supply and command

Business Networks as Complex Systems

Here's an abstract of the paper I presented at the EBHC in Glasgow:

In late medieval Venice, family business networks complemented strong formal institutions of capital generation. Yet the interdependence of public- and private-order institutions has thus far only rudimentarily been explored. This paper interprets a micro-historical case study on a late medieval Venetian family network in terms of complex systems analysis. Comparing the incentive structures of intra-family, intra-Venetian, and transcultural trade partnerships, it devotes particular attention to the respective roles of family representatives and non-kin trade agents. Whereas the latter seem to have profited from individual transactions either by receiving commissions or by being given the benefit of membership in a wider trade coalition, the utility streams of family agents appear to have been internalised to the family enterprise. I propose an internalisation hypothesis that characterises the Venetian merchant family as an institution of collective liability that allowed members to increase their expected future utility streams by resorting to the collective reputation of the family.

Merchant Networks Panel at EBHC

The 14th ANNUAL CONFERENCE OF THE EUROPEAN BUSINESS HISTORY ASSOCIATION 2010 is coming up soon. This time the meeting will be held in lovely Glasgow, Scotland.

Andrea Caracausi has organised a panel on business and merchant networks to which I will be contributing a paper. The aim of the meeting is to explore methodological overlaps between economic  network theory and the historical study of networks. Here's the panel abstract:

"BUSINESS AND MERCHANT NETWORKS IN HISTORICAL PERSPECTIVE: TOWARDS A FORMAL APPROACH

During the last decades, the concept of “network” has fascinated historians. Using approaches drawn from other social sciences, business historians, as well as scholars in economic and social history, have tried to explain in terms of network analysis the rise and fall of businesses, families and also institutions such as the State or financial markets. However, the same concept of “network” remains too vague, and the dialogue between scholars of different backgrounds is very poor.

The aim of this session is to fill this gap in economic and business history. Our idea is to start a confrontation of the formal models in use to study and compare networks in history, trying to extend the usual approach to graph statistics (centrality etc.) using a measure of complementarities (drawn from organisational studies) and inserting (or adding) a consideration for conflict and power (asymmetries, inclusion/exclusion) via vectors and similar tools. We propose four exemplary case-studies on different periods (from the pre-modern to the contemporary period) and topics (merchant networks and social networks in the pre-modern period; business networks in 19th and 20th centuries) in order to discuss how a common formal approach could be useful both in the study of business networks and in the dialogue between history and the social sciences."

ESSHC Talk

And this is what I ended up talking about at the ESSHC. More soon!

This paper uses early fifteenth century Venetian merchant letters to compare the incentive structures of intra-family, intra-Venetian, and transcultural trade partnerships. Particular attention is given to the respective roles of both family representatives and non-kin trade agents. Whereas the latter seem to have profited from individual transactions either by receiving commissions or by being given the benefit of membership in a wider trade coalition, the utility streams of family agents appear to have been internalised to the family venture. I propose an internalisation hypothesis that characterises the Venetian merchant family as an institution of collective liability that allowed members to increase their expected future utility streams by resorting to the collective reputation of the family.

Upcoming Talk

This is what I will talk about at the European Social Science History Conference in Ghent, Belgium, 13-16 April 2010:

"This paper examines the institutional basis of transcultural trade relationships in the early fifteenth-century Eastern Mediterranean. The notion of transculturality describes the continuity of informational flows between perceived separate cultural areas (e.g. “Latin Europe”, “Islamic Levant”, “Byzantium” etc.), which impact upon economic interaction by shaping mercantile techniques and contractual dispositions. Integrating this concept to institutional theory may shed new light on the formation of informal institutional arrangements. Sources used in this study come from the private archive of the Venetian diplomat and merchant Biaggio Dolfin (c. 1370-1420), which contains a number of documents dealing with aspects of transcultural trade (to be found in the Archivio di Stato di Venezia, ASVe). An example highlighting potential gaps in institutional structure is given by a legal quarrel between the Venetian Vice-Consul of Damietta, Michael Papadopolo, and Nichita Zamisi, a ship captain from Candia. Zamisi was accused of having embezzled the cargo entrusted to him by Arab merchants from Jaffa, who had requested the Vice-Consul of Damietta to act as a guarantor for his compatriot. This document, alongside similar sources from the same collection, highlights the consequences of insufficient informal institutional support to trade. In order to commit their Italian business partner ex ante to be honest ex post, the Arab merchants had to rely on the legal system as the ultimate means of contract-enforcement. Yet the use of informal contract-enforcement mechanisms was widespread on both sides, as relying purely on the legal system was an unnecessarily costly option. This research aims at explaining the basis of informal institutional efficacy, while also describing the circumstances under which formal economic institutions had to be called upon as a last resort. Based on the named body of sources, a theoretical framework of transcultural trade shall be developed, focusing specifically on the generation of trust between Venetian traders and business partners of different ethno-religious backgrounds. Combining institutional theory with a game-theoretic approach, the paper describes the institutional conditions that gave rise to various informal mechanisms."

