How Community Institutions Create Economic Advantage: Jewish Diamond Merchants in New York

By Barak D. Richman. Law & Social Inquiry, 2006

163 citations recorded by the source corpus.

This article argues that Jewish merchants have historically dominated the diamond industry because of their ability to reliably implement diamond credit sales. Success in the industry requires enforcing executory agreements that are beyond the reach of public courts, and Jewish diamond merchants enforce such contracts with a reputation mechanism supported by a distinctive set of industry, family, and community institutions. An industry arbitration system publicizes promises that are not kept. Intergenerational legacies induce merchants to deal honestly through their very last transaction, so that their children may inherit valuable livelihoods. And ultra-Orthodox Jews, for whom participation in their communities is paramount, provide important value-added services to the industry without posing the threat of theft and flight.

Subfields: Accounting, Demography, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/fceef35e2bff6c8ebf5d6404f145ef60e77ccb2a

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Demography

In Sociology and Political Science

Citations in the corpus

Does It Pay To Pray? Costly Ritual and Cooperation (2007, background): “This has enabled them to out-compete others unable to achieve such high levels of cooperation, resulting in their worldwide prominence in the industry (Richman, 2006).”
Caste and the Indian Economy (2019, background): “Because of the difficulty in enforcing legal contracts, the diamond industry is a ssociated with a high degree of community networking throughout the world (Coleman 1988, Richman 2006).”
Strength in Numbers: Networks as a Solution to Occupational Traps (2011, background): “Ultra-orthodox Jews historically dominated the Antwerp market and continue to dominate the New York market (Coleman,1988; Richman,2006).”
Toward a unified theory of project governance: economic, sociological and psychological supports for relational contracting (2012, background): “Prominent examples of the use of such mechanisms include the Maghrebi traders (Greif et al., 1994) and numerous other ethnic trading networks (Landa, 1995) including the Jewish diamond merchants in New York (Richman, 2005) as well as stewards of common pool resources (Ostrom, 1990, 2005).”
Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences (2006, background): “Finally, Richman (2006) offers a similar explanation in a microanalytic examination of family-run diamond firms.”