The literature on social networks in labor markets often assumes that hiring through a network is a token in a reciprocal favor exchange. Yet, the scope and mechanisms of this phenomenon remain unclear. I propose a general theoretical framework that initially takes the stand-alone favor, rather than reciprocity, as a mode of economic allocation and identifies its institutional support structures. Markets and hierarchies shape favor-doing alongside social networks, often as a byproduct of their other functions. I find empirical evidence for social networks and market pricing as support structures for favors in the Russian post-socialist labor market of the 1990s. The mechanisms behind social networks are prior history and the general norm of reciprocity, while market pricing induces favors by those employers positioned in the middle of the wage distribution and thus exhibiting simultaneously two qualities: a willingness to do favors, because the jobs they have to offer are not sufficiently lucrative to attract the very best talent, and an ability to ask for favors, because nevertheless those jobs remain attractive enough for job seekers at large. Overall, this study shows how labor market institutions, originally set up to support competitive exchanges, affect the likelihood of favors in hiring, in tandem with the traditional support structure, social networks. Favor-doing in emerging markets is understood better as a broadly conceived institutionalized process having a variety of support structures, not just networks, that must be explored from the bottom up in each specific setting.
YAKUBOVICH, V. (2012). Getting a Job as a Favor in the Russian Post-socialist Labor Market. In: 2012 Academy of Management Annual Meeting.