Structural Embeddedness Analysis

Overview

Embeddedness, in economic sociology, refers to the extent to which social structures influence economic activities. This paper discusses both the positive and negative effects of social relations among firms on economic behaviour. This phenomenon can be understood through its structural, cognitive, political and cultural economic terms (Zukin and DiMaggio, 1990). The analysis is based on structural embeddedness as it is related to economic activities affected by the quality and network structure of material exchange relationships.

Aims: This paper aims at understanding structural embeddedness by researching inter-firm ties and relationships, individual ties of the managers and the structure of the apparel industrial chain—women’s

Firstly, it comes from a reputable American University professor, Brain Uzzi, whose work has been highly cited, demonstrating his academic abilities. Secondly, the author’s research area mainly focuses on social networks, attesting to his knowledge on the subject. Finally, the study’s focus on the social structure of apparel industry is unparalleled in previous literature about embeddedness. Moreover, it not only provides sufficient explanations of structural embeddedness and its strengths but also reveals possible drawbacks of embedded ties. The introduction of Paradox provides new insights into the negative side of embedded ties. Furthermore, in creating a systematic framework for embeddedness in apparel industry, this paper creates a more comprehensive understanding of

The neo-classical theory set a basic formulation of economic behaviours (Wilson, 1989). It presents the notion of an ideal market where exchange partners only establish arms-lengths ties between themselves. Thus, all parties involved only aim at self-interest and seeking profit. However, once this ideal market is broke, the market efficiency then becomes doubtful (Hirschman, 1970). On the other hand, the revisionist theory explanation is less ideal but more complicated compared to the neoclassical theory. It resembles the neoclassical theory with regards to changing the economic and structural questions to organizational ones (Brain Uzzi, 1997). However, the revisionist theory also attempts to explain interpersonal dyadic social ties (Williamson, 1994: 85). For instance, in terms of transaction cost economics, choices made by sellers and buyers may depend on their interests for small-scale transactions. Revisionist economic frameworks redefine embeddedness by considering transaction cost, agency and concepts of game theories to explicate complex situations. Agency theory and team theory similarly focus on self-interest and identical rules followed by members, rather than on embeddedness (Cyert and March, 1992). Game theory provides multiple possible reasons for complex and competitive social ties but lacks sociology