For this weeks blog the assignment was to invite an entrepreneur for an interview about aspects of his relational and structural embeddedness and ‘the paradox of embeddedness’.
I will start with a brief explanation about the definition of these three theories. According to Granovetter (1992), structural embeddedness is the structure of the overall network/ configuration of ones network. Relational embeddedness can be explained as the personal relationships people have developed with each other through a history of interactions (Nahapiet and Ghoshal, 1998:244). Embeddedness brings along certain advantages for an entrepreneur but when an entrepreneur has too many embedded ties, this can eventually result in a decrease of access to new information and opportunities. This is called ‘The paradox of embeddedness’ (Uzzi, 1997). The focus then is held too much on the existing ties and thus embeddedness can turn into a liability.
The entrepreneur I interviewed for this assignment is a friend of mine who owns a online tea web shop since 2009. He sells different kind of healthy tea sorts from different kind of countries. I asked him about the structure of his overall network. He explained that with the nature of his business, his network exists mainly out of weak ties except for the relationship with his supplier. The customers are very important and the most crucial component of embeddedness that plays a major role is trustworthiness. You don’t get to know a lot about the customers but it is important they they trust you, your product and the service that you deliver. The relationship with the supplier is different and is very strong. After a few years of doing business, he even managed to get an amazing deal with the supplier, who proposed something that would save a lot of time and money. He no longer had to buy the products from the supplier and then sell them, but he now takes the orders, delivers them to the supplier, who puts the brand of the tea web shop on the products and sends it to the customers, this for a small percentage of the profit. When I asked him about ‘the paradox of embeddedness’, he said that in his situation this wasn’t really of any value because of his relationship with the supplier. Of course it is always good to keep your eyes open for new opportunities but when a relationship is made of trust and works for both parties, it is unnecessary to take risks to maybe find something better.