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A. Background
In the life of the community as an economic system just as one part or subsystem alone.
Therefore, in understanding aspects of the economic life of the people it needs to be connected
between the economic factors with other factors in the life of the community. Such factors,
among others; cultural factors, group solidarity, and social stratification.
These factors have a direct influence on economic development. Cultural factors; existing values
that promote economic development, but there are also values that hinder economic
development. Similarly, solidarity groups, in this case the families and ethnic groups, families
sometimes encourage economic growth, but sometimes too slow.
Neither economics nor sociology is a science disciplines with an established tradition. The
emergence of economics as a discipline can be seen from the economic phenomenon as a
symptom of how people or communities meet their basic needs for services and goods scarce
preceded by a process of production, consumption and exchange.
Economic sociology studying a variety of activities that are complex and involve the production,
distribution, and exchange of consumer goods and services that are scarce in the community.
This, the focus of analysis for economic sociology is on economic activity, and the relationship
between sociological variables that seen in non-economic contexts.


Concept proposed by Granovetter (1985) to explain economic behavior in social relationships.
concept is economic action is socially and personally embedded in social networks that are
taking place among the actors. As is the network of social relations is as a series regular contact
or the same social relations among individuals or groups - groups. As the network of social
relations is intended as "a series of regular contact or the same social relationships between
individuals or groups" (Granovetter and Swedberg, 1992: 9)
Actions taken by members of the network is "is attached" as he expressed in interaction with
According to Polanyi and his colleagues (1957) in the pre-industrial economy embedded in
social institutions, politics and religion. This means that phenomena such as trade, money and
markets inspired purpose other than for profit. Economic life in pre-industrial societies governed
by reciprocity and redistribution. The market mechanism is not allowed to dominate economic
life, therefore and offers not as forming price but rather the tradition or political authority.
Instead in modern society, "the market sets the price" set by a new logic, namely the logic which
states that economic action is not necessarily inherent in society.
In discussing the economic in society, Polanyi propose three economic processes, namely
reciprocity, redistribution and exchange. Reciprocity referring to the movement of the symmetric
groups are interconnected. It occurs when the reciprocal relationship between individuals often
do. For example, in a traditional Minangkabau society there is guidance on reciprocity is good

news, bad news. That is, if there is good news (good) as the farmers harvest rice paddy owner
must notify the relatives - relatives about the time and place of harvest rice before, if he wanted
to help in harvesting rice. Instead, relatives - relatives also did the same thing to him when
they're harvesting rice in the fields.
Redistribution is a movement that then move towards the center of the central redistributed. This
happens because of the centralized political community. For example, in the kingdom - a
traditional Javanese kingdom, the king has the right to collect taxes from the people. Otherwise
people will have protection or security "blessing" from the center (the king event held once a
year is an example of redistribution carried out by the center.
While economic exchange is a process that takes place between the "arms" under the market
system. In market trading activity is done by using money as a medium of exchange and market
mechanisms are determined by the market through demand and supply.
Start with a few units or actor are assumed behavior "rational behavior". Meaningful maximize
constancy anticipated or expected behavior that will bring future rewards or results will come.
In general, rational choice theory assumes that human action has the sole purpose of being
mentored by a neat hieraki of preference.
In this case a rational means:
- Actors perform the calculation of utilization or preference in the selection of a form of action
- Actor also calculate the cost for each path behavior.
- Actor seeking to maximize utilization to achieve a particular choice

According to Granovetter (1989), the rational choice approach is an extreme form of

methodological individualism try putting a vast superstructure above the narrow
fundamentalism, because the rational choice approach does not take seriously the importance of
social network structures and how these structures affect the overall result.
D. Versus New Institutional Economics
New institutional economics (EIB) comes from the expansion of economic analysis in order to
incorporate social institutions into the scope of attention. Some common beliefs held by the New
Institutional Economics theory is:
Flow-must relate to the main economic institutions.
Analysis institutions have been neglected can be done directly on the basis of the principles of
neo-classical economics.
According Granoveter and Swedberg (1992) Theorists of EIB is a heterogeneous collection of
economists. Among them was Douglas North, Oliver Williamson, Andrew Schotter and Robert
Thomas. Despite their diverse ideas, but can be drawn a line connecting the central theme of
their work is thought of efficiency. Efficiency by reducing transaction costs. Granovetter further
asserts that the institution can not be explained on the principles of neoclassical economics,
particularly efficiency; existing institutions would be more appropriate when viewed as a social
construction of reality. Thus, the existing institutions, economic institutions diskontruksi with
resource mobilization through social networks, and built with consideration of the background of
society, politics, markets and technology.
E. Application of Concept
In behavioral economics has been attached to the concept of trust (trust). Atomized actors
approach rooted in neo-classical economic approach believe that trust is a social institution that
is rooted in the results of the evolution of political forces, social, historical, and legal, is viewed

as an efficient solution to certain economic phenomena.

