Magnus Thor Torfason

Assistant Professor of Business Administration (Leave of Absence)

Unit: Entrepreneurial Management

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Magnus Thor Torfason is an assistant professor in the Entrepreneurial Management Unit at Harvard Business School, where he teaches the Founders’ Dilemmas course in the MBA elective curriculum. Previously he taught The Entrepreneurial Manager course in the MBA required curriculum.

His research focuses on how behavior is influenced by the social structure of individuals and organizations. One research stream explores how social networks and group identities jointly affect adherence to informal societal rules and norms of behavior. Another research stream examines norms and their violation within exchange networks, including VC investment networks and transactions using electronic currency. In a third stream, Magnus has examined the birth and death of network weaving organizations – organizations whose main purpose is to provide connections between other actors.

Several of Magnus’s research projects rely on electronic trace data generated in online interactions, and he has a deep interest in both the methodological questions associated with the analysis of large scale electronic data sets and the theoretical questions associated with studying behavior in environments that are not considered “real” in the conventional sense.

Magnus is the recipient of a number of awards for his research and scholarly work, including a best paper award at the 2009 Transatlantic Doctoral Student Conference. Previously, he was a finalist for the Douglas Nigh Memorial Best Paper Award in 2007. His work has also been profiled in media outlets such as The Washington PostBBC, Wall Street Journal and Bloomberg.com.

Magnus was a co-founder of HandPoint, a software company currently headquartered in the UK, which develops payment and point-of-sale solutions for handheld computers. He served as Technical Director until he began his doctoral studies at Columbia in 2005, but continued to serve on the board of the company until 2009. He did his undergraduate studies at the University of Iceland, where he earned bachelor’s degrees in both electrical and electronic engineering and computer science.

Featured Work

  1. The Global Rise of Democracy

    We examine the influence of an interstate network created by intergovernmental organizations (IGOs) on the global diffusion of democracy. We propose that IGOs facilitate democracy’s diffusion by transmitting information between member states and by interpreting that information according to prevailing norms in the world society, where democracy is viewed as the legitimate form of government. We employ a network autocorrelation model to track changes in democracy among all of the world’s countries from 1815 to 2000. We find that democracy does diffuse through the IGO network and that the influence of democratic countries is stronger than that of undemocratic countries. Evidence indicates that the IGO network serves as a basis for normative diffusion. This is an important contribution to sociological accounts of globalization, which tend to emphasize diffusion divorced from network structure or diffusion dependent on the coercive influence of a small set of international organizations.
  2. Organizing the In-between

    This article examines the population dynamics and viability of network weavers, which are organizations that provide network relations for others. An analysis of the population dynamics of the intergovernmental organizations (IGOs) that are the basis of the interstate networks that infl uenced global economic relations, peace, and democracy in the 1815–2000 period shows that IGO founding and failure depends on the ease and value of specifi c interstate relations. Results indicate that networkweaving organizations are easier to operate when they encompass proximate and similar actors, yet they also reap rewards for bringing together otherwise disconnected actors, in particular, actors with confl icts. Combined, these organizational processes can account for the high clustering and short-path distance between nodes that are characteristic of the endemic small-world network structure. Furthermore, the study shows that the concepts of legitimacy and competition can be applied to identify particular spaces in the network of bilateral relations that are more or less hospitable for IGOs.

Publications

Journal Articles

  1. Here's a Tip: Prosocial Gratuities Are Linked to Corruption

    We investigated the link between tipping, an altruistic act, and bribery, an immoral act. We found a positive relationship between these two seemingly unrelated behaviors, using archival cross-national data for 32 countries, and controlling for per capita GDP, income inequality, and other factors. Countries that had higher rates of tipping behavior tended to have higher rates of corruption. We suggest that this surprising association may be accounted for by temporal focus—people may tip and bribe others in order to receive special services in the future. Indeed, in a pair of follow-up survey studies, we find evidence that the link between tipping and bribery can be partly accounted for by prospective orientation.

