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Memo In Social Structure and Competition in Interfirm Networks

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Memo

In Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness, the author, Brian Uzzi, provides a detailed evaluation of organization embeddedness in terms of networks and channels of communication used in institutions. This article provides a detailed perspective of the role of organizational structure and its role in economic activity and achievements within the modern organization. The article makes a critical note on the role of network structures in modern organizations and their roles on economic behavior. This is not devoid of criticism by economists who claim that organization networks and social structures have minimal or no role in influencing economic achievements in the modern entity. Embeddedness provides an explanation of the role of social ties and networks in the collection and economic actions in modern organizations.

Uzzi notes that, transactions can involve individuals with loose connections and have maintained impersonal and gradually evolving social ties (43). This is common in areas such as markets, exchange partners in stable networks who have been able to maintain close social interactions and engagements. The difference between such networks is their respective structure and the level of depth or quality of such social ties and exchanges, given that such factors usually have a critical influence on the expectations and opportunities.

In the article, The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields, the authors Paul J. DiMaggio and Walter W. Powell provide an in-depth analysis of the similarities of modern organizations. They note that rational actors usually resort to similar approaches and strategies as they initiate change, which gives rise to organizations with similar structures, values, and cultures. DiMaggio & Powell discuss a variety of issues that are central to isomorphic changes in modern organizations. It addresses issues such as centralization of resources, goal ambiguity, dependency, professionalization, and structure in aiding isomorphic change (163).

Ronald Burt’s Structural Holes and Good Ideas provides an outline of the role of brokerage in enhancing social capital. The overview is about the role of behavior and opinion within groups such that individuals are connected in networks by the familiarity of alternative strategies of behaving and thinking. Brokerage becomes social capital as it provides a means of interaction between groups through structural holes and utilization of the unseen options and potential (Uzzi 39). The author notes that all organizations are marked with numerous structural holes. These structural holes serve as means of utilizing various opportunities within an organization. Issues such as positive performance appraisals, compensation, promotions and innovations are usually in the hands of employees, albeit disproportionately, whose networks in the organization are marked by structural holes.

The three articles selected have similar understanding of organizational structure and its role in the establishment of social networks in modern entities. It is evident that social structures in modern organizations have a critical role in the optimized achievement of economic or strategic goals within an entity. Self-interest is usually a motivating factor in inter-firm relations or engagements between individuals in groups. Uzzi notes that it is a critical motivating factor as the actors gradually shift their attitudes and values to accommodate new engagements and thus eliminating possibilities of dependence (46).

The articles also illustrate that personal interactions and relationships are usually atomistic and cordial. If such interactions involve implicit contracts and ties, such are evidently driven by self-interest, profit orientation as opposed to altruistic attachments and willful commitment to a relationship or engagement. Furthermore, formal relationships and ties usually facilitate performance amongst employees given that they induce competition amongst players. The three articles illustrate that organizations are critical social institutions in current modern societies. Social structure plays a crucial role in terms of influencing economic and entrepreneurial behavior, activities, and subsequent outcomes. This is evident in Burt’s Structural Holes, and Good Ideas illustrates the role of social structure in influencing the efficiency of the labor function in modern organizations.

Social structure plays a critical role in influencing the performance of organizations in terms of dispensing their respective businesses amongst their competitors, sampling of products, prices, and evasion of small bargains, which can force them into inefficient business engagements. This is indicative that social relationships are critical to economic and strategic performance of modern organizations. This is indicative that social structures present in a given society or market play a critical role in influencing the organizational structure, culture, and behavior in its engagements and relationships with consumers, competitors, suppliers, and partners.

Burt notes that social capital is present where individuals have a critical advantage because of their respective locations within a given social structure (361). He notes that managers who undertake brokerage across existing structural holes in modern organizations usually enjoy increased levels of performance appraisal, compensation, and promotions. This is because brokerage is associated with positive ideas, innovation, and creativity in the modern organization. Sociologists note that environmental factors are a critical predictor of creativity in the workplace. Factors such as workplace era and family are indicative of the linkage between artistic creativity in the workplace and social disequilibrium. Burt notes that the brokerage importance or value rests within a situation, and in the transaction within which an idea is provided to the audience (368).

DiMaggio & Powell note that isomorphic change within the modern organization, which has been associated with rationalization and bureaucratization, has evolved significantly (151). The modern organizations have grown in terms of homogeneity with bureaucracy becoming the most common element amongst all modern organizations. Bureaucracy is a critical component of organization structure as the entity responds to social structures, values, norms, and culture. Rationalization and bureaucratization are the fundamental aspects that make all firms similar (Burt 380). This is because they respond to the need for a social structure, organizational hierarchy within modern entities and formation of culture.

The three articles provide an in-depth evaluation of various perspectives of social structure, its manifestation in modern organizations and factors that bring about its presence. Social structures are evident in all aspects of society such as institutions, education, employment, and relationships. Social structure influences economic activity and more so the development of organizational hierarchy. Theoretical frameworks attribute bureaucratic developments and the rationalization of changes in modern organizations to the existing social structures within the modern society. Furthermore, social structure places people in society and organizations in various positions and provides them with varied opportunities in terms of realization of economic and skills capabilities. Social structures play a vital role in influence personal relationships between individuals across societal classes, interactions in organizational hierarchies and more so engagements between parties and organizations within an economy. Social structures are also reflective of the relationships present within social groups such as class, race, ethnicity, and culture. Furthermore, social structures are replicated in all social networks and ties in social or institutional settings such as organizations and educational institutions. They are evident in all spheres of human relationships and adhere to similar sets of rationalization and bureaucracies in establishment of rules of engagement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Works Cited

Burt, Ronald S. “Structural Holes and Good Ideas.” American Journal of Sociology, Vol. 110, No. 2 (September 2004), pp. 349-399

DiMaggio, Paul J and Powell, Walter W. “The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields.” American Sociological Review, Vol. 48, No. 2. (Apr. 1983), pp. 147-160.

Uzzi, Brian. Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness Administrative Science Quarterly, Vol. 42, No. 1 (Mar., 1997), pp. 35-67

 

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