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Social embedding as a solution to a control problem? Evidence from Vietnamese small business* - page 10 / 52





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focal entrepreneur is a satisficer. That is, he or she will select the first acceptable exchange

partner. To the extent that there are any costs of social or spatial distance, the model predicts

that those closer would be examined first and, assuming the focal entrepreneur him or herself

was found to be acceptable by the potential partner, family members and neighborhood

residents would be over-represented among the partners of the business – whether employee

or external partner.

Not all partners are generic, however. The implications of the spatial search model

are that partners with generic skills and resources will be socially and spatially proximate

while the more specialized partners, skilled employees, wholesalers of specialized materials,

and customers for technical products, will be more socially and spatially distant, on average.

Those in environments that are richer in human resources will find the more specialized

partners closer. Those in environments that are poor in human resources will need to search

harder. If there are serious costs to covering social and spatial distance, all partners, if they

are found at all, will be found nearby. If the costs of traveling are not high, even some very

generic low-skill partners will come from a distance. This model of social embedding

predicts that family members are over-represented among unskilled workers and generic

external partners (because they are both known and likely to fill the minimal requirements)

but that as the skill of either the family member or the work required increases, the partner

will be less likely to be a family member (because they are most likely to be another

business’s ideal partner or because family members are less likely to have the specific skill,


This model assumes that all partnerships are mutual voluntary choices (Roth and

Sotomayor 1990) – even if both parties do not have equal power. Knowledge does not imply

trust nor does it imply an agreement to work together. Long-term knowledge and experience


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