Joep van Gelder, week 46, Paradox of Embeddedness? (E&N)

Joep van Gelder, week 46, Paradox of Embeddedness? (E&N)

Joep van Gelder


Entrepreneurship and Networks

For this week’s assignment, ‘The paradox of embeddedness’, I will be writing about an audio and video business that is founded and owned by an acquaintance of mine. This business was established in 1985 and went through several location changes, as well as business changes.

When looking at this entrepreneurs’ embeddedness, one good example is seen. His relatively small business – it is considered an SME – does all the audio services for Ahoy. When we spoke about this, he said that this relationship was based on his firm’s qualities, but also the goodwill factor, seen as between all the big boys (read: big firms) he was the one who got to do Ahoy’s audio services. Trust and personal ties did not seem to play a role in the first place, but they gradually became more important and they reduced costs and made use of time way more efficient. The following example was given: when my acquaintance got a call from Ahoy whether he could deliver one small part for one speaker, he could be there the same day or maybe tomorrow. When Ahoy would call a big firm, it would take up to two weeks before this small part would be delivered. This long term cooperative tie, in combination with trust that has been created, also makes it possible to work out problems on the fly and solve them flexibly.

Ahoy is just one good example, but my acquaintance also does business with for example the municipality of Alkmaar. Here, however, it is not guaranteed that he will do all the jobs. One of the municipality’s considerations concerns costs. Because my acquaintance is not the cheapest, other firms sometimes get to do the jobs. This illustrates that the relationship with the municipality is less predictable. He also does business with product distributors and here it is seen that this promotes knowledge transfer and learning, as his employees, for example, go to trainings of the distributors.

When talking about the paradox of embeddedness, this was not really recognized by my acquaintance. He acknowledges that some network relationships are tuned to specific trading partners, but for him this does not have negative outcomes.

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