What we can learn about social networks from contract law

I am big fan of looking to outside fields for ideas and expertise. Case-in-point: I recently came across a reference to a great study about contract law – when people rely on the contract for enforcement during the course of business, and when they don’t. Hint: they usually don’t; they rely on the relationship.

Translating the findings to social network analysis, we come up with six great pieces of advice for all aspiring master networkers:

  1. Established relationships provide more value than new ones.

  2. Your reputation is critical to creating new relationships.

  3. The more your peer gets out of a relationship, the more you will get out of it: deliver excellence.

  4. If you are stuck together for the foreseeable future, you will both get more out of the relationship. This could be from getting forced to trust each other or pushing harder to get more out of the relationship.

  5. New relationships are easier through introductions as the introducer can punish the introducee, through reputation or otherwise, if he does not deliver.

  6. Your network is your asset and yours alone, no one is invested the way you are to maintain your relationships.

Paper discussed:

Johnson, Simon H., McMillan, John NMI1  Woodruff, Christopher M.,   (January 2002). MIT Sloan Working Paper No. 4338-02; Stanford Law  Economics Olin Working Paper No. 227. Which I found referenced in (and translated the summary from) Avinash K. Dixit’s Lawlessness and Ecomonics: Alternative Modes of Governance.