Rethinking embeddedness: a review and research agenda

ABSTRACT

We conduct a comprehensive review of embeddedness in entrepreneurship research. Although the term “embeddedness” is frequently used in this field of study, less is known about the ways in which it is operationalized and applied. Using criterion sampling, we analyse 198 articles in order to investigate how embeddedness is conceptualized and what role it plays in the extant entrepreneurship literature. We categorize our findings based on different phases of the entrepreneurial process (early, mature and exit) and outline the dominant focus and the main conceptualization of embeddedness for each phase. We highlight important learnings for each of the three phases and identify potential areas for conceptual development. Across the phases, we find that embeddedness and context are often used interchangeably. We thus call for construct clarity in the field. In the existing literature, entrepreneurs are generally portrayed as reactive to embeddedness, resulting in a loss of entrepreneurial agency. To remedy this, we introduce the term agencement, which takes into account the relationship between the entrepreneurship and embeddedness. Further, entrepreneurs are found to be embedded in multiple contexts at the same time, and embeddedness can be understood at different levels and to different degrees. To address this complexity, it is relevant to focus on the embedding process itself, acknowledging that it takes place in social interactions including cultural, cognitive, and emotional aspects between contexts and across levels. While the extant literature supports the notion that embeddedness is important for understanding entrepreneurship and entrepreneurs, it does not necessarily support our understanding of how embeddedness takes form or why it takes certain forms. We therefore include a call for future research to turn to process and practice theories.

KEYWORDS:

• Entrepreneurship
• embeddedness
• literature review
• early
• mature and exit phases
• agencement
• micro-social theories
• process and practice theories

Introduction

It is well established that entrepreneurs do not act in isolation, but their behaviours, access to resources and potential opportunities are contingent on the environment in which they are embedded (Jack and Anderson 2002). The embeddedness of entrepreneurs and entrepreneurship is a highly topical issue in both research and contemporary society. The call to consider embeddedness in entrepreneurship research is not new; as a response to the transaction cost economics perspective, embeddedness has created a bridge between economics and sociology (Polanyi 1944; Granovetter 1985) and has become a powerful explanatory concept.¹ Both Granovetter and Polanyi argue that economic activity must be understood within the frame of social relations, and this argument was later expanded to include cognition, culture, social structures, political institutions (Zukin and DiMaggio 1990), power, conflict, and culture (Clegg 1989). Embeddedness, however, is therefore multifaceted, has several dimensions and depends on the situatedness of the entrepreneur.

The core idea of embeddedness relates to the extension of individuals so that social ties connect them to the surrounding environment (Dacin, Ventresca, and Beal 1999; Uzzi 1996) or contexts. Entrepreneurs, like all individuals, are to different degrees embedded or disembedded in contexts (Jack and Anderson 2002). These contexts create the environment we interact with. Contexts set certain conditions for social action. To understand the interactions between individuals, entrepreneurs, and contexts, embeddedness has become an umbrella concept. The embeddedness of an entrepreneur provides him or her with both opportunities and boundaries for action (Welter 2011; Zahra, Wright, and Abdelgawad 2014). This means that the embeddedness process is essential for business processes, as it implies access, or the lack thereof, to different contexts.

The development within the field has led to a plethora of publications that have ‘embedded’ the entrepreneur in social, spatial, and institutional contexts. The results have provided new information but have also created a field marked by inconsistent and differing conceptualizations of embeddedness and fragmented results. Despite receiving increasing attention within entrepreneurship research during the last twenty years, comprehensive reviews on the embeddedness concept in the entrepreneurship field are scarce. Beyond the review of Trettin and Welter (2011) on spatial embeddedness and the Ram and Jones (2008) policy development review introducing the concept of mixed embeddedness, no overview of the field has been conducted. Further, the global scene with an increased mobilization and digitization may have changed the conditions for the entrepreneur’s embeddedness. Given these facts and that the interest in embeddedness has intensified over the last decade, we argue that the time is ripe to take stock of the extant research to compile existing knowledge and insights and to identify gaps and needs for future inquiry. We therefore aim to comprehensively review the literature on embeddedness in entrepreneurship research with the following guiding questions: How is embeddedness conceptualized in extant literature? What role does embeddedness play? How can future research inform and add to our knowledge of the embeddedness of entrepreneurs and entrepreneurship? To answer these questions, we review the entrepreneurship literature that applies the concept of embeddedness. As a result of our review, we categorize our findings based on different phases of the entrepreneurial process: the early phase, the mature phase, and the exit phase. Important learnings for each phase are highlighted, and we identify areas in need of conceptual development. First, across the phases, we find that embeddedness is seldom conceptualized and that embeddedness and context are often used interchangeably. We therefore call upon researchers to strive towards construct clarity, i.e. to take greater care in how embeddedness is defined and conceptualized to further the theoretical advancement of the concept.

