«Inaugural-Dissertation zur Erlangung des Doktorgrades des Fachbereichs Wirtschaftswissenschaften der Johann-Wolfgang Goethe-Universität Frankfurt am ...»
norms and sanctions which will bring about an effectively functioning organization‖.194 Although being employed for instrumental reasons, social capital is still part of social structure and thus an individual cannot act entirely egoistic and out of self-interest. The creation and destruction of social capital follows similar rules, as it is constructed in social systems. Obligations, which are created by doing favors, are part of social capital. In refusing to reciprocate, the process is reversed and social capital destroyed. Favors guarantee durable participation in networks. This again leads to access to knowledge, experience and infrastructure that reduces uncertainty and risk and thus serves as a kind of insurance for the future.195 Another important form of social capital is information as it is the basis for action. Better knowledge of the members of the group facilitates co-operation and informal norms support the enforcement of formal rules. Obtaining efficient and reliable information can be complicated and costly because at least attention is required for it. However, the information obtained over network contacts is ‗thicker‘ than that over markets and also ‗freer‘ than in hierarchies.196 Norms are part of social capital but are a fragile form of it as sanctions are needed to keep them effective.
Walter, 2004, p. 86, Putnam; Leonardi and Nanetti, 1993, p. 172. Reciprocity is an important element of social capital. In the short-run it can be considered altruistic, in the long-run it has also instrumental objectives and is led by self-interest, but still makes all participants better off, Gouldner, 1960. See 3.1.2., fn 218.
Powell, 1990, p. 304.
Coleman, 1990, p. 310, Coleman, 1988, p. S105. The concept of sanctions is closely related to socialization. This means that social norms can be internalized and thus are followed of one‘s own accord. Otherwise the fear of sanctions from others is the reason for complying social norms. "Norms do not need external sanctions to be effective. When norms are internalized, they are followed even when violation would be unobserved and not exposed to sanctions. Shame, anticipation of it, is a sufficient internal sanction". Elster, 1989, p. 131.
Woolcock, 1998, p. 158, 165.
Dasgupta, 2000, p. 380ff. Dasgupta describes how the social positioning of actors within networks can be used for economic purposes similarly to human capital. See also Lin, 2001.
firms are social capital…; [it] is the final arbiter of competitive success‖.201 Depending on the position within a network and the type of ties, an actor can use his connections (which here means the same as social capital) strategically, especially if he closes gaps, so-called ‗structural holes‘, in networks. He becomes thus a ‗broker‘ who can make profits by connecting otherwise not connected nodes of a network. In the same vein, an actor uses ‗strong ties‘ to be well informed about (economic) opportunities and investment possibilities.202 In the view of Dasgupta and Burt, social capital is a highly individual resource that is used for instrumental reasons only. It differs immensely from Bourdieu‘s view and also is different to the concept of Guanxi as will be further discussed below in chapter 6.
To recapitulate, social capital is the sum of social relations, informal rules and psychological dispositions as well as the interdependence between its three parts facilitate cooperation within society. Social capital is the product of social interaction in the past which exhibits substantial inertia in the present.203 As common within sociology, the exact meaning differs from author to author. For Putnam, social capital is represented in voluntary social work; other schools emphasize the role of networks. Social capital in this sense is measured in the degree of engagement for the network, which not necessarily has to be voluntary.204 The diversity of approaches defining it shows that social capital gained importance as explaining variable for economic activity. Common to all definitions is that is it often interpreted, although being immaterial, as merely one factor among others for capitalistic success and thus as purely instrumental, neglecting a broader social and cultural context. The concept of social capital has even gained the attention of international economic organizations such as the World Bank which ―[a]fter the failure of shock therapy in transition economies, [reached] the insight that markets have social and political preconditions‖ and made the concept ―a core policy concept‖.205 3.1.2. Networks The first usage of networks as form of organization has been in the 19th century for transport and communication purposes. It was made possible with the help of additional infrastructure that is needed to use networks for industrial purposes and which earlier were not yet available. Although already in the 18th century road maps were known concepts, Burt, 2005, p. 9.
Burt, 2005, 11ff., 97ff.
Ackermann, 1999, p. 104.
Sennett and Bischoff, 2005, p. 56.
Beckert, 2007b, p. 6.
the first net in its modern sense was the railway system conceptualized by Friedrich List206, which again enabled the establishment of a postal network. Cities were equipped with water, canalization and electricity networks that contributed to urban development.