The more socialized actors approach the view that morality is a general belief in economic
behavior. Therefore, all actions must refer actor, submissive and obedient automatically to the
morality, in that it upholds the values of trust.
New economic sociology approach-or also often called a "" propose a more dynamic view, which
is that the trust does not appear immediately, but will rise from the interpersonal relationships of
the actors who had long been involved in economic behavior together. Confidence is not the raw
stuff (no change), but instead, she continuously interpreted and assessed by the actors involved in
the relationship of economic behavior.
F. Social Networks in Economic Behavior
Granovetter has confirmed that economic behavior in social relationships can be explained
through the social networks that occur in economic life. For sociologists, the study of how social
networks are connected circuitry related individuals with one another and how to bonds affiliates
serve both as a lubricant to get something done mauoun as the glue that gives order and meaning
to social life.
Based on a growing literature, Powell and Smith-Doerr (1994) propose two approaches which
can be used to understand the social networks, which is abstract and analytical approach or
perspective or case study approach. Approach to social network analysis emphasizes the abstract:

a. Informal patterns in the organization, the area basically has framework that informal
relationships as the center of political life organizations.
b. Network is also concerned about how the environment in the organization This means that
more attention is focused on the normative aspects of the environment such as cultural and belief
systems, rights, professions and sources of legitimacy.

c. As a formal research tool for analyzing power and autonomy, this area consists of the social
structure as a pattern of social relations units related (individuals as actors together and working
together) that accountable for the behavior of those involved.
Approach to perspective view social networks as a logical arrangement or as a way of moving
the relationships among economic actors. Thus he is seen as the glue that holds individuals
together into a coherent system. This approach is more pragmatic and related to the interdisciplinary approach. This approach tends to see different motives into the economic life such as
social network analysis in the market, labor, business ethics, business groups and organizations.
Similarities between the analytical approach and the approach perspective on the conceptual
framework of:
a) reciprocity and connection. All of which form a network of relationships for any particular
action inherent in the broader social structure or society as a whole.
b) The use of language and action model. According to Burt (1992), the informational advantage
of social timing, . Both approaches are equally considered important trust (trust) for reciprocity
in social networks.
Both analytical approaches and perspectives approach has limitations. These circumstances led
to the two approaches are not able to see structure or form and content of social networks in
Abstract oriented approach is often too little attention to the substance, more emphasis on
structural (size) than the content of the bond of a social network.
In doing research on social networks, there are four areas of research that can be done by
sociologists, the informal network of access and opportunity; formal network of influence and
power; organization as a network of treaties, as well as the social network in production.

1. Informal network of access and opportunity

On this field of research focused on the use of social networks in employment, mobilization and
diffusion. Social networks play an important role in the labor market. Weak and strong ties of a
social network determine employability. Research conducted Granovetter (1974) showed that the
bond strength of a network allows a person to know the availability of a job. Strong network is
defined as a close friend or family, while a weak bond is as an introduction to classmates or
friends as usual.
Social networks also play an important role in immigrating and immigrant entrepreneurship. This
network united in the bonds of kinship, friendship, and community of the same origin. once the
network there somewhere, he will create a continuous flow of migration (Powell and SmithDOER 1994: 374) most entrepreneurship that occurs in migrant communities facilitated by the
network of ties in helping each other, the circulation of capital and assistance in connection with
the bureaucracy.
Social networks facilitate the mobilization of resources. Expansion of ties and relationships and
bonding in the strategic location is the main thing. Two important areas in the study was an
informal information exchange and resource mobilization. Communication networks play an
important role in the spread of models, structures, practices and business culture. Three ways for
the transmission of ideas and knowledge through professional networks or network commerce
through a pattern of inter-organizational relationships in which companies and individuals
involved and through the actions of an authoritative. For most companies and institutions, they
learn through imitation and and this is an effective way save costs.
2. Formal network of influence and power
Camps of thought believes that the inherent powers are situational, it is dynamic and potentially
unstable (Powell and Smith, 1994:376). While the power is here defined as the formal authority,
informal influence, and domination. In understanding the power of social networks can be

approximated by a three perspectives, namely social exchange, resource dependence and social
Social exchange perspective believes that although individual after another come and go in the
stacks of power, but the distribution of power in the same position.
3. Organization as a social network of agreements
Organizational network analysis based on formal and informal organizations. According to
Dalton (1959:219) means something planned formal and it, while informal means bond
spontaneous, flexible, among members led to feelings and personal interest can not be
maintained by a formal activity.
Through a network of organizations and as part of a broader reorganization process, vertically
integrated organization streamline corporate hierarchy. Networks provide a way for large
companies to secure stakes in the face of uncertainty and market barriers. Decentralization of
production does not require a decentralization of power.
As the double logic of social networks, organizations involved in a complex mixture of
cooperation, competition and the power of the company into the complex network of treaties.
Organizations in the collaboration network will improve learning from experience. Collaborative
activities seem freer and richer through a communications network while channel exchange of
information creates a parallel network of rival alliance in a new form of competition which in
turn guarantee a new position, reputation and the creation of a new identity.
4. Social networks of production
Unlike other networks, the social network of production take seriously the meaning of faith
(trust). Powell and Smith-DOER (1994) propose four network produksio together, namely
regional, research and development, business groups, strategic alliances and joint production.
A regional type of social network based on the location of production.

This type of research and development of production is a social network that is based on
scientific cooperation. This type is driven by innovation and learn about new ideas. While the
basis of trust is placed on the scientific community, intellectuals, and technology.
Type of business groups is driven by inter-organizational ties are relatively egalitarian horizontal
and vertical combined with a more hierarchical relationship with the authorities and policy
Strategic alliances and joint production of a production network that is more formal because it is
formed by mutual consent to cooperate with a relatively short period of time. The characteristics
of this type which comprises members from different business groups, have a common
normative foundation, and relatives feel the work is following a set of common rules.
Mooniyoring therefore tend to be more formally structured.

A. Conclusion
In understanding aspects of the economic life of the community then needs to be connected
between the economic factors with other factors in the life of the community. Such factors,
among others; cultural factors, group solidarity, and social stratification.
focus of analysis for economic sociology is on economic activity, and the relationship between
sociological variables that seen in non-economic contexts.