Connectivity, control, and constraint in business markets

Much research in the social network literature has argued that firm action is to a large extent socially embedded and that social networks that pervade industry structures have an important bearing on individual firm action (e.g., Braudel, 1985; Granovetter, 1985; Macaulay, 1963). In line with this basic insight, marketing scholars tend to agree that exchange in business markets has a social dimension. Despite the convergence on this general statement, there has been hardly any exploration, let alone systematic evidence, regarding the mechanisms through which social networks impact exchange in business markets. The prior literature is dispersed and lacks focus, particularly regarding the actual mechanisms at work. The first objective of this chapter is to provide an overview of some of the network control mechanisms that have been distinguished in prior literature and discuss the conditions under which different mechanisms are likely to be mobilized and be effective. The second objective of this chapter is to highlight the flipside of control: Social networks can constrain firm behavior and outcomes and lead to inferior exchange conditions. The chapter is organized around these two important themes: (a) connectivity and control and (b) connectivity and constraint.