This article documents the role that personal relationships play in
economic exchange. Original survey data show that agricultural traders
in Madagascar perceive relationships as the most important factor for
success in their business. Evidence details the extent to which
relationships are used to serve a variety of purposes such as: the
circulation of information about prices and market conditions; the
provision of trade credit; the prevention and handling of contractual
difficulties; the regularity of trade flows; and the mitigation of risk.
Of these, the regularity of supply and demand and the sharing of risk
appear particularly important. Larger and more prosperous traders are
those with quantitatively and qualitatively better relationships. Family
plays little role in business beyond assistance at start-up.