Economics
College of Humanities and Social Sciences

The Weakness of Strong Ties: The Economic Impact of Social Networks in Russia

Ekaterina Brancato

Enterprise Hall, 318
March 07, 2006, 07:00 PM to 07:00 PM

Abstract:

This study analyzes the institution of social networks?economic and social logic of its formation, patterns of its evolution, and its effects on Russian economy from the origin of the Slavic State to the present day. The dominant role of the Russian State in governing political and economic affairs, peculiarities of Russian culture and a special position and characteristics of the business class resulted in social networks being more important than market mechanisms in the allocation of resources. Over time the importance of strong ties increased in response to growing bureaucracy, economic shortages in legal markets, and the absence of an effective and independent legal system. Throughout its history, Russia has been a connection society, not a contract society and can be characterized as a low general trust society. Social networks in Russia have developed many clusters of strong ties, only a few weak ties, and no horizontal networks of civic engagement. Undoubtedly, personal networks have proved invaluable to the Russians. They remove many obstacles on the way of private economic activity and permit to realize some gains of exchange. However, as an institution they are not supportive of free markets where impersonal exchange is prevalent and of the rule of law?in that lays the weakness of strong ties.

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