Second, we find that the entrepreneur’s agency becomes lost in the existing literature; the entrepreneur seemingly becomes reactive to embeddedness. This phenomenon has been noted earlier in the literature, for example, Davidsson (2015), who discusses the relationship between the actor and the entity acted upon, Trettin and Welter (2011), who note the important link between entrepreneurial activities and localities, and Welter (2011), who discusses the recursive links between entrepreneurs and context. We address agency and take it one step further by introducing an alternative way to view the relationship between the entrepreneur, entrepreneurship and embeddedness, namely, agencement.

Third, embeddedness is found to play different roles depending on the entrepreneurial firm’s life cycle stage. Embeddedness informs the entrepreneurial firm in different ways depending on whether the firm is in its early phase, its mature phase or its exit phase. However, separating the phases results in a failure to recognize the holistic and longitudinal approach to embeddedness. Therefore, by applying the so-called theory of the zone of proximal development (ZPD) (Vygotsky 1978), we argue that it is important for studies to consider the three phases together.

Fourth, from the review, we learn that the complexity of embeddedness is seldom considered. Entrepreneurs are embedded in multiple contexts at the same time, and embeddedness can be understood at different levels. The individual actor is embedded, but so is the firm and the industry. In addition to bringing the phases together, to address this complexity, there is a need to focus on the embedding process as such, acknowledging historical events as well as present processes and future imaginations. The literature in the review supports the notion that embeddedness is important for understanding entrepreneurship and entrepreneurs, but in general, the literature does not help in understanding how it takes form or why it takes certain forms. Here, the process and practice perspectives and micro-social theories can advance future research.

Method

We first conducted a systematic review following contemporary reviews in management and organization studies (Jones and Gatrell 2014). Such reviews are suitable when there is a lack of consistent measures (Hunter and Schmidt 2004) and when the ambition is to provide an ‘integrative synthesis’ (Rousseau, Manning, and Denyer 2008), in our case, of the extant knowledge on the role of embeddedness.

To gain an understanding of how embeddedness has been applied in entrepreneurship research, we searched the words embed* in the title, abstract and keywords of all documents in the Scopus database up to March 2020. Based on the results, which included 2,078 hits, we decided to focus our literature review on articles, as the great majority of research was published in articles (73.6%). Although we acknowledge that there are many interesting works published in books, with 7.8% of our hits represented by book chapters and 1.4% by books, this review does not include them. Conference papers and two previous reviews (Ram and Jones 2008; Trettin and Welter 2011) were excluded, although they provided inspiration.

Our literature review covered the period from 2005 to March 2020 and included articles in press, since there was a rapid increase in the number of published articles after the year 2005. In 2005, 23 articles were published, compared to 223 in 2019; see Figure 1. This period’s selection was a pragmatic decision, as we considered a rough fifteen-year period to be reasonable for an in-depth analysis.

Figure 1. Articles per year.

As a field of research, entrepreneurship developed with the change from one millennium to another (Landström, 2020), supposedly leading to an increase in the number of embeddedness articles in the field. Furthermore, a couple of articles that have had a major impact on entrepreneurship and embeddedness research were published at the beginning of the twenty-first century, i.e. Jack and Anderson (2002) and Aldrich and Cliff (2003).

We decided to limit the review to the broad entrepreneurship literature, and following Shepherd, Williams, and Patzelt (2015), we used criterion sampling (Patton 1990). We conducted our search in five well-established entrepreneurship journals: Entrepreneurship Theory and Practice, Entrepreneurship and Regional Development, the Journal of Business Venturing, the Journal of Small Business Management and the Strategic Entrepreneurship Journal. The choice of these five journals was guided by other literature reviews conducted within the field of entrepreneurship (cf. Shepherd, Williams, and Patzelt 2015). However, from the initial search, we also identified and included three additional entrepreneurship journals that have published a large share of the articles (2005-March 2020): the International Journal of Entrepreneurial Behaviour and Research, the International Journal of Entrepreneurship and Small Business, and the International Journal of Gender and Entrepreneurship. Additionally, to avoid missing important work, we purposefully searched the Institute for Scientific Information’s 2015 list of management rankings, sorted by a 5-year impact factor. We included the five highest-impact journals, i.e. the Academy of Management Annals, the Academy of Management Review, the Academy of Management Journal, the Journal of Management and MIS Quarterly. Our review method is summarized in Figure 2.

