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Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness
Abstract
The purpose of this work is to develop a systematic understanding of embeddedness and organization networks. Drawing on ethnographic fieldwork conducted at 23 entrepreneurial firms, I identify the components of embedded relationships and explicate the devices by which embeddedness shapes organizational and economic outcomes. The findings suggest that embeddedness is a logic of exchange that promotes economies of time, integrative agreements, Pareto improvements in allocative efficiency, and complex adaptation. These positive effects rise up to a threshold, however, after which embeddedness can derail economic performance by making firms vulnerable to exogenous shocks or insulating them from information that exists beyond their network. A framework is proposed that explains how these properties vary with the quality of social ties, the structure of the organization network, and an organization's structural position in the network.
... Moreover, while much of this literature focuses on bilateral relationships, contracts exist within broader interorganizational networks (Granovetter 1985;Schalk, Torenvlied, and Allen 2010;Uzzi 1997). These networks can shape the formal-relational dynamic by influencing how goals are shared and managed (AbouAssi, Prince, and Johnston 2024). ...
Local governments increasingly rely on contractual relationships with third parties for public service delivery, blending formal agreements with relational mechanisms to reduce risks and uncertainties. While most research on these contracts has focused on relationships between two parties, this work adopts a network perspective to analyze how the structure of these networks—especially close‐knit connections—influences contract design. We analyzed 6576 agreements between local governments in Iowa related to public safety from 2007 to 2017 and selected 300 to qualitatively code for contractual provisions. Our findings show that when there are strong shared connections between third parties, contracts tend to be less formal. These results expand the typical focus on two‐party relationships, showing how larger networks can shape the balance between formal and relational contracts in public service management.
... These networks reflect the specificity and dynamics of the cinema industry, encompassing relationships between different theaters within a chain, connections between theaters and film distributors, as well as network interactions with technology providers, advertisers, and consumers. In this context, cinema chains serve not only as channels for film content distribution, but also as platforms for exchanging knowledge, technological innovations, and marketing strategies that are crucial for survival and growth in an increasingly competitive environment [Hallinan, Reynolds, 2019;Powell, 1990;Uzzi, 1997]. ...
This article delves into the critical role of strategic management in the context of cinema chains, aiming to identify the key strategic elements that influence their development and operation. It addresses two primary research questions: "What are the main strategic elements that impact the development of cinema chains?" and "How do strategic management components such as market positioning, innovation, strategic planning, analysis, formulation, and implementation assist cinema chains in navigating market challenges, including the shift to digital content distribution?" This study contributes meaningfully to the discourse on strategic management within the entertainment sector, offering practical insights for decision-makers in cinema chains. The research involved a comprehensive literature review, utilizing renowned academic sources such as Scopus, EBSCO, and JSTOR, covering publications from 1990 to 2022. This approach aimed to dissect the complex layers of strategic management in the cinema industry, shedding light on the unique challenges and opportunities within this segment of the entertainment market. Our research highlights a notable gap in the existing literature concerning strategic management practices specifically within the realm of cinema chains. This deficiency points to a need for more focused research in this area. Based on our findings, it is recommended that cinema chains prioritize the adoption of technological innovations and diversify their revenue streams to remain competitive. Strategic adaptability, Dawid Pytel, Justyna M. Bugaj 10 informed by continuous monitoring of internal and external factors, is essential for sustainable growth in the rapidly evolving film industry. The findings of this study could significantly enrich the academic dialogue and offer pragmatic advice for industry practitioners. The identified gap in the literature underscores the urgency of initiating primary research, such as surveys, interviews, or case studies, in the field of cinema chain management. Such research promises to deepen the empirical understanding of strategic management practices and provide actionable guidance for industry stakeholders.
... This knowledge needs to be shared and actions must be integrated, requiring governance that guides and regulates actions (Haerem et al., 2014). To carry out the collective task, an environment of cooperation, trust and commitment is necessary (Nohria et al., 1992;Uzzi, 1997). With these conditions, it is possible to adopt the circular economy model. ...
