Business Networking in the Industrial Revolution

organization studies, and business history.2 Despite the scepticism of some-that networks are exceptional or transient phenomena, a sign of market failure in young economies-it is now widely argued that networks are an integral part of economic activity, which is moulded by social, cultural, and political influences as well as by market mechanisms.3 Some authors have made a useful distinction between the everyday personal relationships within a group-the activity of networking itself-and the 'institutional arrangements' which are produced by this activity, including custom and contractual devices designed to discourage malfeasance.4 Moral attitudes and value systems shared by members of a network, as well as rules and regulations, can reduce the risk, and therefore also the cost, of commercial transactions. Few economic actors rely solely on either institutional arrangements or a generalized morality to guard against the risk of opportunism, free riding, or cheating. Instead they prefer to deal with individuals of known repute and to base their decisions to trade on information about reputation from reliable sources, and on their own past dealings with the same individuals. However, the greater the level of trust, the greater the potential gain from malfeasance. Thus, institutional arrangements for contract enforcement are seldom dispensed with entirely.5 In general terms it can be said that business networking

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