Figure 2. Review method.

The final search identified all articles, including articles in press, that contained the word embed* in the title, abstract or keywords and that were published in the 13 selected journals between 2005 and March 2020. The search resulted in 397 articles. Two of the 397 articles were labelled as erratum or corrigendum and were excluded. As some articles used the word ‘embed’ as a synonym for phrases such as ‘to involve’ and ‘being part of’ and/or did not at all relate to the field of entrepreneurship, those articles were excluded from the review. Out of the 395 remaining articles, we selected ten articles that each of the four authors individually coded from a coding scheme that we had jointly defined. The results of each author’s coding scheme were checked to verify a coherent analysis and to increase the interrater reliability of the analysis.

Then, the articles were divided among four of the authors. During coding, when questions arose, the researchers consulted each other to agree on a categorization. For example, an article could claim to take an institutional approach; however, when operationalizing embeddedness, only location is considered, i.e. spatial embeddedness. By consulting each other, we jointly agreed on a categorization (in this case, spatial). During the coding process, 197 articles were excluded, which left us with 198 articles that are included in the remainder of this review.

The dimensions included in reviewing the articles are given in Table 1.

Table 1. Dimensions included in the review

Dimension	Explanation
Dimension of embeddedness	Spatial, social, institutional, mixed, family or other.
Purpose	What the study aims to understand.
Definition of embeddedness	The explicitly or implicitly expressed view of embeddedness and the main works the author is following.
Operationalization of embeddedness	The manner in which embeddedness is studied (as measured by variables or explored more qualitatively).
Theories and main perspectives applied	Key theories and literature adopted in each study.
Empirical or conceptual
Method	Quantitative, qualitative or mixed method
Basic view of embeddedness	Static view refers to a view of embeddedness where a ‘snapshot’ is allowed to determine the embeddedness as a fixed state and/or a measurable ‘matter of fact’, while those studies that apply a dynamicview treat embeddedness as a dimension that may change over time and/or is subject to change in the interaction with an actor.
Context of embeddedness	The geographic location of the study or other mentioned context of embeddedness.
Main findings

Appendix I summarizes our coding. It presents all articles coded into phases of entrepreneurship and which dimension of embeddedness the study focuses on. This appendix also describes whether the study is empirical or conceptual, methods applied (quantitative, qualitative or mixed), and the basic view of embeddedness (static/dynamic). For a more detailed presentation of all included entries, we guide the reader to Appendix II, which includes all dimensions presented in Table 1 above. The results and discussion are built on those two appendices. Our results are presented below.

Embeddedness in entrepreneurship research – Three phases

The first coding of the articles was performed in line with the purpose of the article, the theory in use, key phenomena that the authors sought to understand and main findings, leading to the division of spatial, social, institutional, mixed embeddedness and family embeddedness. These categories mainly constituted an empirical division based on how researchers had classified their work. Further reviewing all the articles in our sample, we identified characteristics of the role of embeddedness that made it relevant to group the articles related to three different phases of the entrepreneurial process: the early, mature and exit phases. These phases are in line with (although not fully corresponding to) the phases identified by Cardon et al. (2005) and DeTienne (2010). Entrepreneurship research is a broad and heterogeneous field (Shepherd et al. 2019), and it makes sense to map this review in line with different phases of the entrepreneurial process, especially as we sensed that embeddedness played out differently in the different phases.

Based on the characteristics of embeddedness, we relate the early phase to the start-up phase; in this phase, embeddedness influences, for example, the decision to engage in entrepreneurship, nascent activities, or start-up rates. In this phase, emphasis is placed on overcoming the liabilities of newness. For the mature phase, we included articles that focus on the role of embeddedness for, e.g. acquisitions, innovation, entrepreneurial orientation, growth, and internationalization within established organizations. These articles focus more on the role of existing networks and embeddedness for the ability to develop and expand the business. The articles we referred to as being included in the exit phase deal with entrepreneurial exit processes, such as failure, succession in family businesses or shutdowns. The account below relies on this division. Table 2 provides a short overview of the articles, and a detailed account of all 198 entries is provided in Appendix II.

