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

Administrative Science Quarterly, Vol. 42, No. 1. (1997), pp. 35-67.

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ERRATA On page 65 of "Social Structure and Competition in Interfirm Networks" by Brian Uzzi (March 1997: 35-67), the correct 417/ASQ, June 1997 title and publisher of Mitchel Y. Abolafia's 1996 book is Mak- ing Markets: Opportunism and Restraint on Wall Street (Har- vard University Press). In Figure 6, on page 93 of "Chain Affiliation and the Failure of Manhattan Hotels, 1898-1980" by Paul Ingram and Joel A. C. Baum (March 1997: 68-102), the vertical axis should be labeled "Multiplier of the Rate," and the horizontal axis should be labeled "Age in Years." 418/ASQ,

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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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