3500_0911 UN Connecting:3500_0911 UN Connecting 07.11.11 12:12 Seite 49
Networks for Prosperity PART 1, Chapter 1: Private Sector Development, Knowledge Management and Networks
The social structure underlying the transactions is crucial in understanding economic action and development.
collaboration comes from an empirical observation that many organizations work and experiment with many different forms of co-operation and collaboration (Powell, 1990; Scott; 2000; Helper et. al., 2000; Knoke, 2001). The further development of embeddedness theory for empirical research was undertaken by Brian Uzzi, who elaborated the difference between arm-length networks and embedded networks for economic action: ď‚Ą Arm-length networks are characterized by lean and sporadic transactions and function without any prolonged human or social contact between parties who need not enter into recurrent or continuing relations (Uzzi, 1996, 1997, 1999). In other words, these networks are characterized by minimal information exchange (Williamson, 1985). ď‚Ą Embedded networks are characterized by their strength, repetitiveness, transmission of tacit, thick and additional information and their grounding in norms of trust and reciprocity (Uzzi & Gillespie, 2002; Perrow, 2002, p. 25).
Embedded networks can be identified or measured in three distinct ways (Uzzi & Gillespie, 2002). A first indicator for embeddedness is duration. The longer a network tie lasts, the greater the possibility that close bonds of trust and reciprocity are developed. A second indicator is multiplexity, which refers to the diversity of relationships involved between two actors/organizations. The more diverse the relationships are, the more embedded network ties become. A third indicator of embeddedness is the dispersion or concentration of an actor’s network. A proxy for this indicator is the size of a network. Large networks tend to be mainly constructed of arm-length network ties, while small networks are more related to embedded network ties. Throughout the network literature the distinction between armlength and embedded networks is conceptualized in order to capture their different performance with regard to knowledge and information exchange.
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