The Social Character of Economic Exchange

By Joel Podolny
1992| Working Paper No. 1198

Sociological work on markets has called into questio the validity of certain traditionally accepted distinctions between social and economic exchange. Work in this area has shown economic exchange to be structural in the sense stressed by Emerson, where pre-existing patterns of relations constrict the flow of resources and thereby influence both market bheavior and market outcomes. In line with the prior work, this paper seeks to further undermine accepted distinctions between these two forms of exchange. However, it does so not by focusing on the structural concerns at the core of Emerson’s work, but by exploring the economic significance of status processes to which early social exchange theorists such as Blau and Homans gave attention. This paper argues that as long as individual or organizational actors lack perfect information on the goods which confront them in the market, then an action orientation toward status is a central element of economic exchange. This general claim is then tested through an examination of co-brokerage relations in the investment banking industry. Implications for current and future work are discussed._x000B_