Table 2. A summary of the review articles

Phase	Early (37%)	Mature (60%)	Exit (3%)
Dominant focus	Nascent entrepreneurship activities Identification of a supportive environment Environmental factors’ impact on decision for start-up Characteristics of the entrepreneur and the environment Embeddedness as an explanatory factor for differences in start-ups Relational and structural embeddedness	Mobilization of resources Knowledge sharing Innovation Internationalization Performance/growth Type of resources	Entrepreneurs embedded in a family context How factors such as family, institutional, social or geographic influence an exit or succession decision.
Dominant theories	Institutional theory Social capital theory Embeddedness theory Social network theory	Embeddedness theory Social network theory Social capital theory Gender theory Institutional theory	Family embeddedness Institutional theory Mixed embeddedness
Main method/s	The majority of the studies are quantitative (54%)	There is a somewhat even division between qualitative and quantitative studies (49.5% vs. 42.7%)	There is a quantitative study design in all but one article
Mainconceptualization of embeddedness	There is often no explicit definition; when a definition is offered, Granovetter (1985) is the most commonly used reference Characteristics of the environment (e.g. population growth, income per capita, start-up rate) Individual characteristics (e.g. gender, age, education, work status, family relations) Social structure Community culture Social capital Relational and structural ties State and local community groups	There is often no explicit definition: when a definition is offered, Granovetter (1985) is the most commonly used reference Conceptualization not provided; unclear or implicit Geographical context Clusters Structural and relational network ties Cultural variables Norms and values Institutional variables	Aldrich and Cliff’s (2003) concept of family embeddedness or Granovetter’s definition (1985) Conceptualization is implicit Geographical context Financial background data Bourdieu’s forms of capital Human and financial capital Family support Succession or transition of ownership
Learnings about embeddedness	Place (as the community, region, or nation) affects the intention to start a business Institutional embeddedness both facilitates and hinders the start-up process The same embedding factor can have both a positive and negative outcome Social embeddedness is crucial to secure resources Relational and structural embeddedness affect resource acquisition (e.g. incubators, mediators) Culture influences resource allocation to social value creation	The balance between and level of relational and structural embeddedness is important for resource acquisition, internalization and innovation Linkages locally and globally may affect innovation differently Embeddedness in culture, gender, logics, and formal institutions may have an impact on knowledge sharing, innovation and resource acquisition Spatial embeddedness, understood as the physical location of the firm and its surroundings, may promote innovation and competitiveness Bricolage of embedding resources promotes resource mobilization The effect of embeddedness can differ, with both positive and negative effects at the same time	Low levels of spatial embeddedness make it less likely to escalate commitment in times of failure Geographical proximity to family members, resources, ownership structure, and identity play a role in the decision to exit from ownership, entrepreneurship, or succession Embeddedness in financial logics as opposed to community logics more likely leads to team dissolution due to less ability to attract local support Transnational entrepreneurs are better equipped to exit from underperforming investments

I The early phase of entrepreneurship

The articles on the early phase of entrepreneurship mainly focus on how the liabilities of newness of an entrepreneurial start-up are affected by its embeddedness. The physical place, country, or region where the entrepreneur is running his or her firm explains his or her embeddedness (e.g. Brieger and De Clercq, 2019; Klyver, Nielsen, and Evald 2013; Sequeira, Carr, and Rasheed 2009; Yousafzai, Saeed, and Muffatto 2015). Local communities, local cultures and rural settings are ascribed certain characteristics (Breitenecker et al. 2017; Brieger and De Clercq, 2019; Huggins and Thompson 2014; Kessler 2007) that affect the entrepreneurial endeavour. Embeddedness also determines access to resources (Hopp and Stephan 2012) and resource acquisition ‘[b]ecause entrepreneurs are embedded in a set of environmental characteristics, they cannot act independently of the situation in which they find themselves’ (Brieger and De Clercq 2019, 194). With such a perspective, embedded entrepreneurs are left without the agency to influence their embeddedness.

Regional role models (Bird and Wennberg 2014; Nikolaev and Wood 2018), a supportive community culture (Hopp and Stephan 2012) and social ties (Wang 2016) are important factors in nascent entrepreneurs’ motivation and self-efficacy (Azmat and Fujimoto 2016; Ekinsmyth 2013) to engage in entrepreneurship. On the institutional level, based on aggregated data, the developmental stage of a country and industry can explain the gender gap in men’s and women’s self-employment choices (Klyver, Nielsen, and Evald 2013). In these studies, once again, embeddedness is not problematized as such; rather, the context defines embeddedness.

In the articles on the early phase, embeddedness is explained to be an influential mechanism for the regional differences in start-up rates (e.g. Breitenecker et al. 2017). A dense population of firms implies dense networks, which are equated with embedded entrepreneurs, which result in high start-up rates. These stories do not necessarily enrich and problematize embeddedness, as the relationship between the entrepreneur and the context is overlooked; i.e. the embedding itself is lost. For example, it is reasonable to assume that embeddedness could create a lock-in effect, but such an effect is not considered.