Objective: The objective is to investigate the problems, challenges and solutions of implementing technologies in recycling networks found in the analysis of research sources, based on a proposition. Theoretical Framework: In this topic, the main concepts and theories that underpin the research are presented. The theories of network formation, principles of circular economy and principles of technology adoption theory stand out. Method: The research is qualitative and exploratory due to the rarity of bibliographic production. A matrix of indicators was produced and research was carried out in secondary sources of documents and media, and primary sources of interviews. Results and Discussion: The data supports the proposition that problems and challenges are found on the human side, because technologies exist. There is a lack of environmental education, business commitment and good government governance. Research Implications: The results imply knowledge about resistance and solutions for adopting recycling technologies, paving the way for new research and possible management actions. Originality/Value: A matrix of results is offered, which organizes the problems, challenges and solutions throughout the stages of recycling and environmental and human variables, presenting a practical contribution to future research and policies to encourage the circular economy.
... Therefore, members of the manufacturing value chain are likely to form codes of conduct for knowledge and information sharing, and information about the deviant behaviors of members in the network is easily disseminated, which amplifies the reputation effects and collective sanctions. These characteristics inhibit the possibility of opportunistic behavior among value chain members (Yeung et al., 2009), significantly reduce barriers to information sharing among members, and strengthen emotional ties beyond the contractual relationship, thus enhancing the "common knowledge" among members (Shteynberg et al., 2020), that is, the mutual cognition among manufacturing enterprises based on each other's resources, technologies, and practices is continuously strengthened, and mutual understanding in terms of organizational culture and long-term goals (Capaldo, 2007;Uzzi, 1997). "Common knowledge" promotes the improvement of cooperation efficiency and knowledge transfer effectiveness. ...
Despite the rapid development of the servitization process, few studies pay attention to the distribution of benefits in the servitization cooperation. Furthermore, existing researches mainly focus on coupled enterprises, neglecting to explore the issue from the perspective of cross-chain cooperation among multiple entities of manufacturing enterprises. Accordingly, this paper takes the idea of “value appropriation” as a starting point and combines social capital theory and profiting from innovation theory. From the perspective of the value chain, the paper explains the joint impact of knowledge characteristics and asset status on the value of servitization innovations possessed by manufacturing enterprises. Based on the empirical analysis of 517 sample enterprises, the results show that in the process of servitization cooperation (i) manufacturing enterprises establish tight networks in the manufacturing value chain and loose networks in the service value chain; (ii) establishing complementary assets with upstream and downstream enterprises in the manufacturing value chain that are highly complementary and weakly mobile, and establishing complementary assets with service providers in the service value chain, enables enterprises to capture more newly created value. The contributions of this paper are as follows: (i) it reveals how manufacturing firms can capture more new value creation in servitization cooperation by carefully structuring the micro-cooperation between the manufacturing value chain and the service value chain based on the knowledge and asset characteristics; (ii) although this paper takes the servitization cooperation as the object of the study, it further develops the PFI theory and expands its analytical framework to the cross-domain cooperation level. These findings can help enterprises participating in servitization cooperation to clarify their position and function in the cooperation network and even determine how to capture more new creation value by shaping the micro-industrial structure in various types of business ecosystems based on the analytical framework of this paper.
... According to supply chain management scholars (Bowersox et al., 2002;Cooper et al., 1997), vertical integration is a way to optimize logistic planning and operations. Social network theorists (Borgatti et al., 2009;Lin, 2017;Uzzi, 1997) emphasize on inter-firm relationships (such as trust, reputation and dependencies). The resurgence of vertical integration in the agriculture sector has been a result of rising customer demand for strict quality and quantity schedules (Chu & Pham, 2024;Maertens & Swinnen, 2009). ...
