Networks are defined as “formal exchanges, either in the form of asset pooling or resource provision, between two or more parties that entail on-going interaction in order to derive value from the exchange.” (Smith-Doerr and Powell, 2005). These networks, illustrated as a collection of nodes and links between the nodes, are a useful representation of complex systems. The analysis of networks gives important clues in identifying the trends and patterns between individual players in the network and how they influence the network as a whole. In the wider field of networks, Social Network Analysis (SNA) has gained widespread popularity. Social networks are all around us and operate on multiple levels, starting with the most basic level of the family to a much broader level of the country existing in a global economy. The application of SNA to business and finance examines whether interactions between individuals, teams and organisations result in network structures that can explain important phenomena such as the evolution, governance and performance of firms.
More recently, economic and business historians have applied Social Network Analysis to reveal interesting insights from the past. This has been in the areas of finance, governance and trade. Bloch et al. (2022) use a corpus of 170,000 documents of administrative correspondence of the Portuguese empire from 1610 to 1833 and analyse the political and social evolution of the early modern Portuguese Empire, spanning the reign of seven Portuguese monarchs. Buchnea (2014) also analysed trade in the early modern Atlantic world and how it brought communities and commodities closer together. She applies SNA to the Liverpool-New York trade network and used network visualisations to reveal the changes the network went through in three distinct phases; 1760-90, 1790-1815 and 1815-33. The network visualisations reveal the extent to which the network was dynamic and how it sustained risks and longevity over time.
The application of SNA can serve as an important methodological tool for the study of finance, as financial systems exhibit a high degree of interdependence. In this regard, Del Angel (2016) examined the Mexican financial system in the early twentieth century and argued that it emerged from being embedded in business. In an environment of weak legal institutions, closed ownership and corporate governance, the diversity of organisational arrangements led to an outcome in which most financial intermediaries were able to grow while maintaining sound operations. In a more recent setting, Buchnea et al., (2020) analyse the nature and depth of the British corporate network from 1976-2010. The authors argue that given the increasing role of financial institutions in UK equity ownership from 1960, the withdrawal of financial institutions from the network suggests a growing disconnect between owners and boards. Additionally, major changes in the business landscape related to policy and crises appear to have resonated in the network itself, demonstrating reactive corporate interlocking behaviour among the largest businesses in Great Britain.
The use of social network analysis to historical phenomena is a powerful tool due to its ability to provide contextual and longitudinal explanations of business phenomena. There is much scope for employing SNA to history as it can provide rich insights into the evolution of firm networks, relationships between key economic stakeholders and their implications for the wider economy.
