Social Networks 189
this multilateral reputation mechanism,67 the Hanseatic network trade was a
self-enforcing institution. Hanseatic societies and institutions creating oppor-
tunities to socialize contributed greatly to the reputation mechanism. It was
in the societies’ functions and informal meetings that participants were reg-
ularly provided with information regarding the reputation of other network
members.68 For example, there is plenty of evidence that the names of those
who were no longer allowed to share the privileges of the Hanseatic League in
Bruges were published in the Artus courts.69 Joint membership of merchants
and councilors in societies or fraternities as well as closeness within a town
helped merchants make city councilors an instrument in advocating commer-
cial interests. Thus, design and functionalism of trade networks do verify that
commercial purposes and social practices of Hanseatic merchants overlapped
to a great extent.
Benefits and Long-range Consequences of Networking
Using networks for commercial purposes was certainly beneficial for Hanseatic
merchants, but in the long run, this also had some ambiguous consequences
for the competiveness of the Hanse as a whole. Individual level benefits of net-
working can be derived from the transaction costs approach, which was devel-
oped by Coase and Williamson.70 First, “networking” produced many costs
instead of saving them. Since merchants were engaged in medium-term or
even long-term partnerships, they had to account for the individual costs that
67 See on the impact of reputation-based institutions in medieval trade Avner Greif,
“Institutions and International Trade: Lessons from the Commercial Revolution,”
American Economic Review, Papers and Proceedings 82 (1992), 128–133, 130; Id., “Contract
Enforceability and Economic Institutions in Early Trade: The Maghribi Traders’ Coalition,”
American Economic Review 83 (1993), 525–548, 531–535; Id., Paul Milgrom and Barry R.
Weingast, “Coordination, Commitment, and Enforcement: The Case of the Merchant
Guild,” Journal of Political Economy 41 (1994), 745–776; Id., “Fundamental Problem of
Exchange” (see footnote 65), 260–272; Jochen Streb, “Die politische Glaubwürdigkeit von
Regierungen im institutionellen Wandel. Warum ausländische Fürsten das Eigentum der
Fernhandelskaufleute der Hanse schützten,” Jahrbuch für Wirtschaftsgeschichte 2004/1,
141–156; and quite recently Yadira Gonzáles de Lara, “The Secret of Venetian Success:
A Public Order, Reputation-based Institution,” European Review of Economic History 12
(2008), 247–285.
68 Selzer, “Trinkstuben” (see footnote 26), 84, 96–97.
69 Selzer, Artushöfe (see footnote 26), 105.
70 Ronald H. Coase, “The Nature of the Firm,” Economica ns 4 (1937), 386–405; Id., “The
New Institutional Economics,” Journal of Institutional and Theoretical Economics 140
(1984), 229–231; Oliver E. Williamson, “Transaction-Costs Economics: The Governance of
Contractual Relations,” Journal of Law and Economics 22 (1979), 233–261.