For social embeddedness, the network tends to be equated with embeddedness (Newbert and Tornikoski 2013). These studies are inclined to operationalize embeddedness based on the strength of network ties at one given point in time (Grichnik et al. 2014; Villanueva, Van de Ven, and Sapienza 2012; Newbert and Tornikoski 2013). Specific network ties with specific values are portrayed as strong or weak. Family and relatives represent strong ties, while others, such as industry networks and connections to academia, represent weak ties (Grichnik et al. 2014). Arregle et al.’s (2015) study, which constitutes an exception, shows that family ties can have both positive and negative effects on new venture growth. However, rather than being problematized and subject to change, ties are normally polarized.

Furthermore, the characteristics and background of an entrepreneur are prominent features of this phase that define embeddedness. For example, a privileged background is shown to positively influence the outcome of entrepreneurship (Jayawarna, Rouse, and Macpherson 2014; Smith 2011), while gender structures and ethnicity are shown to obstruct the entrepreneurial processes for women and minorities (Jones et al. 2014; de Vries, Hamilton, and Voges 2015). Other examples of background characteristics are the degree of embeddedness in the home country (Sequeira, Carr, and Rasheed 2009) and previous employment and embeddedness in an organization (Mai and Zheng 2013). In short, these studies use different forms of embeddedness to help predict the emergence, type, and success of start-ups. While socioeconomic status seems to influence individuals’ chances of becoming and succeeding as entrepreneurs, research is scarce concerning the role of socioeconomic status in understanding the entrepreneurs’ embedding process per se. However, there are studies that point to the need for mediators to assist less embedded entrepreneurs. A mediator can be an incubator that supports an entrepreneur in becoming embedded in the early phase (Meister and Mauer 2019), or it can be a local entrepreneur who acts as a networking agent in a rural area or small city to provide the missing link between artisans and tourists (Bakas, Duxbury, and Vinagre de Castro 2019).

To a great extent, studies on the early phase follow the unquestioned plot that context is given and that the entrepreneur needs to fit in or adjust to the context. Depending on the location, the characteristics of the context, and the characteristics of the entrepreneur, this fit is more or less challenging. The majority of the studies view embeddedness as a static fact, but there are qualitative studies that acknowledge the role of the entrepreneur by considering embeddedness to be dynamic in nature, by applying a processual view of embeddedness, and by focusing on the embedding process, i.e. how embeddedness is achieved (e.g. Keating, Geiger, and McLoughlin 2014; Aggestam and Wigren-Kristoferson 2017; Ettl and Welter 2010; Hopp and Stephan 2012). A small set of studies even applies a micro-process perspective on embeddedness that is helpful in understanding embedding in its own right. For example, Ekinsmyth (2013) embeds the process of ”mumpreneurship” in everyday life and practices and argues that spatial factors affect mothers’ capabilities and constraints and, therefore, the decisions they make. Another example is how sociocultural factors such as social class and habitus influence entrepreneurial growth in community-based entrepreneurship (Smith 2011). These microlevel, real-life practices of embeddedness and entrepreneurship have provided us with valuable knowledge but are few.

Less acknowledged in the early phase is how the level of embeddedness might differ among entrepreneurs, even if such considerations are made by Korsgaard, Ferguson, and Gaddefors (2015). These authors investigate how rural entrepreneurship engages with place and space and who explore ruralness as a sociospatial concept. A small number of studies also recognize mixed embeddedness and acknowledge the role of multiple contexts (Jones et al. 2014; de Vries, Hamilton, and Voges 2015; Ohlsson, Broomé, and Bevelander 2012). However, the general tendency is that several coexisting contexts are not acknowledged. Furthermore, most studies view embeddedness as merely positive and do not address the possible dark sides of embeddedness. In this respect, one exception is Newbert and Tornikoski (2013), who find that embeddedness can increase the cost of resource acquisition, which implies that embeddedness can be costly and a limitation.

II The mature phase

In the mature phase of entrepreneurship, articles on embeddedness attempt to understand the ability of a firm to remain in business or expand, as well as the benefits brought by being embedded. Doing so is accomplished by focusing on diverse topics, such as resource mobilization, knowledge sharing, innovation, and internationalization, as well as performance and growth.

