ABSTRACT
The governance of exchange is a core topic of sociological theory and ‘economic sociology’. Durkheim (1893, Book I, Chapter 7) highlighted the limits of explicit contractual agreements as a basis for efficient transactions. He addressed unforeseen or unforeseeable future contingencies that arise in the course of contract execution. He also stressed bargaining costs associated with the negotiation and re-negotiation of detailed contractual agreements. Weber (1921, p. 409) presented similar arguments in his sociology of law. According to Durkheim, efficient transactions presuppose appropriate legal and extra-legal institutions, e.g., moral norms of reciprocity and solidarity, that complement bilateral contracts. In an influential contribution to the sociology of law, Macaulay (1963) presented empirical evidence for the widespread use of non-contractual modes of arranging transactions. Granovetter (1985) has argued from a network perspective that the embeddedness of transactions in ongoing relations and in a network of relations with third parties has crucial implications for efficient governance via non-contractual means.
