nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒05‒27
twenty-two papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Social capital, institutions and trust By Nooteboom,Bart
  2. Trust, Inequality, and Ethnic Heterogeneity By Andrew Leigh
  3. Forms, sources and processes of trust By Nooteboom,Bart
  4. Does Equality Lead to Fraternity? By Andrew Leigh
  5. The Opportunity Cost of Social Relations: on the Effectiveness of Small Worlds By Lorenzo Cassi; Lorenzo Zirulia
  6. Does Democracy Foster Trust? Evidence from the German Reunification By Helmut Rainer; Thomas Siedler
  7. Social Participation: how does it vary with illness, caring and ethnic group? By Lucinda Platt
  8. Network embeddedness and the exploration of novel technologies : technological distance, betweenness centrality and density By Nooteboom,Bart; Gilsing,Victor; Vanhaverbeke,Wim; Duysters,Geert; Oord,Ad van den
  9. Human nature in the adaptation of trust By Nooteboom,Bart
  10. Learning and innovation in inter-organizational relationships and networks By Nooteboom,Bart
  11. Social Cohesion By Lindqvist, Erik; Östling, Robert
  12. Knowledge and Information Networks: Evidence from an Italian Wine Local System By Andrea Morrison; Roberta Rabellotti
  13. Public private sector partnerships in an agricultural system of innovation: concepts and challenges By Hall, Andy
  14. Public Research in Regional Networks of Innovators: A Comparative Study of Four East-German Regions By Holger Graf; Tobias Henning
  15. Networks Performance and Contractual Design: Empirical Evidence from Franchising By Magali Chaudey; Muriel Fadairo
  16. A research agenda for international corporate social responsibility By Frans Paul van der Putten
  17. Governance and Migration in a South-North Partnership : the Teaching of Economic Analysis By Thierry Baudassé
  18. Participation of Older Europeans in Volunteer Work By Marcel Erlinghagen; Karsten Hank
  19. The return of the guild? Network relations in historical pespective By Simon Deakin
  20. Remittances, Institutions and Economic Growth By Natalia Catrinescu; Miguel Leon-Ledesma; Matloob Piracha; Bryce Quillin
  21. Personality Preferences in Laboratory Economics Experiments By Kurtis J. Swope; John Cadigan; Pamela M. Schmitt; Robert S. Shupp
  22. Social Position and Distributive Justice: Experimental Evidence By Kurtis Swope; John Cadigan; Pamela Schmitt; Robert S. Shupp

  1. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: This paper analyzes the relations between social capital, institutions and trust. These concepts are full of ambiguity and confusion. This paper attempts to dissolve some of the confusion, by distinguishing trust and control, and analyzing institutional and relational conditions of trust. It presents a tool for the analysis of the foundations of trust and a diagnosis of its strength and viability.
    Keywords: social capital;institutions;trust;economic systems
    JEL: D63 D64 D71 L14 P16 Z13
    Date: 2006
  2. By: Andrew Leigh (SPEAR Centre, RSSS, ANU)
    Abstract: Using a large Australian social survey, combined with precise data on neighbourhood characteristics, I explore the factors that affect trust at a local level (‘localised trust’) and at a national level (‘generalised trust’). Trust is positively associated with the respondent’s education, and negatively associated with the amount of time spent commuting. At a neighbourhood level, trust is higher in affluent areas, and lower in ethnically and linguistically heterogeneous communities, with the effect being stronger for linguistic heterogeneity than ethnic heterogeneity. Linguistic heterogeneity reduces localised trust for both natives and immigrants, and reduces generalised trust only for immigrants. Instrumental variables specifications show similar results. By contrast with the United States, there is no apparent relationship between trust and inequality across neighbourhoods in Australia.
    Keywords: Trust, social capital, income distribution, immigration, ethnicity
    JEL: D31 D71 J15 Z13
    Date: 2006–01
  3. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: This chapter reviews some key points in the analysis of trust, based on Nooteboom (2002)i. The following questions are addressed. What can we have trust in? What is the relation between trust and control? What are the sources of trust? And what are its limits? By what process is trust built up and broken down? What are the psychological mechanisms involved? The chapter ends with an illustration of trust in the police.
