Seemingly Embedded But Obviously Exploitative Relations: Organizational Contingencies of Mutual Dependence, Power Imbalance and Embedded Relations

Abstract

We examine effects of mutual dependence and power imbalance on embedded relations between organizations in an industrial district setting. Employing qualitative methodology, we conducted an exploratory research on manufacturer-retailer relations in the Siteler Furniture District in Ankara. The findings indicated that manufacturer's size and retailer's competitive strategy shape their dependencies and embedded relations. Illustrating various patterns of relationships for different combinations of size and strategy in manufacturer-retailer dyads, we found that mutual dependence enhances embedded relations. We also found that power imbalance does not necessarily hinder them, but generates one-sided relations: the more dependent party tries to build them at the expense of being exploited by the less dependent one. Our study implies that embedded relations may entail exploitation particularly in governed networks where power inequalities are high.