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Transacting in the absence of trust : Uncertainty and network patterns in post-communism


  • Lehmbruch, B.


The paper critically discusses the widespread literature focusing on informal post-communist “clans,” “networks,” or “fiefdoms.” Often self-described as determinedly empirical, the “clan” paradigm is crucially shaped by its origins in the analysis of East Asia, as well as by its use as an ideal-typical opposite of Western-style hands-off market contracting in the “markets and hierarchies” literature. To counter such deficiencies, the paper proposes an alternative argument. Although interactions are indeed personalized, interpersonal trust in many post-communist countries has failed to compensate for missing institutional safeguards. Rather, confronted with an environment of low trust and high uncertainty, actors have developed two main coping strategies: on the one hand vertical integration, on the other hand a hedging strategy of purposeful network redundancy. Even though trust and enforcement remain low, actors can minimize the consequences of default by maintaining multiple ties. The consequences of such organizational strategies are ambiguous. By compensating for defaults, network redundancy has cushioned the impact of economic crisis. At the same time, network redundancy has considerably raised overall transaction costs and may also play a role in impeding democratic consolidation.

Suggested Citation

  • Lehmbruch, B., 2012. "Transacting in the absence of trust : Uncertainty and network patterns in post-communism," ISS Working Papers - General Series 539, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  • Handle: RePEc:ems:euriss:32268

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    References listed on IDEAS

    1. Schaffer, Mark E., 1998. "Do Firms in Transition Economies Have Soft Budget Constraints? A Reconsideration of Concepts and Evidence," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 80-103, March.
    2. Martin Gargiulo & Mario Benassi, 2000. "Trapped in Your Own Net? Network Cohesion, Structural Holes, and the Adaptation of Social Capital," Organization Science, INFORMS, vol. 11(2), pages 183-196, April.
    3. Ellman,Michael, 2014. "Socialist Planning," Cambridge Books, Cambridge University Press, number 9781107074736.
    4. Geertz, Clifford, 1978. "The Bazaar Economy: Information and Search in Peasant Marketing," American Economic Review, American Economic Association, vol. 68(2), pages 28-32, May.
    5. Tom Schuller, 2007. "Reflections on the use of social capital," Review of Social Economy, Taylor & Francis Journals, vol. 65(1), pages 11-28.
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    Russia; networks; social capital; transition; trust;


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