Economic Sociology covers a large amount of gray area between the disciplines of economics and sociology (Swedberg 1990). This gray area is being explored by "economic sociologists" from both disciplines. Unfortunately, communication between the economists and sociologists concerning their exploration has not been substantial (Baron and Hannan 1994; Davern and Eitzen 1995). This paper is an attempt to communicate the utility of a sociological approach to economic sociology.
Recent sociological work in the field of economic sociology has emphasized the importance of a social network approach for understanding socioeconomic behavior. The network metaphor in economic sociology emerged from the structuralist tradition(1), and it is presently manifested in a wide variety of sociological concepts. For example, in the study of formal organizations and job mobility Ronald Burr (1992) has used the concept of "structural holes," in the study of labor markets Nan Lin (1982; 1990) has used the concept of "social resources," and Endre Sik (1994a; b) has used the concept of "network capital" to explain the macroeconomic changes associated with the transition in Eastern Europe from state socialism to an economic system that is more reliant on market mechanisms. Other popular concepts that make use of the social network metaphor include "interlocking directorships" (Useem 1984; Zeitlin 1974), "social capital" (Coleman 1988), the "informal economy" (Lomnitz 1988; 1977), "embeddedness" (Granovetter 1985), and the "strength of weak ties" (Granovetter 1973). All of these sociological terms share a social network component, and together this group of wide ranging theoretical abstractions provide sociologists with powerful tools for analyzing the economy (Baron and Hannan 1994).
Network-based concepts, while influential in particular subject areas (such as the study of formal organizations or labor markets), are not properly integrated into a theory that bridges the varying areas of specialization (Emirbayer and Goodwin 1994). Therefore, the first goal of this paper is to develop four basic categories that form a foundation for social networks by synthesizing the theoretical content of the concepts that use the network metaphor. These four categories will be used to navigate through the existing literature and to demonstrate the utility of social networks for studying socioeconomic phenomena. This will be done in two parts. First the research that has already been done in the field of economic sociology will be summarized and second, new areas for the application of social networks in the study of socioeconomic phenomenon will be discussed.
Four Categories for Social Networks
The fundamental components of a network are nodes and connections. In order to develop a network metaphor, sociology has replaced the nodes with actors and the connections with social ties or bonds. Thus, a social network consists of a series of direct and indirect ties from one actor to a collection of others, whether the central actor is an individual person or an aggregation of individuals (e.g., a formal organization). A network tie is defined as a relation or social bond between two interacting actors.
The social network image is one way to conceptualize social structure and, therefore, social networks will be used synonymously with social structure throughout this paper. The social network conception of social structure is fundamentally a relation-centered approach. The relations in the structure are the social ties connecting actors. Furthermore, by positing that relations among social actors form a social structure, network analysis rests on a flexible conception of structure. The flexibility comes from the fact that ties are formed and/or broken the social structure changes. Thus social networks are flexible and dynamic because of the frequency of tie formation and dissolution.
The four basic components of social networks are as follows: (1) the structural component (2), the resource component, (3) the normative component, and (4) the dynamic component. The structural aspect refers to the geometric shape of the actors and ties within a network as well as the strength of the ties. This is the basic building block of network analysis. The resource focus is on the distribution within networks of various characteristics that differentiate among actors within society. Examples of these characteristics are ability, knowledge, ethnicity, estate, gender, and class. The normative aspect of networks refers to the norms and overt rules that influence the behavior of actors within varying networks (e.g., the prevalence of reciprocity, or the level of trust among actors within the network, and the overt rules governing behavior). The normative component is also concerned with the type of tie, which is determined by taking into consideration the social roles connected through a tie (e.g., is the tie between a worker and employer, between friends, between kin, etc.). The dynamic component takes into account the opportunities and constraints for tie formation and the ever evolving network structure. Networks are constantly changing and any network model must describe these changes. Together the structural, resource, normative, and dynamic components form the basis of social network research.
The Structural Component
The structural component takes the configuration of the actors and ties within a network as its main concern. All actors are treated as nodes that are affected by the configuration of the social ties and other actors in the network. The arrangement of the parts (actors and ties) controls a substantial amount of the variance in the outcome of socioeconomic behavior. Imagine a group of actors connected by lines that represent social ties from one actor to another. If three actors are all tied to one another within a network, then the structure takes on a triangular shape. But, if one person connects the other two within a network, then the structure is a straight line. These different shapes, or network structures, have varying social consequences according to the network exchange theory. (Cook and Whitmeyer 1992; Markovsky, Ridgeway and Lawler 1993). For instance, in the network structure consisting of a straight line, the one person connecting the other two has a more "powerful" network position relative to the others. And within the triangular structure, no actor has a "power" advantage. Power differentials created by network structure can account for the differences in exchange among actors. …