Scandinavian Working Papers in Economics
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Department of Industrial Economics & Strategy, Copenhagen Business School Working Paper Series, Department of Industrial Economics & Strategy, Copenhagen Business School

No 98-13:
The Genesis and Progress of the Socially Embedded Firm.

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.

Keywords: Embeddedness; economic activities; a theory of action; social structure; evolutionary economics; business studies; economic relationships; information; learning; (follow links to similar papers)

JEL-Codes: B2; B4; L2; M1; (follow links to similar papers)

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