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A Brief History of Networking


Disciplines > Networking > A Brief History of Networking

Long ago | The industrial revolution | Developing networks | These days | So what?


Long ago

Long ago, there was no need for networking as we now understand it. People lived in stable communities where their social position and role did not change very much over a lifetime. They would know at most around 150 people (which is known as 'Dunbar's number').

Actually 'long ago' is not really that long ago. Up to the 18th century, there was a largely agrarian society with a much smaller trade sector than we know now and although it benefited some to build a wide network, for most people it was an unknown concept.

The industrial revolution

With the rise of the industrial revolution in the 18th and 19th centuries came the need for businesses to collaborate and trust a wider range of people and other businesses. It was not enough to develop a few partners and customers then work with them for the rest of your life, as often happened with simple artisans and craftspeople.

In business, risk sharing and resource pooling became more common as a way of 'expanding the pie' and making more profit for everyone involved.

Expanding overseas trade needed people to take the longer view and trust others more. Investors had to trust sea captains. Manufacturers had to trust their suppliers. And business partners needed to trust one another in order to reduce transaction cost and so increase competitive advantage. Business also led to a huge increase in insurance, starting with maritime protection and moving on to other business interests. To insure a person you need to trust them and insurance agents can safely give lower premiums to those they trust.

In late eighteenth-century Britain, business people created capital and credit networks. The consequent increase in trust and decrease in transaction cost led to credit expansion and various collective forms of economic diversification, as well as an increasing use of the joint-stock form of business organization.

Kinship ties were extended by social, religious, political, and cultural connections which led to the development of a common values system among business people who formed the new and extended middle class. Business became a way of life and common rules reduced conflict and eased the many transactions. People lived more transparent and open lives with their charitable works, cultural patronage, civic ceremonies, and voluntary subscription societies, which again helped develop trust.

Developing networks

As information costs change, so also does the institutional structure of the economy and so the whole way that businesses worked and interacted evolved to a system where both collaboration and competition could effectively coexist. As mentioned, trust is central to collaboration and business where you may be trusting large sums of money with other people.

The way a person developed trust was by how they (and in business then it was mostly men) act. A great deal was placed upon general conduct including personal integrity, keeping promises, paying debts and having a general sense of solidity and respectability. What clubs and institutions you belonged to made a further difference as they gave additional strong indication of your underlying values and concern. The codes of how one dressed and treated others were not written but became widely understood.

These factors became even more important than political or religious affiliation as the rules of doing business grew, including working well with others and building an effective and worthwhile network of associates. In this way the industrial revolution also became a social revolution that spawned networking far and wide as a way of working.

These days

These days, the interconnectedness of the industrial revolution has intensified into the knowledge economy, where jobs are increasingly mobile and flexible.

In all this, who you know is still hugely important and can be important than what you know and many jobs come through contacts (your author, for example, has changed jobs quite a few times but has not applied through an advert for over 25 years).

And the internet has facilitated networking to a new and frenetic level, where people tweet and post many times per day. With cell phones and social networking we can have endless 'friends', though Dunbar's number still constrains the number of people we can realistically know.

There is now a 'Millennial Generation' who have known nothing but being permanently connected and how they will continue to live their lives and the impact of this connectedness has yet to be played out.

See also



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