CLASS SUMMARY WEEK 4 OCTOBER 23, 1996
ARTICLE SUMMARY:
"A Business Elite: German-Jewish Financiers in Nineteenth-Century New
York," by Barry E. Supple (The Business History Review 21 (2), 1957:
143-178).
The study focuses on elite formations in a small group of families in
order to understand the implications of these formations for network
theory. To that end, routes to successful business/economic
establishment are demarcated along two paths: immigrants who came
with "qualified" resources and business expertise and those who came
with "unqualified" or limited resources. Both groups eventually made
up the business elite. In comparing interaction between business
organizations and ethnic or family groups, the reading serves as a
example of the strength of 1950's network theory in spite of the
paucity of tools for network analysis.
Business success for the studied groups may have been dependent on their
European connection to capital, because as Jews their cultural heritage
meant that they were not necessarily interested in agriculture, or other
less "business-oriented" immigrant enterprises. Another alternative
hypothesis to these groups' success: their alliances were not as key as
much as their common German culture.
Most important: they were outsiders in the Yankee business world. Since
they were not assimilated, they formed a society in a society, along
natural marriage and friendship lines because of their closeness. This
formation provided a network that facilitated trust and credibility, which
are both seen as important for good business practice (a practice also
based on cooperation). Thus the economic basis for cooperation was shaped
by social mobility, or a lack thereof. As mobility increased, the
networks changed, and with those changing networks came new business
linkages. At this point it might be helpful to examine the overall
network of all people in the financing community, not just the distinct
groups.
Other important points: 1) evolution of business laws allowed businesses
to avoid risk (even go bankrupt) and formalized the cooperation that was
previously dependent on informal networks; 2) interconnectivity of
networks: critical because allows entities to raise large amounts of
capital in a way that is optimal for parties in a homogenous elite; 3)
trust and intermarriage in context of trade: it might be interesting to
model this apparent question of agency -- greater cohesion (consolidating
per capital, rather than expansion) best business practice -- to see if it
is greater in elites than with at-large community. This study does not
allow this because it is just a snippet.