    Keywords: trust;social psychology;mental framing;relational signaling
    JEL: D23 D64 L14 M14 Z13
    Date: 2006
  4. By: Andrew Leigh (SPEAR Centre, RSSS, ANU)
    Abstract: Several cross-country studies have observed a negative correlation between inequality and interpersonal trust. Using data from 59 countries, I instrument for inequality using the relative size of the mature-aged cohort, and find that a rise in inequality reduces trust.
    Keywords: Trust, inequality, ethnic fractionalization, instrumental variables
    JEL: D3 D7
    Date: 2006–01
  5. By: Lorenzo Cassi (CESPRI, Università Commerciale Bocconi, Milano, Italy); Lorenzo Zirulia (CESPRI, Università Commerciale Bocconi, Milano, Italy)
    Abstract: The aim of this paper is to extend the theoretical literature on knowledge and network structure by considering explicitly the choice to use the social network as a learning mechanism. In the model, we consider a set of actors that creates and diffuses knowledge. They are located on a lattice (identifying the social space) and they are directly connected with a small number of other individuals. Their aim is to increase their personal knowledge. We assume that individuals can learn in two ways: individually, by elaborating their personal knowledge; or socially, by interacting with other individuals in their social neighbourhood. Given this framework, we compare network structures in terms of efficiency and equity. We find that networks characterized by low average distance perform well in the short run, when the opportunity cost of using the network is low, but cliquish networks are more efficient in the long run, when the opportunity cost is high. However, a "small world" structure, characterized both by low average distance and high cliquishness, is the most equal structure in terms of knowledge distribution.
    Keywords: Knowledge, Networks, Small worlds, Diffusion, Learning
    JEL: D83 O33 Z13
    Date: 2005–09
  6. By: Helmut Rainer; Thomas Siedler
    Abstract: The level of trust inherent in a society is important for a wide range of microeconomic and macroeconomic outcomes. This paper investigates how individuals' attitudes toward social and institutional trust are shaped by the political regime in which they live. The German reunification is a unique natural experiment that allows us to conduct such a study. Using data from the German General Social Survey (ALLBUS) and from the German Socio-Economic Panel Study (SOEP), we obtain two sets of results. On one side, we find that, shortly after reunification, East Germans displayed a significantly less trusting attitude than West Germans. This suggests a negative effect of communism in East Germany versus democracy in West Germany on social and institutional trust. However, the experience of democracy by East Germans since reunification did not serve to increase levels of social trust significantly. In fact, we cannot reject the hypothesis that East Germans, after more than a decade of democracy, have the same levels of social distrust as shortly after the collapse of communism. In trying to understand the underlying causes, we show that the persistence of social distrust in the East can be explained by negative economic outcomes that many East Germans experienced in the post-reunification period. Our main conclusion is that democracy can foster trust in post-communist societies only when citizens' economic outcomes are right.
    Date: 2006–05–16
  7. By: Lucinda Platt (University of Essex)
    Abstract: It has long been accepted that lack of social participation in wider society is one aspect or one definition of poverty. Current concerns with the extent and distribution of social capital as both a measure of a good society and as means to upward mobility also emphasise the importance of social contacts and networks to the well-being of individuals and communities. While research has often focused on ‘civic participation’ and the measurement of trust, more informal social bonds are also a crucial part of individuals’ social capital. Moreover, informal social capital or social participation might be particularly important for those whose circumstances make them already more vulnerable to marginalisation, exclusion or poverty. For example, social interaction has been argued to be conducive to better outcomes for those with health problems; and there is an extensive literature which aims to chart and explain the role of ‘ethnic capital’ in the life chances of minority ethnic groups. I use the British Home Office Citizenship Survey 2001 for England and Wales to explore the impact on four aspects of lack of social engagement of long-term illness, caring for someone with such an illness, and ethnicity. Controlling for a range of characteristics and examining the relationships separately for men and women there is evidence that between them, the four measures reveal an underlying propensity for reduced social contact. Other things being equal, illness has little association with reduced social participation, but caring does seem to affect opportunities for sociability. Members of some ethnic groups are less likely to engage in neighbourly social visiting than others, and these differences are little affected by income level. By contrast differences in ‘going out’ across groups can largely be explained by differences in income. Overall, social engagement among male Bangladeshis and to a lesser extent Pakistanis is high, whereas Black Africans and Black Caribbeans, especially women, are notable for their lack of opportunities for social engagement compared with their otherwise similar peers. They would appear to be particularly at risk of social isolation, with consequences for their current and future welfare.