    Keywords: Giving and Philanthropy; Crime and Corruption; Behavior;

    Citation:

    Torfason, Magnus Thor, Francis J. Flynn, and Daniella Kupor. "Here's a Tip: Prosocial Gratuities Are Linked to Corruption." Social Psychological & Personality Science 4, no. 3 (May 2013): 348–354.
  2. Restaurant Organizational Forms and Community in the U.S. in 2005

    Recent sociological theory and research highlights food, drink, and restaurants as culturally meaningful and related to social identity. An implication of this view holds that the prevalence of corporate chain restaurants affects the sociological character of communities, as many activists, popular-based movements, and theorists contend. The analysis we report here seeks to identify the ecological niche properties of chain and independent restaurants—which kinds of communities support restaurant chains and which kinds of communities tend to support independent local restaurants and food service providers instead. We analyze data from a 2005 sample of 49 counties across the United States with over 17,000 active restaurants. We argue that demographic stability affects the community composition of organizational forms, and we also investigate arguments about a community's income distribution, age distribution, population trends, geographic sprawl, and commuter population. We find that communities with less stable demographic makeups support more chain restaurants, but that other factors, including suburban sprawl and public transit commuters, also have some impact.

    Keywords: Demographics; Age; Supply Chain Management; Culture; Balance and Stability; Income Characteristics; Research; Civil Society or Community; Identity; Theory; Society; Service Industry; United States;

    Citation:

    Carroll, Glenn R., and Magnus Thor Torfason. "Restaurant Organizational Forms and Community in the U.S. in 2005." City & Community 10, no. 1 (March 2011): 1–25.
  3. Organizing the In-between: The Population Dynamics of Network-weaving Organizations in the Global Interstate Network

    This article examines the population dynamics and viability of network weavers, which are organizations that provide network relations for others. An analysis of the population dynamics of the intergovernmental organizations (IGOs) that are the basis of the interstate networks that influenced global economic relations, peace, and democracy in the 1815-2000 period shows that IGO founding and failure depends on the ease and value of specific interstate relations. Results indicate that network-weaving organizations are easier to operate when they encompass proximate and similar actors, yet they also reap rewards for bringing together otherwise disconnected actors, in particular, actors with conflicts. Combined, these organizational processes can account for the high clustering and short-path distance between nodes that are characteristic of the endemic small-world network structure. Furthermore, the study shows that the concepts of legitimacy and competition can be applied to identify particular spaces in the network of bilateral relations that are more or less hospitable for IGOs.

    Keywords: Networks; Organizations; Demographics; Relationships; Globalization; Economics; Conflict and Resolution; Value; Lawfulness; Competition;

    Citation:

    Ingram, Paul, and Magnus Thor Torfason. "Organizing the In-between: The Population Dynamics of Network-weaving Organizations in the Global Interstate Network." Administrative Science Quarterly 55, no. 4 (December 2010): 577–605.
  4. The Global Rise of Democracy: A Network Account

    We examine the influence of an interstate network created by intergovernmental organizations (IGOs) on the global diffusion of democracy. We propose that IGOs facilitate this diffusion by transmitting information between their member states and by interpreting that information according to prevailing norms in the world society, where democracy is viewed as the legitimate form of government. We employ a network autocorrelation model to track changes in democracy among all of the world's countries from 1815 to 2000. We find that democracy does diffuse through the IGO network and that the influence of democratic countries is stronger than that of undemocratic ones. The evidence indicates that the IGO network serves as a basis for normative diffusion and is an important contribution to sociological accounts of globalization that have tended to emphasize diffusion divorced from network structure or diffusion dependent on the coercive influence of a small set of international organizations.

    Keywords: International Relations; Networks; Society; Transformation; Power and Influence; Country; Globalization;

    Citation:

    Torfason, Magnus Thor, and Paul Ingram. "The Global Rise of Democracy: A Network Account." American Sociological Review 75, no. 3 (2010): 355–77.

Working Papers

  1. With Us or Against Us? Networks, Identity and Order in a Virtual World

    Social networks and social groups have both been seen as important to discouraging malfeasance and supporting the global pro-social norms that underlie social order, but have typically been treated either as pure substitutes or as having completely independent effects. In this paper, I propose that interpersonal relationships between individuals with different social identities play a key role in linking local and global norms, and in supporting social order. Specifically, I show that social identity derived from group memberships moderates the effects of social relationships on pro-social norm observance. I test my predictions using a novel empirical setting consisting of a large online virtual environment. I show that the number of within-group relationships increases and the number of an individual's across-group relationships reduces the prevalence of anti-normative behavior. Furthermore, I show that network closure has a qualitatively different effect between within-group ties and across-group ties. The effects of within-group and across-group ties are moderated by both group characteristics and actor experience, providing boundary conditions on the mechanisms presented here. My findings illustrate the need for a more nuanced view of the complex interrelations between institutions, identity, and networks.

