Social Networks and the Success of Market Intermediaries

What is it about?

Economic sociology views transactions as embedded in social networks rather than happening in isolation. The paper examines what kinds of network ties are more important for market intermediaries: ties to potential customers or ties to other professionals. Using data from a survey of real estate agents, we find that ties to other professionals are quite predictive of success, while ties to potential customers are not.

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Why is it important?

The implication of the study is that for complex transactions, market intermediaries like real estate agents can add value by providing access to a network of other professionals, not just by connecting buyers and sellers. The results help explain why transaction-cost-theory predictions of disintermediation due to the use of information technology on have not been supported. An implication for market intermediaries is to strengthen these ties and to look for ways to support customers through the transaction.