Beyond economizing: social networks and value appropriation in cooperative relationships
Keywords:
Strategy, Transaction Costs, Embeddedness, Opportunism, Networks.Abstract
This theoretical work investigates the role of social networks in explaining value appropriation in cooperative relationships. The governance perspective (WILLIAMSON, 1985; 1996) uses a scenario composed by atomized agents to explain economic organization. Under this view, individuals can establish ex ante the benefits of participating in a cooperative relationship. Consequently, they can mitigate threats of opportunist behavior. The present work demonstrates that, due to the existence of specific assets, the governance perspective characterizes markets imprecisely. More specifically, it argues that the existence of positive transaction costs makes it difficult to obtain relevant information which is used to determine the value created in a cooperative relationship. Consequently, a misalignment between relative contributions and rewards may occur. This paper provides an explanation, based on new economic sociology (GRANOVETTER, 2005; 1985; UZZI, 1996) for the process of gathering information and the reasons which determine its transference among individuals. The main conclusions are: i) hold up does not represent the only threat of opportunist behavior in a cooperative relationship; ii) the transference of information helps to explain social embeddedness; iii) being part of a network is a source of reducing the costs of discovering relevant information; iv) the existence of embedded networks explains the free transfer of information among their members. The reasoning developed here intends to clarify the relationship among individuals and their interaction space where assets are exchanged. It allows a more realistic approach to the architecture of markets, a topic which has not received attention from economists. It also provides tools for interpreting the existence of heterogeneous patterns of distribution of value in cooperative relationships.
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