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Embeddedness for Control , for Compatibility , or by Constraint ? Within-Network Exchange in the Selection of Home Remodelers

This paper advances our understanding of why some transactions are “embedded” in preexisting social relations and some are not. While prior research tends to interpret such relations as instruments that transaction parties use to control one another in situations of vulnerability, this interpretation has difficulty accounting for high rates of embeddedness among the many consumer transactions where there are alternative safeguards (e.g., reputational penalties) against such exploitation. Apparent empirical support for this “embeddedness-as-control” thesis from the 1996 General Social Survey (DiMaggio and Louch 1998) is limited by mixed findings, by recourse to indirect measures of the mechanisms involved, and by an inability to compare the selected seller with those who were rejected. The present study analyzes data from a 2004 national survey of American homeowners concerning recent home remodeling projects, which helps address each of the weaknesses of the 1996 GSS. Results are largely inconsistent with the embeddedness-as-control thesis. Instead, two mechanisms that have not received sufficient attention in past research seem important in leading homeowners to select remodelers from among members of their social networks: (a) consumers often seek sellers who are particularly compatible with their needs and desires and regard strangers as less likely to be compatible; and (b) that buyers often feel constrained or obligated to keep their business “within the family,” and do not even consider alternatives.