Informational Advantages in Social Networks: The Core-Periphery Divide in Peer Performance Ratings

Abstract

Organizations frequently rely on peer performance ratings to capture employees’ unique and difficult to observe contributions at work. Though useful, peers exhibit meaningful variance in the accuracy and informational utility they offer about ratees. In this research, we develop and test theory which suggests that raters’ social network positions explains this variance in systematic ways. Drawing from information processing theory, we posit that members who occupy core (peripheral) positions in the network have greater (less) access to firsthand and secondhand performance information about ratees, which is in turn associated with more (less) accurate performance ratings. To overcome difficulties in obtaining a “true” performance score in interdependent field settings, we employ an external criterion comparison method to benchmark our arguments, such that larger validity coefficients between established predictors of performance (i.e., a ratee’s general mental ability [GMA] and conscientiousness) and peer performance ratings should reflect more (less) accurate ratings for core (peripheral) members. In Study 1, we use an organization-wide network in a technology startup company to examine the validity coefficient of a ratee’s GMA on performance as rated by central versus peripheral members. In Study 2, we attempt to replicate and extend Study 1’s conclusions in team networks using ratee conscientiousness as a benchmark indicator. Findings from both studies generally support the hypotheses that core network members provide distinct, and presumably more accurate, peer performance ratings than peripheral network members.