that have been broadly used in academic research (Granovetter 1973; Coleman 1988; Burt 1992). Converse to suggestions in some industrial symbiosis literature (e.g., Doménech and Davies 2011b;

Paquin and Howard-Grenville 2012), this section will outline the idea that innovation and the emergence of norms might not be possible under the same network conditions by revisiting two basic network theories.

The structural hole theory (Burt 1992) suggests that access to knowledge is a source of competitive advantage. By strategically positioning themselves in social networks, companies can optimise competitive advantages by ensuring timely access to information through direct and indirect contacts (also see Figure 5.1 in Chapter 5). Burt argues that companies should reduce redundancy in the information that can be accessed through their contacts. The idealised network structure would be open with predominantly dyadic ties, associated with lower network density, although ties within the network can be strong.

The network closure theory (Coleman 1988) focuses on the emergence and persistence of social norms. Social norms would theoretically be better facilitated in closed rather than open social networks such as suggested in the structural hole theory. Arguably, norms can only emerge and persist in dense social networks with predominantly strong triadic ties, and this means that network actors should have ‘redundant’ contacts, because theoretically it would be impossible to collectively sanction and reward behaviour in networks with predominantly dyadic ties.

Part A Chapter 3 42

The structural hole theory and network closure theory have long been presented as opposing theories. However, since the former is about information transfer and the latter about emergence and persistence of social norms, it could be said that the theories might not be that opposing because they are discussing different subjects. In fact, these theories also discuss entirely different processes: While the structural hole theory is about information transfer to enable innovation, i.e. changing practices, the network closure theory is about anchoring practices in social norms, i.e. preventing change to practices. This idea is also reflected by other network analysts: Compared to network actors in open social networks, actors in closed social networks may be more constrained to change their practices and less likely to implement innovations (Granovetter 2005; Day 1994). With this in mind, it is possible to start developing a more dynamic understanding of consecutive periods of change and preservation in which networks with more closed and more open structures develop respectively (Figure 3.4). Indeed, such understanding also started to develop in exploration and exploitation literature which will be introduced in the next section.

Figure 3.4: Combining the structural hole and network closure theories suggests that norms emerge and persist within closed network structures (left) and innovativeness is better supported in more open networks (right), which implies that the emergence of norms and increased innovativeness could not occur simultaneously (Coleman 1988; Burt 1992).

Part A Chapter 3 43

3.3.2 Exploration and exploitation dynamics

Exploration and exploitation dynamics suggest that industries and companies go through phases of radically changing practices followed by phases in which practices are continued although perhaps with some incremental changes (Levinthal and March 1981; March 1991).

This theory offers the opportunity to integrate the structural hole and network closure theory into a dynamic view on industries and companies. If this theory is correct, it would be expected that networks during exploration have increasing density and diversity as new practices are investigated and implemented, before stabilising and moving into exploitation as new practices become the norm (network closure); and during exploitation diversity and density start to decrease again to optimise efficiencies (structural hole) before stabilising and eventually moving back into exploration (Figure 3.5) (Coleman 1988; Burt 1992;

Nooteboom and Gilsing 2004). This dynamic perspective could perhaps also help explaining why some industrial ecologists did observe changes in collaborative culture during the evolution of industrial symbiosis networks (e.g., Ashton 2009) while others could neither confirm this development nor did collaborative culture contribute to the development of resource synergies (e.g., Pakarinen et al. 2010).

The consideration of exploration-exploitation dynamics raises questions about the evolution of industrial symbiosis. This theory suggests that the self-reinforcing cycle of emerging norms and increased innovativeness in industrial symbiosis networks (Section 3.1) would perhaps not be possible. To explore this issue further, it would be necessary to start developing understanding about the variation in innovation intensities of resource synergies, the changing network characteristics in the period that companies are adopting resource synergies, diversity (Jensen et al. 2011c) and proximity (Velenturf and Jensen 2016;

Chapter 2) between companies and the effects on e.g. the persistence of resource partnerships (see e.g., Paquin et al. 2014), the presence and absence of emerging norms, and so on. It also raises the implicit question whether innovative industrial symbiosis is different from other types of innovation. Although this section raised many ideas about the emergent process of network evolution, it did not clarify how exactly the context might trigger innovation processes and hence this will be further explored in the next section.

Part A Chapter 3 44

Figure 3.5: Integrating network theories, exploration-exploitation dynamics, proximity and findings on industrial symbiosis (Chapter 2), suggests that industrial symbiosis networks might evolve through periods of increased innovativeness directly followed by emerging norms (exploration), which persist for some time while incremental innovations take place (exploitation), before going back into exploration, and so on (Desrochers 2004; Boons 2008; Burt 1992; Coleman 1988; Granovetter 2005; Day 1994; Nooteboom 2000;

Nooteboom and Gilsing 2004; Cohendet and Llerena 1997; Chertow and Ehrenfeld 2012; Doménech and Davies 2011a; Ashton 2008; Chertow et al. 2008).