A New Economic History?

I have been thinking a lot recently about what I want to achieve in my doctoral studies from a methodological point of view. My PhD thesis is a project in medieval economic history, yet it presents a methodological challenge to the typical modus operandi in medieval studies. This stems mainly from the inclusion of social-scientific concepts and methods that are not commonly used in descriptive historical research. It is my hope that, by highlighting the mutual dependence of historical narrative and theory, their inclusion may contribute towards the solution of an ongoing Methodenstreit in economic history. This post provides a short recap on this debate before outlining my own stance (in still rather rudimentary form).

Document of Commercial Agency

This is a transcription of a fifteenth century merchant letter that I dug out in the State Archive in Venice (I know, it's a bad transcription but my paleographic skills are still rather basic). It's a business representative of a Venice-based merchant reporting back to his superior. Unfortunately, the letter does not reveal where the agent is based.

I won't translate the document for now, instead leaving my readers with the fun of sorting out the late medieval Italian. It's an interesting (and partly entertaining) document that indicates the significance of personal bonds in principal-agent business relationships. 

Al nome de Christo 1418 a die 22 Febraio

da poy la debita salutacion chomo alo charisimo fradelo mio mazor dovi asaver ch'io som bene sano per la grazia de Christo. Ecusy aioria al dir de la vostra sanitade dovi asaver chomo ho recevudo du vy vostre letere de le qual fo molto chontento audir de vostra sanitade esi me de grande consolacion che tu me scrivi che tue guarido elevado di leto si che di questo fo molto contento. Anchora tu me scrivi che tu me mandy dui chavuty di pano e uno tavoler cum 40 tavole e uno par di quanty e duy dozien di stringe e una barila cum le chastane tutte quiste chose sio recevudo. Anchora tu me scrivi alfato de duy charatelii che me lasey che me devese inpyir de bon vino et si te respondo che el vino di qua sie plu charo ch'a Venezia el quarto denar ma nienty di mino. Io si te mando el charatelo picolo per portador de dita che moza 4 ÷ del vino in dito charatelo e si gosta £ 3 s. 10 el mozo e l'altro charatelo non te volsy mandar per amor de la charistia del vino che tu non haby [...] ma nienti di mino. Sy tu vol che ti se manda el dito charatelo e ti lo mandaro per Zorzy da Sibenicho. Scrive me pur. Anchora tu me scrivi per amor de la femena che ti la devese mandar et io te respondo che adeso si te li averia mandado ma per amor che li marinari de mala carne si e tropo zuveni, ma per Zorzy da Sibenicho centa falo si te la mandaro. Anchora tu me scrivi per fato de le martore che te devese cumprar per prizio de s. 40 l'un a quisto prizio e li trovarimo asay. Si mi sapy che ty mando la nostra barila inpyiga de fige e tre bucrilady in puterada d'intro in dita barila e questo si te mando per amor. Anchora si te mando uno scilato vivo per dito portador per questa mon digo Dio sia cum vuy amen.

saludame misser Biazio de parte mia
ere chomandame a luy chomo al mi signor

sapy che te saluda Dobrica sorela de [...]
chon charoso amante

Nicholo di Polo [...]
sempre al vostro chomando

PhD Update in 250 Words

In my first research proposal (written as an exposé for the Centro Tedesco di Studi Veneziani, January 2009), I outlined my PhD project as an inquiry in institutional history, investigating the informal institutions of fourteenth century long-distance trade in the Eastern Mediterranean on the basis of Venetian sources. Since then, I have identified primary source material, specified the historical focus, and further developed the theoretical framework by incorporating approaches from network analysis and evolutionary economics.