    Keywords: Social Norms; social networks; Triadic Closure; Social groups; Group Identity; Groups and Teams; Boundaries; Organizations; Identity; Social and Collaborative Networks; Societal Protocols;

    Citation:

    Torfason, Magnus Thor. "With Us or Against Us? Networks, Identity and Order in a Virtual World." Harvard Business School Working Paper, No. 13-019, August 2012. (Revise and Resubmit, American Journal of Sociology.)

Other Publications and Materials

  1. Definitions of Reality: Virtual Environments as a Context for Organizational Research

    Citation:

    Torfason, Magnus Thor. "Definitions of Reality: Virtual Environments as a Context for Organizational Research." 2010.
  2. Undermining Order: A Dynamic Network Simulation Analysis

    Citation:

    Torfason, Magnus Thor, and James A. Kitts. "Undermining Order: A Dynamic Network Simulation Analysis." 2011.

    Research Summary

  1. A major area of Professor Torfason's research is the behavior of individual social network structures. He studies the violation of norms – specifically the use of excessive force in conflict situations – within the empirical context of a large online video game. He has found that effect of network ties on behavior differs significantly when the ties are among members of the same formal organization within the game and when they span organizational boundaries. This and other of Professor Torfason's research projects rely on electronic trace data from virtual online environments, and he has a deep interest in both the methodological questions associated with the analysis of large-scale electronic data sets and the theoretical questions associated with studying behavior in environments that are not considered “real” in the conventional sense.

    In another primary research stream, Professor Torfason investigates networked organizations. In a study of the institutional impact of networked organizations, he has focused on international organizations and the rise of democracy over nearly two centuries. His work documents the importance of international organizations in diffusing the cultural norms that promote the spread of democracy. In a separate study on the population dynamics of networked organizations, he has found that the foundation and failure of international organizations are closely related to the existing network structure of the states that could theoretically cofound them.

    Professor Torfason has also examined the ecology of organizations by analyzing the prevalence of chain restaurants in different U.S. metropolitan areas. The results indicate that a primary characteristic of communities that support chains is demographic instability, suggesting that demographic stability has a key relationship with community identity.

    Teaching

  1. Founders' Dilemmas

    Founders' Dilemmas examines the early, often difficult, decisions that have important long-term consequences for founders and their ventures. Potential consequences include losing control of their ventures, breaking up of the founding team due to tensions between founders, and jeopardizing the financial gains from their hard work and innovative ideas. The course's goal is to help students be much more informed about those long-term consequences before they make early choices that can lead to them.

    We will focus on "people" issues (i.e., the key challenges faced when deciding when and how to involve other people in the venture) and on "universal" issues (i.e., those issues faced by founders regardless of the industry, geographical location, or period of time in which they are founding their ventures). The cases emphasize high-potential ventures (as opposed to "mom-and-pop shops"), where the choices we examine have the most impact on the future success or failure of the venture.

  2. The Entrepreneurial Manager (TEM)

    This course addresses the issues faced by managers who wish to turn opportunity into viable organizations that create value, and empowers students to develop their own approaches, guidelines, and skills for being entrepreneurial managers.

    The course teaches students how to:

    • Identify potentially valuable opportunities.
    • Obtain the resources necessary to pursue an opportunity and to create an entrepreneurial organization.
    • Manage the entrepreneurial organization once it has been established.
    • Grow the business into a sustainable enterprise.
    • Create and harvest value for the organization's stakeholders.
    BBC World Update
    08/22/2013
    Washington Post
    09/05/2012

    Sarah Kliff

    If you want to know how corrupt a given country is, you may not need a big police sting. You could just look at how regularly its citizens tip.

    Freakonomics.com
    08/22/2013
    HBS Working Knowledge
    10/29/2012

    Dina Gerdeman

    Washington Post
    09/28/2012

    Brad Plumer

    Inflation can be a headache for any central banker. But it takes a certain type of economist to know what to do when a belligerent spaceship fleet attacks an interstellar trading post, causing mineral prices to surge across the galaxy.