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The Genesis and Progress of the Socially Embedded Firm

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  • Henrik Sornn-Friese

Abstract

In his seminal article Economic Action and Social Structure: The Problem of Embeddedness Granovetter argued that economic action is embedded in social relations and structures that affect its functioning, and that economic action should be analyzed as such. In theories of the business firm the idea that firms are socially embedded is widely acknowledged, but social context is typically understood as an exogenous force. When embeddedness is actually accounted for in theories of the business firm it is mostly as independent variable highlighting the structural aspects of embeddedness at the expense of more relational aspects. This short paper traces the origin and branching of embeddedness in business studies. It asserts that the concept of embeddedness is recurrently used as a concept symbol to reclassify aspects of social context, but not in a way that gives credit to the endogeneity of social context to the actions of the business firm. Finally, it is suggested that the notions of evolution and mutualism are fruitful for understanding how and why firms are embedded in different ways and to different degrees.

Suggested Citation

  • Henrik Sornn-Friese, "undated". "The Genesis and Progress of the Socially Embedded Firm," IVS/CBS Working Papers 98-13, Department of Industrial Economics and Strategy, Copenhagen Business School.
  • Handle: RePEc:ivs:iivswp:98-13
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    File URL: http://ep.lib.cbs.dk/download/ISBN/8778690323.pdf
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    Keywords

    Embeddedness; economic activities; a theory of action; social structure; evolutionary economics; business studies; economic relationships; information; learning;

    JEL classification:

    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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