This week the blog will have the ‘paradox of embeddedness’ as central subject. To link the theory to practice, an interview has been conducted with an entrepreneur. I chose to interview the owner of a high-end furniture store (established in 1985) because it is a sector I worked in for a while and wanted to know more about.
Central aspect in embeddedness is how social structures affects economic life (Uzzi, 1997). It can create opportunities that are ‘difficult to replicate via markets, contracts or vertical integration'(Uzzi, 1997). The interview showed this to be true. The owner stated that when he started the business he already had a reputation of having a good eye for design. He earned this reputation in his former work as a purchasing agent for a large retailer. It made that he already had a network of customers who trusted him when he started the business. Although he states that his ties with suppliers have not always been strong, for the ties he holds with his customers the opposite is true. It made him the ‘go-to-guy’ whenever you wanted to know more about a product. Now, almost thirty years after starting the business he states that he does not simply sell furniture, he sells knowledge; people buy the story behind the product.
As stated in the literature, ‘the same process by which embeddedness creates a requisite fit with the current environment can paradoxically reduce an organizations ability to adapt’ (Uzzi, 1997). From the interview it could be deduced that this was especially true in the first couple of years of the business. Focussing much on maintaining the trust of existing customers led to not looking at other potential markets for his products. it characterizes the network. This is something that is not an issue now. The owner soon realized that he should focus on his strength; eye for design. Always spotting the next ‘big thing’ made people want to go to his store. The owner praises his ability to recognize talent and believes this to be an important part of his success. This has not only led to monetary gain for his business but also to a broader network. It made the business a bit more apt to changes in the market because changes in the market (new designs, products) is where he thrives.
Luuk Staudt (2506898)