Returns to Social Network Capital Among Traders

Centro Studi Luca D'Agliano Development Studies Working Papers No. 145

43 Pages Posted: 2 Jan 2001

See all articles by Marcel Fafchamps

Marcel Fafchamps

Stanford University - Freeman Spogli Institute for International Studies

Bart Minten

Cornell University - Food and Nutrition Policy Program; Catholic University of Leuven (KUL) - Department of Agro-Engineering and Economics

Abstract

Using data on agricultural traders in Madagascar, this paper shows that social network capital has a large effect on firm productivity. Better connected traders have significantly larger sales and value added than less connected traders after controlling for physical and human inputs as well as for entrepreneur characteristics. The analysis indicates that three dimensions of social network capital should be distinguished: relationships with other traders, which among other things help firms economize on transactions costs; relationships with potential lenders; and family relationships, which reduce efficiency, possibly because of the blurring of firm boundaries. We find no evidence that social capital favors collusion.

Suggested Citation

Fafchamps, Marcel and Minten, Bart, Returns to Social Network Capital Among Traders. Centro Studi Luca D'Agliano Development Studies Working Papers No. 145, Available at SSRN: https://ssrn.com/abstract=250762 or http://dx.doi.org/10.2139/ssrn.250762

Marcel Fafchamps (Contact Author)

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

Bart Minten

Cornell University - Food and Nutrition Policy Program ( email )

BP 6313
Antananarivo 101
Madagascar
033 11 38520 (Phone)
261 20 2222198 (Fax)

Catholic University of Leuven (KUL) - Department of Agro-Engineering and Economics ( email )

Kardinaal Mercierlaan 92
Heverlee, B-3001
Belgium

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
259
Abstract Views
2,663
rank
131,037
PlumX Metrics