Between Closure and Holes: Hybrid Network Positions and the Performance of U.K. Investment Banks

This study examines the possibility that hybrid network positions that balance a firm's access to structural holes (Burt, 1992) and dense interconnections (Coleman, 1988) may outperform positions emphasizing one or the other alone. To do this, we estimate models of U.K. investment bank performance that consider a bank's own and its partners' balance of closure and bridging ties in the bond underwriting syndicate network. We find that banks occupying hybrid-firm positions outperform banks emphasizing only bridging, which in turn outperform banks emphasizing only closure. We also find that banks emphasizing closure can substitute their partners' bridges for their own; banks emphasizing bridging cannot, however, substitute their partners' closure the same way. These findings support the idea advanced by small-world network theorists that advantageous network positions both provide ready access to heterogeneous information sources through bridging and facilitate efficient exchange and integration of rich information through closure.