Nov 082010
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Networking websites are booming, but they have not supplanted more traditional business networks.

FRANÇOIS PÉROL, the adviser whom Nicolas Sarkozy, France’s president, controversially appointed in February to head two merging mutual banks, is not known as a champion of transparency. But Mr Pérol has let it be known that he intends to reduce the influence of freemasons at Caisse d’Epargne and Banque Populaire. He has refused an invitation to a tenue blanche ouverte, a masonic meeting that non-freemasons may attend. And he does not want senior posts shared among the banks’ various rival lodges.

French business may be particularly full of networks, but every country has its cliques, whether based on education, social background or spiritual beliefs. In Spain, Italy and Latin America as well as France, businesspeople speak of the influence of Opus Dei, a conservative Catholic lay order which supports a number of business schools. America has its Ivy League alumni groups and Rotary clubs. Chinese businesspeople often rely on guanxi, or personal connections.

At the same time online professional networks such as LinkedIn, headquartered in California, Viadeo, a French-owned website, and Xing, a site with a strong presence in German-speaking countries (formerly called OPEN Business Club), are surging in popularity, thanks in part to fear of lay-offs amid the recession. A year ago it took LinkedIn over a month to win 1m new members; it now takes about 15 days and the site has 42m members around the world. Online networks, in contrast to the old kind, are open to all and easy to join.

Old-style networks, however, are usually stronger than online ones, and the trust between their members facilitates transactions of all sorts. They can be particularly helpful for young companies in emerging markets. A study of entrepreneurship in China by Yusheng Peng of the Chinese University of Hong Kong, for instance, showed how kinship networks helped firms protect their property, obtain reliable information and identify opportunities. Social networks can also be speedier than formal systems: in July 2002, for example, when Vivendi, a French conglomerate, was weighed down with debt and needed to raise €3 billion (then $3 billion) in three days, its chief executive at the time, Jean-René Fourtou, turned to a group of bosses who were fellow rugby fans, including Claude Bébéar, then the chairman of the AXA Group, an insurance firm, and the money was secured.

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