This week’s assignment was too interview an entrepreneur about embeddedness and how it plays a role in his or her business.
Through a friend of mine I got to know an entrepreneur who owns a furniture store which she just started this year. She is 31 year old and makes this furniture together with her partner, it is all wood. The neat thing from their business is if a customer wants a custom size or colour, for instance, table they can do this fairly easily and cheap because it is not a huge business and they make the furniture themselves. I asked her how big her network was and how she used it, she replied that her network started off really small and she just sold furniture to mainly friends, but after a while through these friends people would ask where they got their furniture from and they would come and have a look. In this way her network grew bigger and stronger.
A component of embeddedness is trust, and this also plays an important role in her company. First she made a deal with a wood supplier to deliver her good quality wood, if they deliver bad quality wood she could only produce bad quality furniture. Second her partner builds all the furniture while she does the finishing on it so the trust between her partner and her needs to be there otherwise the business would fall apart. And third her friends sometimes help getting her product out in the world and recommending it, either through showing off their own furniture (which they got from her) or through Facebook.
I explained the concepts of embedded-tie and arm’s length-tie. An embedded-tie is a tie which is close and that you can trust, an arm’s length-tie is someone that is less close and only talk to on a business level. She said that her friends and partner definitely were an embedded tie and that the wood supplier was more of an arm’s-length tie.
The paradox of embeddedness is that one could become over-embedded and be isolated from the market demand or opportunities. She is not really concerned with over-embeddedness, since she knows who she can trust and right now is just looking to extend her network. She said that she agrees with the concept but not applicable in her start-up situation right now. The entrepreneur’s network is growing but still quite small, this was actually useful for me because she could tell me exactly how her network was put together and who the embedded-ties and the arm’s length-ties were. She has a neat company and I think it will grow into something bigger.
See you next week,
Matthijs de Mari