The project has both a micro- and a macro-historical dimension. On the micro-historical level, it investigates the institutional functioning of the trade relationships of one Venetian merchant, Biagio Dolfin (c. 1370-1420), with his trade agents. Were contracts and informal agreements in the given period enforced through formal institutions (e.g. legal system) or through informal means (reputation mechanisms, kinship bonds)? Biagio Dolfin’s business correspondence hints towards the latter, as he frequently employed relatives to handle his business in distant locations. This curious phenomenon, the recourse to kinship-based business partnerships and informal enforcement mechanisms despite the existence of a well-functioning legal system, constitutes the macro-historical dimension of my research. The devolution from an elaborate system of impersonal exchange enabled through complex financing tools (e.g. bills of exchange, commenda contracts) to kinship-based partnerships is crucial to the emergence of the modern firm. It should ideally be investigated by incorporating insights from evolutionary economics on the significance of kinship in economic decision-making. The aim of this historical study is to provide insights to the micro-foundations of this development.

Profit and Commitment – Economic Agency Relations in Venetian Mediterranean Trade, 1350-1450

A brief introduction to (the current state of) my doctoral research, which I wrote for the News on the Rialto yearbook:

"This research examines the institutional basis of Venetian agency relations in the Eastern Mediterranean. The century between 1350 and 1450 saw a rise in Venetian naval supremacy resulting in considerable political and economic power. The factual Venetian monopoly on trade with the Islamic Levant, which was buttressed by a papal permission dating from 1345, reinforced the extensive economic, political, and cultural contacts between the Venetian Republic and the Eastern powers. In the course of this interaction, the Venetian Diaspora grew rapidly, concentrating primarily on the major trade hubs of the Eastern Mediterranean, such as Nicosia, Byzantium, and Mamluk Alexandria.

My primary objective is to integrate a historiography of late medieval European trade to an institutionalist framework of cultural dispositions, thereby analysing the degree of endogeneity of formal economic institutions with respect to informal institutional determinants. In order to conceptualise the institutional interrelation of perceived separate cultural areas, the philosophical notion of transculturality shall be applied. This suggests a constitutive interdependence of commercial practices and behavioural dispositions across cultural entities, leading to the formation of transcultural economic areas that generate universally valid informal means of contract enforcement.

PPP Ante Litteram

I returned from Athens last week, having attended the 2nd International Conference on Meditarranean Studies. The conference, organised by the Athens Institute for Education and Research, brought together researchers from various backgrounds to discuss a wide array of topics related to the Mediterranean. It was a fun, easy-going meeting with lots of stimulating discussions. (Interested scholars in the humanities and social sciences can sign up for next year's meeting here.)

The (draft) paper that I presented at the conference deals with "Economic Agency Relations in Mediterranean Trade, 1350-1420 - Evidence from Venetian Merchant letters". Therein, I attempt to describe, based on a few selected sources, the institutional order of Venetian long-distance trade in the said period, during which agency relations rose in importance as a means of business organisation.

I define the institutional structure of Venetian Mediterranean trade as a hybrid form of private-order and public-order systems. I thus apply a recently-proposed institutional model of medieval finance to the realm of commodity trade and economic agency.  According to this article by Yadira González de Lara, the institutional order of contract enforcement in the late medieval Venetian financial market was neither strictly public-order, coercion-based, nor private-order, reputation-based. “Instead, a public-order yet reputation-based institution supported the Venetian financial market” (p. 248). The Republic of Venice vested merchants with capital for overseas business, the future returns on which were greater than gains from embezzling parts or all of these rents. Merchants were committed ex ante to return to Venice and render a true ac-count ex post, since their ability to secure future investments depended on their reputation to be honest. While this reputation mechanism allowed for large-scale investments in overseas trade, formal economic institutions guided the provision of capital. The Venetian case thus exemplifies a model of economic organisation that is characterised as much by informal arrangements as by formal institutional systems.

Abstract for Mediterranean Studies Conference

Here's the topic of my upcoming talk at the 2nd International Conference on Mediterranean Studies in Athens:

Economic Agency Relations in Mediterranean Trade, 1350-1450 – Evidence from Venetian Merchant Letters
This paper evaluates merchant letters from the Venetian State Archive (Archivio di Stato di Venezia) in order to present new evidence for the institutional structure of agency relations in Mediterranean trade in the fourteenth and fifteenth centuries. Agency relations in medieval long-distance trade have widely been regarded as shaped by economic institutions that provide the incentive structures to prevent contract deviation. Since existing institutional theories of impersonal exchange are mostly confined to mono-cultural environments, this research perspective allows for the institutional design of agency relations to apply across cultural entities. In this context, the notion of transculturality is applied to describe the continuity of informational flows between perceived separate cultural areas (e.g. "Latin Europe",  "Islamic Levant", "Byzantium" etc.) that also impact upon economic interaction. The methodology adopted here operates at the crossroads of economic history and cultural studies, emphasising the significance of these informational flows to both commercial activity and cultural development.

Details of my paper will follow soon.