Social structure and competition in interfirm networks: The paradox of embeddedness

Abstract

Research on embeddedness is an excitingarea in sociology and economics because it advances our understanding of how social structure affects economic life. Polanyi (1957) used the concept of embeddedness to describe the social structure of modern markets, while Schumpeter (1950) and Granovetter (1985) revealed its robust effect on economic action, particularly in the context of interfirm networks, stimulating research on industrial districts (Leung, 1993; Lazerson, 1995), marketing channels (Moorman, Zaltman, and Deshponde, 1992), immigrant enterprise (Portes and Sen - senbrenner, 1993), entrepreneurship (Larson, 1992), lending relationships (Podolny, 1994; Stearns and Mizruchi, 1993; Abolafia, 1996), location decisions (Romo and Schwartz, 1995), acquisitions (Palmer et al., 1995), and organizational adaptation (Baum and Oliver, 1992; Uzzi, 1996).