Jian Qin and Li Xia on the Social Credit System
In her famous 1992 study of networked relationships in entrepreneurial settings, entrepreneurship professor Andrea Larson (University of Virginia), observed how network form of governance highlight ‘reputation, trust, reciprocity and mutual interdependence, and how social control is one of the possible governance mechanisms of network organizational forms.
As it is well-known, networks are a governance mechanism that provides an alternative to both markets and hierarchies. While markets – at least in their most abstract conceptualization – are limited to the private sector, and hierarchies are confined to the public sector, networks span across the public, private, and voluntary sectors. If hierarchies are governed through administrative orders, and markets are coordinated through competition and prices, networks are governed through mechanisms based on trust.