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Social embedding as a solution to a control problem? Evidence from Vietnamese small business* - page 7 / 52





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posits very different reasons for that relationship. We begin to sort out how well the

empirical facts support each argument by drawing out the implications of each argument for

the (mutual) choice of exchange partners – be they suppliers, creditors, customers, or

employees – and the nature of relationships. The next section of the paper outlines the

mechanisms behind each argument in more detail. We then summarize the advantages of our

research site, Vietnam, for addressing the questions posed before describing the data and

reporting our findings. We conclude by summarizing our findings and discussing areas for

further research.

Three arguments about social embedding

Many arguments about the association between social relations and economic

exchange have been made. All the arguments are based on the existence and allocation of

economic rents. We explore three arguments wherein social relations could have a sustained

direct relationship to community development (Portes and Mooney 2002). That is, these

arguments assert mutual – although not necessarily equal – benefit to each party. Some

arguments about the effects of social capital, based on brokerage between two otherwise

separated groups suggest that returns may sometimes be fleeting (Tullock 1993) or that they

can accrue only to a very well-positioned few within a community (Burt 1992). While these

arguments are convincing, in both cases the effects would be difficult to observe and social

capital may have no overall effect.

The first argument centers on the information effects of social embedding on the

search for and selection of exchange partners. It asserts that a history of social interaction

provides detailed first-hand knowledge about the characteristics of potential exchange

partners and allows for more efficacious partner choice than would otherwise be possible.


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