This week’s assignment was to interview an entrepreneur on topics concerning the embeddedness of relationships in his or her network. In The Paradox of Embeddedness (1997), Brian Uzzi argues that a network consisting of a healthy balance between arm’s length ties and embedded ties will be most successful. As businesses have different business strategies, and operate in different markets, there is no real guideline as to what percentage of the network should be embedded. I find this an interesting topic of discussion considering the entrepreneur I interviewed.
The entrepreneur I interviewed is male and in his late twenties. He has a business in solar technology. His business is three years old and is clearly still in the start-up phase. When asked about what he found important in his business relationships he said: reliability. The most important thing you need from your business relationships is that they uphold their promises. Clearly this was a sensitive subject so I asked him to elaborate. He told me that he had had great trouble with certain relationships in Asia (I identified these relationships as arm’s-length ties). They had set up contracts for the R&D of certain technology that was needed in the product, and while the Asian developer failed to develop what was promised, money was asked.
This developer was purely out for ‘quick money’ or a ‘one-time deal’, and purely focussed on self interest, rather than establishing a trustworthy relationship. Especially in the R&D part of his business, the entrepreneur found it important that the developer could foresee future disadvantages of the technology, and assist where necessary when running into problems with the technology. According to Uzzi (1997) these are very clear properties of embedded relationships.
The entrepreneur said he valued embedded relationships for certain parts of the business greatly. His production factory, developer, supplier of aluminum, and legal advisors definitely had to be embedded ties. They were indeed trustworthy relationships that participated in various joint problem solving efforts.
Relationships that are responsible for parts of the business that are less important to him like, transporters, and manufacturers of less vital parts of the product did not necessarily have to be embedded relationships. They are replaceable.
In analyzing the entrepreneur’s network I could see that he had a very stable network consisting of a mixture of embedded ties and arm’s-length ties. The nature of his embedded relationships absolutely contributed to a strong and solid business. I also noticed that most of the relationships were embedded rather than arm’s length. As Uzzi (1997) mentions, this could become a very large problem for the entrepreneur. (For example: if the aluminum supplier would not be able to supply anymore, this would be a huge problem for the entrepreneur). However I believe that in a start-up phase your relationships automatically become more embedded and you are more dependent on those relationships. It would be interesting to discover if this is really the case…
Jobbe van der Maesen- 2564136