Relational Habitat: A Conceptual Contribution to Economic Sociology

ABSTRACT

Elaborating on the concept of embeddedness, this article proposes the notion of relational habitat, which denotes the relatively durable constellation of ongoing, specialized relations developed and sustained by a firm. This constellation is basically a protective social device, which by sufficiently stabilizing and simplifying the immediate operational environment of the embedded firm considerably relaxes the constraints imposed on its action capacity. The core argument is that by expanding the control of the firm beyond its organizational borders, the relational habitat enhances the ability of the firm to successfully pursue the adopted business plans and secure the intended outcomes. The notion is proposed to provide the analytical specification needed for understanding firm behavior as an emergent outcome of the enabling as well as constraining relational context that embeds the firm.

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No potential conflict of interest was reported by the author.

Notes

¹ In other words, another point of departure of the approach proposed here is that the formation and maintenance of such relations, as well as their long-standing existence and proliferation, are, to a substantial degree, due to the important functions they perform as uncertainty-reducing devices. In this way, the article draws explicitly on two major research traditions, namely organization studies and transaction cost economics – two traditions which, despite their numerous differences, share a common interest in the pivotal issue of boundary uncertainty and its impact on firm behavior, and which also view interfirm relations as protective devices that are primarily crafted to reduce boundary uncertainty.

² As early as the late 1950s, the notion of task environment was put forth to underline the importance of the immediate environment of an organization for its behavior (Dill 1958). William Evan (1965:177–79) criticized researchers for failing to take the “organization in its environment as a unit of observation and analysis” and proposed the notion of organization set for this purpose, defined as the group of organizations with which a given focal organization directly interacts through the exchange of various flows of resources such as personnel, material, capital, legality, and legitimacy on the input side, and different goods and services produced for a market, an audience, or a client system on the output side.

³ As the trading firms in given situations are to interact, each party must assess the intentions that trigger the behavior of the other and design its own line of action in light of such assessments. Each party needs to take the other into account by “perceiving, defining and judging the other [party] and [his] action” (Blumer 1969:109), with the effect that the actual as well as likely actions of the other become the social “context inside which [the focal party’s] developing act has to fit” (Blumer 1969:97); and as a result of such interdependency and interlocking of the interacting parties’ lines of action, uncertainty, contingency, and unpredictability become part and parcel of the process of the transaction that is in the making between them, making its “career” or “fate” open to many possibilities and dependent on what happens during its formation (Blumer 1969).

⁴ For instance, the notion of business group (Granovetter 2001) suffers from insufficient specification and falls short of expressing anything but the general idea that larger firms typically do not stand alone but rather tend to engage in durable formal as well as informal business relations in which “the level of binding [among the interconnected but legally separated firms] is intermediate” (p. 329). In fact, despite the attempt made to highlight the novelty of the notion by contrasting it with similar ideas, the notion of business groups remains vaguely defined and fails to serve as the theoretical tool needed for exploring the systemic properties of the relational system that embeds the focal actor and for producing specified accounts of the ways in which these properties influence the behavior of the embedded actors.

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Reza Azarian

Reza Azarian is a associate professor in the Department of Sociology, Uppsala University, Sweden. His interest areas are economic sociology, symbolic interactionism, and social networks. He is the author of General Sociology of Harrison C. White: Chaos and Order in Networks (2005, Palgrave/McMillan). He has also published a number of articles, in journals including Sociology, International Review of Sociology, Deviant Behavior, Journal of Sociology, and Acta Sociologica.