Embeddedness influences the mobilization and acquisition of resources (Desa 2012; Martens, Jennings, and Jennings 2007; Ozdemir et al. 2016); social embeddedness increases the possibility of generating resources (Díaz García and Carter 2009), while structural embeddedness leads to a greater ability to obtain more distant resources and information (Ozdemir et al. 2016). The antecedent of resource acquisition is often embeddedness itself, and there is a tendency to treat embeddedness as a state, i.e. as being stable over time, rather than as a process of embedding. This is especially the case when entrepreneurs must adjust to a location or to institutional regulations (e.g. Greenman 2013; Marano et al. 2016; Welter 2007).

Knowledge sharing (Martin, Warren-Smith, and Lord 2019; McKeever, Anderson, and Jack 2014; Weber and Weber 2011), innovation (Alsos et al. 2013; Bayat, Schøtt, and Zali 2014; Elo and Vincze 2019; Jensen 2014; Pahnke et al. 2015; Kawarazuka and Prain 2019; Schøtt and Cheraghi 2015; Schøtt et al. 2014) and internationalization (DeMartino, McHardy Reid, and Zygliodopoulos 2006; Leppäaho and Pajunen 2018; Musteen, Datta, and Butts 2014; Solano 2016) are all related to different forms of firm expansion. Knowledge sharing can take place in an interplay among entrepreneurs, culture and communities (McKeever, Anderson, and Jack 2014), and the gender perspective shows how networks are gendered and how culture influences both gendering and the relationship between networks and innovation (Schøtt and Cheraghi 2015). According to Schøtt and Cheraghi (2015), women’s networks are more common in the private sphere, and such networks impede innovation, whereas men’s networks are public in character, which is beneficial for innovation. On the other hand, women who are embedded in their families are not affected by the determinants of competitive behaviour, such as marital status and the number of children (Quagrainie 2016). Furthermore, innovation and competitiveness are promoted in different ways, with spatial embeddedness in the form of both local and global linkages of firms being beneficial for innovation (Aslesen and Harirchi 2015; Eraydin and Armatli-Köroğlu 2005).

To expand through internationalization (DeMartino, McHardy Reid, and Zygliodopoulos 2006; Leppäaho and Pajunen 2018; Musteen, Datta, and Butts 2014; Solano 2016), social embeddedness in networks is important (Masiello and Izzo 2019). Both local and international linkages can be beneficial for the internationalization process, with actors in a local context with dense international linkages having an advantage in the internationalization process through the formation of research alliances (Al-Laham and Souitaris 2008). Internationalization is also affected by industrial clusters, where local relationships become less important and firms develop new capabilities outside their home regions, which in turn provides access to new resources (DeMartino, McHardy Reid, and Zygliodopoulos 2006). Social embeddedness in networks also translates into higher firm performance and growth (Hernández-Carrión, Camarero-Izquierdo, and Gutiérrez-Cillán 2017; Herz et al. 2016; Ozcan and Eisenhardt 2009; Quagrainie 2016).

Overall, the articles in this group show how embeddedness informs a range of entrepreneurship phenomena, but it is less clear how these studies inform embeddedness. The diversity of foci and the different views on embeddedness, as well as the different meanings ascribed to embeddedness itself, result in a somewhat confused understanding of the role of embeddedness and the phenomena under study. Consequently, a richer understanding of embedding processes and firm-level behaviour and outcomes is lacking. Embeddedness is rarely viewed as a multilevel phenomenon (cf. Tlaiss 2019; Uzo and Mair 2014), but there are initiatives to do so. For example, Crick and Chaudhry (2010) show that transnational entrepreneurs can benefit from being embedded in several contexts, such as the physical and virtual; thus, they more successfully leverage resources from their country of origin. The lack of multilevel approaches means that embeddedness is studied such that the complexity of the nature of embeddedness remains unclear.

The interrelatedness and mutual influence among entrepreneurs, places and communities have been examined only to a minor extent such that the dynamism of the relationships between them is addressed. From the few studies that exist, everyday entrepreneurial actions can be understood as culturally embedded in an interinstitutional system of different logics that shape both the willingness to act and the ability to act (Greenman 2013). For example, women can successfully pursue entrepreneurial careers by disobeying cultural and gendered mandates through a dynamic process of individually negotiating and interpreting agency, gender, patriarchy and existing norms and values (Tlaiss 2019). However, the majority of the articles do not problematize the interrelatedness between the entrepreneur and embeddedness. For example, the question of how this interrelatedness plays out over time remains unanswered.

