Stability and change in embedded relationships: Broken ties in Japanese automotive keiretsu

In: https://doi.org/10.7916/D8280G40

Abstract

This study examines how destabilizing pressures interact with embedded exchange relationships in an analysis of broken ties between Japanese auto manufacturers and their suppliers. While functional, political and social pressures all led to broken ties, their effect differed depending on the nature of the tie. We define two types of embeddedness, relational and normative, and argue that while political and social pressures lead to breakage of normatively embedded ties, relationally embedded ties are robust to these pressures. In contrast, functional pressures, specifically, performance, lead to breakage of relationally embedded ties. Our theory and empirical findings have implications for the study of networks and embeddedness and for research on institutional change in business systems.