This paper assesses the impact of the level of cooperatives’ vertical integration on financial performance of smallholder rice farmers in the North Central Province, Sri Lanka. A sample of 309 smallholder rice farmers was surveyed using a structured questionnaire. The sample represented 152 partially and 157 fully integrated smallholder rice farmers who are members of partially and fully vertically integrated cooperatives respectively. The propensity score matching technique was applied to correct for potential selection biases. Three financial performance indicators: cost of production, operating profit, and sales revenue have been used. Results show better financial performance for the farmers who are members of fully integrated cooperatives except for the cost of production. They receive higher operating profit and sales revenue than those farmers who are members of partially integrated cooperatives. However, the cost of production remains more comparable for both groups of farmers. Overall, the findings of this study suggest that the smallholders can enhance their financial performance through cooperatives that are fully vertically integrated.
... Scholars in the field of social sciences have emphasised the importance of clustering as a form of social embeddedness resulting from shared past experiences. Clustering, in turn, facilitates trust formation, limits opportunistic behaviour, and reduces transaction costs (Coleman, 1988;Granovetter, 1985;Uzzi, 1997). ...
... Specifically, our results highlight that while both types of network relational embeddedness have a positive impact on absorptive capacity, relational embeddedness in knowledge networks may, in some cases, limit the positive effects of the relational embeddedness within the cooperation network on absorptive capacity. This finding challenges the traditional view that all forms of network embeddedness work together in a complementary manner [59,60]. Second, previous studies have typically focused on the effects of either cooperation networks or knowledge networks [61][62][63]. ...
In the knowledge economy, organizations embedded within large network systems enhance their capability to identify, acquire, assimilate, and effectively utilize external knowledge. Given the diversity and complexity of these networks, examining the factors that influence organizational absorptive capacity from a multi-network perspective is both essential and timely. However, how organizations can strategically allocate positions across different networks to enhance absorptive capacity remains unclear. Drawing on social network theory and the knowledge-based view, this study proposes that the relational embeddedness of organizations across networks produces an interactive substitution effect on absorptive capacity. Using a composite database of patent, financial, and organizational data, we annually constructed multiple networks of listed companies in the global automobile and components industry and empirically tested the model through multiple stepwise regression analysis. The results indicate that relational embeddedness in both cooperation and knowledge networks positively affects absorptive capacity; nevertheless, relational embeddedness in knowledge networks can limit the positive effect of cooperation network embeddedness on organizational absorptive capacity. This interaction highlights the substitution effect between different network roles in shaping absorptive capacity.
Sharing scientific and technical information plays a vital role in fostering more deliberate political dynamics within policy subsystems, according to the Advocacy Coalition Framework (ACF). However, obstacles to this exchange are not well understood. Our research, guided by theories of social exchange and network embeddedness, explores how power imbalances relate to the reciprocal exchange of scientific information. Using network visualization and quadratic assignment procedure multiple regression on the network data from a local hydraulic fracturing policy subsystem in New York, we find that power imbalances negatively affect the sharing of scientific and technical information within the subsystem, and this adverse relationship is consistent regardless of shared policy beliefs. Despite the presence of collaborative relationships, power imbalances hinder information sharing. Conversely, trust among policy actors helps to lessen the detrimental effects of power imbalances on information exchange. These findings contribute to the ACF and policy process literature by highlighting power imbalances as barriers to information sharing and elucidating how these imbalances interplay with beliefs, collaboration, and trust, in affecting information dissemination within policy subsystems.
While the academic diaspora can serve as a facilitator of internationalisation for higher education institutions (HEIs) in low‐ and medium‐income countries, anecdotal evidence on the engagement of the academic diaspora indicates that it is temporary, superficial and of little impact on the quality of research and educational programmes; it has mainly benefited HEIs by raising their visibility and university rankings, thus exploiting the diaspora rather in home countries than vigorously engaging them in academic activities and capacity building efforts. The present study builds on the boundary‐spanning perspective to elaborate on the potential functions of academic diaspora as enhancers of HEIs' capabilities by enabling genuine partnerships between HEIs in developing and developed countries. Furthermore, using an explorative qualitative approach, the paper provides insights into the factors involved in the low‐quality engagement of academic diaspora at the national, institutional and individual levels. Finally, several implications for HEIs' managers and policymakers are laid out to improve the quality and impact of academic diaspora engagement.
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