This rather technical conception of networks changed only in the 20th century when it became a sophisticated means to analyze personal relations.207 Network as a term for social connections between people is ―a specific set of linkages among a defined set of persons‖.208 The members of a network and their actions are not autonomous but interdependent actors that share material and immaterial resources. These relations between actors are durable patterns.209 A network can besides individuals also link organizations, political actors, households and families. The link itself can be specified as relation or interaction and be based on emotions, power or information exchange.210 Also, ―networks represent a third dimension to the existing dichotomy of the vertical (hierarchies) and the horizontal (markets) ones. Networks are neither vertical nor horizontal; their enabling quality resides in their ambiguity and their ‗navigational‘ … capacity…to compensate for the defects of vertical and horizontal structures and to turn these defects into advantage of network members‖.211 Between the two extremes of market and hierarchy, networks are hybrid forms that combine elements of competition with hierarchical organizational structures.212 Networks can act as substitute or addition to markets and the state and be associated with both negative and positive effects of social capital. Networks are systems of nodes and ties around particular persons and are thus considered highly personal. Networks can be analyzed internally as an object of interest itself to evaluate its importance and utility for the individual or it can be seen only as an instrument and thus is scrutinized externally.213 Formal and informal networks are part of nearly every existing society in past and present, although networks may vary in influence and structure.214 The existence of networks does not necessarily have influence on economic growth, but it might have depending on its structure, as becomes clear in the comparison of the Chinese and Russian reform expeList, 1833.
Neurath and Krempel, 2008, p. 64., Wassermann and Faust, 1999.
Ledeneva, 2005, p. 4, Mitchell, 1969, p. 2.
Wassermann and Faust, 1999, p. 4, 36ff.
Hollstein, 2006, p. 14.
Ledeneva, 2005, p. 7.
Bathelt and Glückler, 2000, p. 171.
Ledeneva, 2005, p. 3. In the case of franchise networks of firms or restaurants, railway networks or virtual information networks, networks can also be regarded as impersonal. This type of network, however, is outside the scope of this dissertation.
Putnam; Leonardi and Nanetti, 1993, p. 173.
rience.215 The term network is also used as metaphor and ideal type for a modern system organizing economic interaction.216 Various types of networks can be defined in combining reciprocity, interdependence, power and loose affiliations in different ways. Reciprocity is important within networks as it guarantees the voluntary sequence of transactions over a longer period of time.217 There are networks that require a balanced reciprocity, hence a simultaneous exchange of goods and favors of comparable value (this kind of reciprocity is often found in corporate networks, like that connecting the German Mittelstand, see also below and chapter 6.4.1.).
Other types of networks are more reliant on generalized reciprocity, which is never balanced but always entails the expectations that a favor given now will be repaid at an unknown time in the future (this kind of reciprocity is an important part of Guanxi networks, see chapter 6).218 Networks thus rely on the interdependence of intertwining relations somewhere between the complete independence of markets and the complete dependence in hierarchies. Over time, reputation, loyalty and trust are built up within a network, dependent on experience, strengthening the permanent nature of network relations. Nevertheless, not all participants of a network need to be equal as power asymmetries can exist, which are often more complex than within markets or hierarchies. One reason for that can be seen in the nature of connections which are often only very loosely linked as well as voluntary, each ‗node‘ keeping its autonomy. Loose affiliations also result in redundancies, which further stabilize the networks.219 Building up a reputation within a network is paramount as it is the foundation for trust and only then can an actor have full access to his social capital.220 Ledeneva, 2005, p. 8, please refer also to chapter 5.1.
Walter, 2004, p. 82.
Bathelt and Glückler, 2000, p. 171.
Putnam; Leonardi and Nanetti, 1993, p. 172. For a detailed definition of reciprocity see Gouldner, 1960, but of course also the seminal book of Marcel Mauss, Mauss, 1966. Reciprocity is often defined in a functionalist way, ―as a mutually contingent exchange of benefits between two or more units, as if it were an ‗all or none‘ matter‖. Defined like this, reciprocity becomes a quantifiable variable that does not rule out that the items exchanged may be equal or that a favor is not reciprocated at all. Gouldner, 1960, p. 164. Reciprocity is a stable norm when the exchange parties have both rights and duties, moreover, it structures the roles within such a system, (p. 169). ―In sum, beyond reciprocity as a pattern of exchange and beyond folk beliefs about reciprocity as a fact of life, there is another element: a generalized moral norm of reciprocity which defines certain actions and obligations as repayments for benefits received‖, p. 170. ―A norm of reciprocity, in its universal form, makes two interrelated, minimal demands: (1) people should help those who have helped them, and (2) people should not injure those who have helped them‖. Although it is a universal norm, reciprocity varies with status and in different cultures functions differently, but always facilitates social interaction, p. 171, 176.
Bathelt and Glückler, 2000, p. 171f.
Ackermann, 1999, p. 103.
Networks consist of strong and weak ties. The strength – or quality – of a tie ―is a (probably linear) combination of the amount of time, the emotional intensity, the intimacy (mutual confiding), and the reciprocal services which characterize the tie. Each of these is somewhat independent of the other, though the set is obviously highly intracorrelated‖.221 Bian adds to this the finding that the strength of a tie also depends on its institutional and cultural environment and additionally, if the connection is used for obtaining influence or information.222 However, strong ties create dense networks with high levels of trust and loyalty, whereas weak ties are part of less dense networks, that above were called loose affiliations. Different ‗nodes‘ of a network might be connected over so-called ‗bridges‘ which are ‗lines‘ in a network that are the only existing connection between two points.