Stability, Specialization and Social Recognition

CentER Discussion Paper No. 2006-17

30 Pages Posted: 17 Apr 2006

See all articles by Robert P. Gilles

Robert P. Gilles

Queen's University Management School

Emiliya A. Lazarova

Queen's University Belfast

Pieter H. M. Ruys

Tilburg University - CentER

Date Written: March 2006

Abstract

Yang's theory of economic specialization under increasing returns to scale (Yang 2001) is a formal development of the fundamental Smith-Young theorem on the extent of the market and the social division of labor. In this theory specialization and, thus, the social division of labor is firmly embedded within a system of perfectly competitive markets. This leaves unresolved whether and how such development processes are possible in economies based on more primitive, nonmarket organizations. In this paper we introduce a general relational model of economic interaction. Within this non-market environment we discuss the emergence of economic specialization and ultimately of economic trade and a social division of labor. We base our approach on three stages in organizational development: the presence of a stable relational structure; the presence of relational trust and subjective specialization; and, finally, the emergence of objective specialization through the social recognition of subjectively defined economic roles.

Keywords: networks, stability, social division of labor, specialization

JEL Classification: C78, D85

Suggested Citation

Gilles, Robert P. and Lazarova, Emiliya A. and Ruys, Pieter H. M., Stability, Specialization and Social Recognition (March 2006). Available at SSRN: https://ssrn.com/abstract=895461 or http://dx.doi.org/10.2139/ssrn.895461

Robert P. Gilles (Contact Author)

Queen's University Management School ( email )

25 University Sq
Belfast, Northern Ireland BT7 1NN
United Kingdom

Emiliya A. Lazarova

Queen's University Belfast ( email )

25 University Square
Belfast, BT7 1NN
Ireland

Pieter H. M. Ruys

Tilburg University - CentER ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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