    Date: 2006–05
  8. By: Nooteboom,Bart; Gilsing,Victor; Vanhaverbeke,Wim; Duysters,Geert; Oord,Ad van den (Tilburg University, Center for Economic Research)
    Abstract: In this paper we analyze the innovative performance of alliance networks as a function of the technological distance between partners, a firm's network position (centrality) and total network density. We study how these three elements of an alliance network, apart and in combination, affect the 'twin tasks' in exploration, namely novelty creation on the one hand and its efficient absorption on the other hand. For an empirical test, we study technology-based alliance networks in the pharmaceutical, chemical and automotive industry.
    Keywords: innovation networks;cognitive distance;centrality;density
    JEL: O31 O32 L14 L24 L25
    Date: 2006
  9. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: This chapter pleads for more inspiration from human nature, in agent-based modeling. As an illustration of an effort in that direction, it summarizes and discusses an agentbased model of the build-up and adaptation of trust between multiple producers and suppliers. The central question is whether, and under what conditions, trust and loyalty are viable in markets. While the model incorporates some well known behavioural phenomena from the trust literature, more extended modeling of human nature is called for. The chapter explores a line of further research on the basis of notions of mental framing and frame switching on the basis of relational signaling, derived from social psychology.
    Keywords: trust;transaction costs;buyer-supplier relationships;social psychology
    JEL: A14 D64 L14 L24 Z13
    Date: 2006
  10. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: This paper gives a survey of insights into inter-firm alliances and networks for innovation, from a constructivist, interactionist perspective on knowledge, which leads to the notion of 'cognitive distance'. It looks at both the competence and the governance side of relationships. Given cognitive distance, organizations need to align cognition sufficiently to enable the fast and efficient utilization of opportunities from complementary capabilities. This, I propose, is done by means of a culturally mediated 'organizational cognitive focus'. The problem with that is that it yields a greater or lesser organizational myopia that, for the sake of innovation, needs to be complemented by means of outside relations with other firms, at larger cognitive distance. Hence the importance of networks for innovation. On the governance side, the paper gives a review of relational risks and instruments to manage them. Next to the effects of cognitive distance, the paper analyses the effects of density and strength of ties in innovation networks, concerning both competence and governance.
    Keywords: inter-organizational relationships;networks;competence;governance;innovation; cognitive distance
    JEL: D23 L14 L22 O31 O32 Z13
    Date: 2006
  11. By: Lindqvist, Erik (Dept. of Economics, Stockholm School of Economics); Östling, Robert (Dept. of Economics, Stockholm School of Economics)
    Abstract: Although several economic theories predict that heterogeneity in preferences affects economic outcomes, there are few attempts to directly study this relationship. We measure the degree of social cohesion in a society by the standard deviation in responses to multiple-choice questions in the World Values Survey. Using cross-country data, we find that social cohesion is lower in countries that are poor, ethnically fragmented, situated close to the equator and where the level of trust is low. We also find social cohesion to have predictive power for the measures of government quality used by La Porta et al (1999), in particular infant mortality, and for income inequality. This paper does not try to decide whether these relationships are causal, but the results suggest that social cohesion may be a measurable and robust determinant of economic outcomes.
    Keywords: social cohesion; preference heterogeneity; trust; ethnic fractionalization
    JEL: H11 H20 H42 Z13
    Date: 2006–05–19
  12. By: Andrea Morrison (CESPRI and Department of Economics and Quantitative Methods, Università Bocconi, Milano and Università del Piemonte Orientale, Novara, Italy); Roberta Rabellotti (Department of Economics and Quantitative Methods, Università del Piemonte Orientale, Novara, Italy)
    Abstract: A well-grounded empirical and theoretical literature shows that local production systems can benefit from external economies generated by a shared ‘industrial atmosphere’. Many scholars would agree that in contexts as industrial districts, clusters and local systems, economic actions are strongly embedded in social and institutional factors. Nevertheless, many scholars would instead debate about the nature, boundaries and processes underpinning ‘industrial atmosphere’. This paper aims at contributing to this field of studies by entering into the black box of the ‘industrial atmosphere’ reconstructing the informal contacts underpinning collective learning in a local production system. The study is based on empirical evidence collected at firm level in an Italian wine local system and uses methods of network analysis.