Some studies on the mature phase of entrepreneurship stress the dark side of embeddedness. Pahnke et al. (2015) found that embeddedness could cause information leakages and thus endanger the innovation process. Path dependency may constitute an advantage for social embeddedness in the internationalization process; however, structural overembeddedness and ‘blind trust’ may be a result of path dependency and become an obstacle in the process (Masiello and Izzo 2019). Structural, personal, cognitive and relational ties may facilitate knowledge transfer; however, the lock-in effects of such capital can become a liability (Weber and Weber 2011). Likewise, sociocultural complexities and social stratification may exclude entrepreneurs from different types of social capital (Torri 2011), and embeddedness has asymmetric effects on innovation processes (Schillebeeck et al. 2020). Furthermore, too much embeddedness can create lock-in effects and lead to negative outcomes at the firm level (Pahnke et al. 2015; Masiello and Izzo 2019; Tsai, Wen, and Chen 2009: Weber and Weber 2011). These studies indicate that it is fruitful to consider the mixed effects of embeddedness.

III The exit phase

The group of articles exploring when entrepreneurs exit implicitly deals with disembeddedness or re-embeddedness. In these articles, the operationalization of embeddedness demonstrates a predominant focus on the contextual factors that affect the entrepreneur rather than the role played by the entrepreneur in the disembedding process. The context may involve the family, institutional, social, or geographical environment, and the focus is on how these external factors may encourage or prevent an entrepreneurial exit or succession. This means that embeddedness is mainly presented as something static that is external to the entrepreneur rather than as an integrated process in which the entrepreneur takes an active part. For example, family embeddedness can be operationalized as the degree of family support (Zhu, Burmeister-Lamp, and Hsu 2017), whether family members live in the entrepreneur’s geographical proximity and whether s/he has a native spouse, which was found to decrease the entrepreneur’s likelihood of exiting (Bird and Wennberg 2016). The more embedded a family is in the venture, the more difficult it is to disembed. The decision to exit entrepreneurship or to transfer ownership is also influenced by family embeddedness in terms of the ownership structure (Wiklund et al. 2013) and/or inherited identity (Yoo, Schenkel, and Kim 2014). In Almandoz (2012), the professional background of the entrepreneur translates into institutional embeddedness. This means that entrepreneurs embrace different logics, such as a community logic or a financial logic, depending on their professional experience (Almandoz 2012). A background in the banking industry or a corporate board background instils embeddedness in the financial logic – a logic that more often leads to team dissolution, i.e. exit, than the community logic, which is better for attracting resources. The operationalization of embeddedness is, however, not always made explicit (e.g. Wiklund et al. 2013; Yoo, Schenkel, and Kim 2014; Devigne, Manigart, and Wright 2016). In sum, regarding the operationalization of embeddedness, there is a lack of problematization, which paves the way for diverse variables that may represent the concept when exploring entrepreneurial exit.

While the major part of the studies on the exit phase of entrepreneurship explores the family context of business by applying the perspective of ‘family’, ‘social’, and ‘relational’ embeddedness or a mix of these perspectives, other studies examine the institutional context in relation to entrepreneurial exits. ‘Local embeddedness’ and ‘social embeddedness’ as well as social capital and institutions are elaborated as part of an escalation of commitment framework (Devigne, Manigart, and Wright 2016), whereas societal institutions ‘provide the cognitive models, schemata, and guidelines for behavior’ that organizations rely upon (Almandoz 2012, 1385). Because they have a lower level of domestic embeddedness in the local economic and social environment, which means lower emotional and social involvement, international investors are better able to terminate and exit from investments when portfolio managers underperform (Devigne, Manigart, and Wright 2016). Regarding spatial location, Devigne, Manigart, and Wright (2016) refer to international investors as embedded either locally or across borders, indicating that ‘embeddedness’ is not ‘an either-or’ proposition. The general working model, however, seems to involve a sole dimension of embeddedness, such as ‘family’, ‘social’ or ‘immigrant’, and although Bird and Wennberg (2016) have intertwined such dimensions, the combination of dimensions has more to offer in terms of creating an understanding of the role of embeddedness when entrepreneurs leave their business. This also leads us to the conclusion that embeddedness will benefit from being broken down and explored from different perspectives.

Although there are articles that show that embeddedness may limit rationality (Yoo, Schenkel, and Kim 2014; Devigne, Manigart, and Wright 2016), there is no clear-cut supposition concerning whether embeddedness plays a beneficial or an inhibitory role during exit from entrepreneurship. This situation indicates that a critical stance towards embeddedness in the exit phase is warranted.

Summary of the three phases and an outlook for future research

In the above, we have shown and acknowledged that the literature on entrepreneurship and embeddedness has added extensive and valuable knowledge to the field. However, there are also openings for future research. First, as a result of our review, we argue that the unit of analysis, embeddedness, is underdeveloped. It has been a taken-for-granted concept, and reflections on whether and how entrepreneurs relate to embeddedness or how embeddedness is carried out are lacking to a high degree. To develop our understanding of embeddedness as a concept for entrepreneurship, it is important for researchers to clarify what they are studying. Based on the general lack of such elucidations in our review, we call for more construct clarity in future research.

