Status, Closure, and Brokerage

This article explores the question of “what kind of social capital is optimal for growth in status.” In line with Burt’s “magnifying glass” metaphor, this research claims that brokerage has a positive effect on high-status firms but not on low-status firms and that the positive effect of brokerage will become greater as organizational status improves. The main proposition of the article is supported by an empirical analysis of the venture capital industry from 1980 to 2004. The findings have both theoretical and practical implications. Specifically, the article suggests that firms should initially position themselves in a cohesive network and increase the level of brokerage as status grows.