    Keywords: Social Networks, Knowledge, Industrial Clusters, Wine Sector
    JEL: O31 R10 Z13
    Date: 2005–09
  13. By: Hall, Andy (United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology)
    Abstract: The potential for public private sector partnerships is likely to grow. However, despite a number of high profile success stories, promoting partnerships has proved more difficult than many assumed. This paper argues that such partnerships need to be viewed in the framework of an innovation system and a development scenario where networks of agro-enterprises and intermediary organisations will underpin rural development and poverty reduction. This view helps reveal the importance of embedding public research organizations within these local networks and highlights that constraint to building partnership is usually institutional in nature – i.e. it relates to habits practices and patterns of trust. The paper concludes by suggesting that efforts should be focused on building social capital in agricultural innovation systems and cautions that this should be done in contextually relevant ways.
    Keywords: Public private sector partnerships, innovation systems, institutional change, capacity building, social capital
    JEL: O32 O38 J24
    Date: 2006
  14. By: Holger Graf (University of Jena, Faculty of Economics); Tobias Henning
    Abstract: Universities and public research organizations are said to be an integrative and essential element of a functioning innovation system as they play a vital role not only in the generation of new technological knowledge, but also in its diffusion. We analyse four East German local networks of innovators which differ in structure and innovative performance and investigate the characteristic role of public research within these local systems by applying methods of social network analysis. Our results show that universities and non-university institutions of public research are key actors in all regional networks of innovators both in terms of patent output and in terms of centrality of their position in the networks. Further we find the 'thicker' networks to have more central public research organizations. Higher centrality of public research compared to private actors may be due to the fact that universities are explicitly designed to give away their knowledge and that they increasingly face the need to raise external funds.
    Keywords: Innovator Networks; Public research; R+D Cooperation; Mobility
    JEL: O31 Z13 R11
    Date: 2006–05–24
  15. By: Magali Chaudey (CREUSET (EA 3724) - Centre de Recherche Economique de l'Université de Saint Etienne - [Université Jean Monnet - Saint-Etienne]); Muriel Fadairo (CREUSET (EA 3724) - Centre de Recherche Economique de l'Université de Saint Etienne - [Université Jean Monnet - Saint-Etienne])
    Abstract: This article deals with the links between networks performance and the design of vertical contracts. It provides evidence broadly consistent with the hypothesis that within franchising systems, constraining contracts for the retailers favor a better performance at the network level
    Keywords: vertical relationships; contractual constraints; contracts econometrics
    Date: 2006–05–22
  16. By: Frans Paul van der Putten (Nyenrode Business Universiteit)
    Abstract: This paper builds on a recent article by Elisabet Garriga and Domènec Melé, in which they provided an overview of the main approaches in current CSR (Corporate Social Responsibility) research. It applies their general approach to CSR research aimed specifically at the international level, and concludes that the research agenda in this field may usefully divided into four main questions. First, how does the process of establishing absolute (also ‘international’ or ‘universal’) standards for social and environmental issues – supposedly related to the objectives and values of developing societies – affect business behaviour? Second, under which conditions can profit maximisation by Western firms lead to responsible business behaviour in developing countries, and under which conditions does such behaviour contribute to profit maximisation? Third, what is the relevance of societal demands on business behaviour related to developing countries, and what is the legitimacy of these demands? Fourth, under which conditions can Western-based businesses make a positive contribution to local communities in developing countries?
    Keywords: International corporate social responsibility, csr
    Date: 2005
  17. By: Thierry Baudassé (LEO - Laboratoire d'économie d'Orleans - [CNRS : UMR6221] - [Université d'Orléans])
    Abstract: The aim of this paper is to study the relation between governance and migration in the case of a South-North partnership, using the tools of economic analysis. We will analyse both the governance of migratory phenomenon (i.e. the control of South-North migration, as much as the control of rural-urban or internal migration) and the consequences of internal and/or international migrations on a broader problem which is the compatibility of economic liberalization, political stability and other objectives which are pursued by governments (such as avoiding the deterioration of social capital, or a social dumping). In a first section we develop an original Harris-Todaro model in order to resolve the question of the compatibility of different policies. In a second section we will consider four possibilities to enrich the Harris-Todaro model, which are to take into account the cost of migration, the attitude toward risk, the relative deprivation hypothesis, and the relation between migration and social capital. In each case, our attention will be focused on the policy recommendations we can formulate as a result of every approach.
