Lecture 2: embeddedness

Question 1

definition social embeddedness

Answer 1

the degree to which commercial transactions take place trough social relations and networks of relations that use exchange protocols associated with social, non-commercial attachments
- the more embedded people are, the more connected, the more central they are in the network

Question 2

Paradox of embeddedness meaning

Answer 2

You can reach an optimal point of embeddedness. Organizations can profit from embeddedness because it fits better with all the other players in the market for example. However, if the organization is too embedded, it can reduce the organization’s ability to adapt.

Question 3

3 mechanisms that explain the paradox

Answer 3

1. if the organization is too embedded, the exit of a core net work player (resource dependency) makes the organization very vulnerable. For example tied to another organization which disappears
2. institutional forces rationalize markets (system change). as an organization you’re used to a certain environment. Due to several crises, organizations needed to comply to new rules and regulations to avoid fraud. Social structures don’t function anymore then.
3. Over-embeddedness (no new info). Same group, but no new info

Question 4

difference first-order network and second-order network

Answer 4

first-order network: is made up of an actor’s ties to its exchange partners

second-order network: is made up of an actor’s exchange partners ties to their trading partners

Question 5

Underembeddedness, intergrated network and overembedded network explained

Answer 5

Underembedded: focal firm’s 1st-order and 2nd-order network is composed of armslength ties

Integrated: focal firm’s 1st-order network is composed of mostlly embedded ties, 2nd-order network is an integration of armslength and embedded ties

Overembedded: focal firm’s 1st-order and 2nd-order network is composed of embedded ties

Question 6

what is the optimal network (under, intergrated or over)

Answer 6

optimal is the intergrated network: embedded ties enrich the network, but arm’s-lentg ties prevent the complete insulation of the network from market demands and new possibilities