Skip to content

Home-base effect and social networks

I recently read Nicholas Chistakis and James Fowler’s Connected, and now everything I see makes me think of social networks.

For example, Richard Florida links to a research article by Bart Bronnenberg, Sanjay Dhar, and Jean‐Pierre Dubé, who write:

We [Bronnenberg et al.] document evidence of a persistent “early entry” advantage for brands in 34 consumer packaged goods industries across the 50 largest U.S. cities. Current market shares are higher in markets closest to a brand’s historic city of origin than in those farthest. For six industries, we know the order of entry among the top brands in each of the markets. We find an early entry effect on a brand’s current market share and perceived quality across U.S. cities. The magnitude of this effect typically drives the rank order of market shares and perceived quality levels across cities.

I haven’t read the article, but assuming it’s findings are correct, could some of this be the effect of employees and investors in the company, as well as local pride? I doubt Heinz Ketchup currently employs a lot of people in the Pittsburgh area, but over the years it must add up to a lot of people. Then add in their friends and relatives, along with people who get business from Heinz (suppliers and the like), and that’s a whole bunch of Pittsburghers with some connection to Heinz.

The social network bit is the idea that the employees and the like are multiplied by their friends. Beyond this, of course, people are creatures of habits, tastes can get established young, and so forth.

Also, Heinz ketchup is something that anyone can buy. The very fact that it’s (a) substitutable with other items and (b) just different enough to be distinguishable (it doesn’t taste _exactly_ like other ketchups, it’s not a pure commodity), might make it particularly susceptible to this sort of effect. It may be no coincidence that Bronnenberg et al. found this effect in the area of low-cost packaged foods.

P.S. See also the comments of Tyler Cowen and Matthew Yglesias. Cowen made the mistake of titling his post, “Why is Heinz Ketchup still so popular in Pittsburgh?” As a result, most of his commenters give Pittsburgh-specific explanations, which seems to sort of miss the point. Or maybe that is the point, that blog comment threads can move beyond the subject of the original post.

Oddly enough, Yglesias’s commenters mostly talk about burgers. Burgers on one thread, ketchup on the other . . . somebody’s got to put those two blogs together to get something really delicious!

One Comment

  1. Tim Kastelle says:

    I've been meaning to comment on this post forever – it was definitely interesting. As a (mostly) networks researcher myself, I think that part of the story is also that social ties are often very persistent (moreso than most people expect) – which ties in to your investors/employees idea…