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Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness

Brian Uzzi
Administrative Science Quarterly
Vol. 42, No. 1 (Mar., 1997), pp. 35-67
DOI: 10.2307/2393808
Stable URL: http://www.jstor.org/stable/2393808
Page Count: 33
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness
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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 embeddedhess 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."

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