    Keywords: Rural-urban migration ; international migration ; agricultural liberalization ; social capital
    Date: 2006–05–16
  18. By: Marcel Erlinghagen; Karsten Hank (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: Today’s discussion about the growing ‘burden of ageing’ must not neglect the substantial productive potential of the elderly population. Using micro-data from the new ‘Survey of Health, Ageing and Retirement in Europe’ (SHARE), we explore cross-national patterns of volunteering and the relationship between selected socio-demographic characteristics and participation in voluntary work among the population aged 50 and older in 10 countries. Our analysis reveals a clear spatial pattern of volunteering (with higher participation rates in Northern Europe and lower ones in the Mediterranean countries) and shows that particularly age, education, health, and involvement in other social activities matter greatly for the individual’s propensity to engage in volunteer work. Our conclusions stress the need to maintain a contextual perspective in future research on volunteering, accounting for the role of institutions and culture, and support policies and programs designed to encourage elder citizens to make use of their productive potential – for the benefit of themselves and society.
    Date: 2005–05–16
  19. By: Simon Deakin
    Abstract: Prior to the industrial revolution, the predominant form of economic organization in western Europe and north America was the guild. Guilds were network forms, loose associations of independent producers, with strong local and regional identities, in which cooperation and competition were combined. The decline of the guild was brought about in large part by legal changes which privileged the emerging conjunction of the vertically integrated enterprise and mass consumer market. If present- day network forms are not be consigned to the margins of capitalism as their predecessors were, we need a set of legal concepts and techniques which can underpin and protect network relations, most importantly in the context of competition law.
    Keywords: networks, guilds, vertical integration, industrialisation, competition law.
    JEL: K21 L14 L22
    Date: 2006–03
  20. By: Natalia Catrinescu (European Commission); Miguel Leon-Ledesma (University of Kent); Matloob Piracha (University of Kent and IZA Bonn); Bryce Quillin (World Bank)
    Abstract: There is considerable debate regarding the relative contribution of international migrants’ remittances to sustainable economic development. While the rates and levels of officially recorded remittances to developing countries has increased enormously over the last decade, academic and policy-oriented research has not come to a consensus over whether remittances contribute to longer-term growth by building human and financial capital or degrade long-run growth by creating labor substitution and ‘Dutch disease’ effects. This paper suggests that contradictory findings have emerged when looking at the remittancesgrowth link because previous studies have not correctly controlled for endogeneity. Using Dynamic Data Panel estimates we find that remittances exert a weakly positive impact on long-term macroeconomic growth. The paper also considers the proposition that the longerterm developmental impact of remittances is increased in the presence of sound economic policies and institutions.
    Keywords: international migration, remittances, growth, institutions
    JEL: F22 O15 O47
    Date: 2006–05
  21. By: Kurtis J. Swope (Department of Economics, U. S. Naval Academy); John Cadigan (Department of Public Administration, American University); Pamela M. Schmitt (Department of Economics, U. S. Naval Academy); Robert S. Shupp (Department of Economics, Ball State University)
    Abstract: Student volunteers at the U.S. Naval Academy (USNA) participated in one of the following oneshot games: a dictator game, an ultimatum game, a trust game, or a prisoner’s dilemma game. We find limited support for the importance of personality type for explaining subjects’ decisions. With controls for personality preferences, we find little evidence of behavioral differences between males and females. Furthermore, we conclude that seniority breeds feelings of entitlement - seniors at USNA generally exhibited the least cooperative or other-regarding behavior.
    Keywords: Experiments; preferences; personality
    JEL: A12 C72 C78
    Date: 2005–07
  22. By: Kurtis Swope (Department of Economics, United States Naval Academy); John Cadigan (Department of Public Administration, American University); Pamela Schmitt (Department of Economics, United States Naval Academy); Robert S. Shupp (Department of Economics, Ball State University)
    Abstract: In a simple double-blind dictator experiment, systematically removing subjects’ levels of power and entitlement increases their choice of an income distribution generally consistent with Rawls (1971) concept of distributive justice, although choices are less unanimous and risk-averse than hypothesized
    Keywords: Power; entitlement; justice; experiments
    JEL: C91 D31
    Date: 2005–06

This nep-soc issue is ©2006 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.