When business networks “kill” social networks: A case study in Bangladesh

Abstract

Social networks are a key contributor to the economic and social fabric of life. There is evidence that the social cohesion that social networks provide is critical for societies to prosper economically and for development to be sustainable. These social networks and the functions they perform co-exist with, influence and are influenced by the business networks of connected firms and other economic organisations that surround them. This is increasingly so in our ever-more-complex, internationalized and connected world. This paper explores the potential consequences of this influence via a case study that considers the changes to a community's social network and the associated norms emerging from the growing influence of a microfinance providers' network. A case study reports the impact of microfinance on a particular Bangladesh rural community. We show there is a breakdown in traditional social networks in this and other poor rural villages brought about by the taking of micro loans when the families have no means of paying them back. This increased indebtedness to NGOs is perpetuating their poverty and diminishing the community's quality of life including their traditions of bounded solidarity, where families support each other as best they can through common adversities. The case concludes by considering the mechanisms underpinning these processes. This includes competitive structure, i.e. the highly saturated and interconnected structure of the micro finance industry, the dominance of this business network in the economic structure of rural Bangladesh and changing norms, in particular the changes to traditional forms of financial exchange and associated support and risk management. We conclude that public policy and a different business model that is more accountable and altruistic are needed to guide this and other networks whose goals are economic development of the poor.