Social Networks and Institutions: Why is Network Analysis Important for Institutional Analysis?

Abstract

"Social network analysis and research has shown that social networks constitute structures of opportunity and constraint for individuals as well as corporate actors. Whether they will be enabling or constraining depends on the nature of the network (structure and types of ties) and the governance of the network. The importance of social networks for institutional analysis has also been recognised by different institutional scholars in the commons-field (see for example the contributions of Bonnie McCay and Paul Stern et. al. in The Drama of the Commons.)

"This paper aims to further explore and discuss the relevance of a network approach for institutional analysis (IAD-framework) especially in relation to the question of institutional performance (achieving objectives or not). The paper will draw on recent insights from research within the fields of economic sociology, organizational sociology and organizational behaviour.

"The paper argues that it is important to complement an institutional perspective with a broader network perspective by focusing on information processing and transmission, strategies vis-a-vis network partners and liabilities for the functioning of institutions related to social networks. In relation to information-processing the paper discusses differences in the amount and nature of information processed, information asymetries and the possibilities of knowledge creation in network ties. In relation to strategies vis-a-vis network partners the paper focuses on the use of voice-strategies versus exit-strategies (cfr. Hirschman) and differences in bargaining power, commitment, co-ordination and technological change. Finally in relation to liabilities the paper discusses the liabilities of overembeddedness versus underembeddednes and liabilities and risks related to loyalty versus opportunism.

"The paper will end with hypotheses on the relation between network characteristics and the performance of institutions."