In the early phase, embeddedness is conceptualized as defined by context; i.e. the entrepreneur is ascribed given contexts that provide access to different resources. These resources make it possible to handle liabilities of newness. This is the phase when the new venture, or organization, is created and networks, social linkages, structural linkages, and institutional support are to be established. The mobilization of these resources becomes the core of the new venture or organization, and the embeddedness of the entrepreneur makes this possible, implying that embeddedness plays a crucial role. However, in this early phase, the context defines the entrepreneur, and entrepreneurship scholars seem to have assumed ‘what you see is what you get’, as if the entrepreneur is without agency. Only at its best does research portray the entrepreneur as an individual actively interacting with the context. The focus is primarily on the entrepreneur’s characteristics and what the individual entrepreneur needs to do or what actions he or she needs to take in order to assimilate without any detailed accounts of these actions and often applying cross-sectional studies. Embeddedness is an ongoing activity where we argue for a need to consider the entrepreneur’s agencement, where the agent takes an active part, influencing his or her embedding in different contexts. In doing so, entrepreneurship research will gain from a more elaborative consideration of embeddedness (cf. Dacin, Ventresca, and Beal 1999) that also considers the interaction between structure and agency. Further, although the entrepreneur strives to embed within their social, spatial, and institutional contexts, the extant literature tends to focus on only one of these rather than on the intertwinement of them. Therefore, embedding as a process and practice – including across levels, would become the focus.

In the mature phase, embeddedness is conceptualized as ‘a given’. The firm is now established, and the entrepreneur makes use of the mobilized resources of the firm to grow, to innovate, or to go international. In these endeavours, surprisingly little focus is on over-embeddedness and lock-in effects. Instead, embeddedness is assumed to play a positive role. Like in the early phase, future research would benefit from following the embedding as a process and practice of the firm.

In the exit phase, the context constrains the entrepreneur in some way or the other, which results in the entrepreneur disembedding from the firm and/or exiting, i.e. leaving or closing the firm, or in the entrepreneur re-embedding. The present embeddedness becomes a hindrance for future development. In this phase, there is a lack of research in general and much more is needed on reasons for exiting, ways of exiting and how constraints on differing levels interact. Thus, in this phase, we need more process and practice studies on dis- and re-embeddedness and an understanding of how the different social, spatial and institutional contexts effect the entrepreneur’s disembeddedness and vice versa.

From our review, we draw the conclusion that less attention is given to the intertwinement of the social, spatial, and institutional contexts and its role for embeddedness. Regardless of the phase and level of embeddedness, we argue that entrepreneurs participate in different social contexts and socio-cognitively and emotionally embed in different social structures, with each structure having its own culture. The starting point for such a perspective would be the socio-cognitive and emotional embeddedness of the entrepreneur and how he or she in interaction with others learns and changes behaviour. To learn about the entrepreneur’s embedding process, the rule-like structures, norms, and values shared to varying degrees between members need to be considered; that is, social and institutional as well as spatial levels matter. With this focus, it is possible to learn whether, how, and when entrepreneurs adapt and embed or ultimately resist and disembed. For this reason, studies on embedding across levels will add value.

The extant literature to a high degree however neglects the learning aspect of embedding or disembedding. We claim that entrepreneurs learn from and accomplish more in interaction with those who are more experienced peers. This means that in interactions with others, e.g. other entrepreneurs, customers, suppliers, and organizations, the entrepreneur is learning by listening, imitating and following; that is, the entrepreneur enters into zones of development (cf. Vygotsky’s 1978). In the early phase, the novice entrepreneur experiences many such zones. In the creation process, the entrepreneur is continuously embedding in (and disembedding from) several contexts and listening, imitating, and following others. Over time, the entrepreneur develops certain skills and competences, and together with the organization, he or she embeds into new contexts. With more skills and competences, in the mature phase, the entrepreneur enters new zones of development when, for example, entering new markets, new industries, or new collaborations. In the exit phase, the entrepreneur again moves into new zones of development by learning from the process of leaving, selling, or closing the firm. In this phase, a distance from the firm is created, which can be understood as a process of disembedding. This reality implies that the roles of embeddedness and embedding processes differ among the different phases, and it indicates the need to focus on embeddedness across levels and across phases.

In Figure 3 below, we summarize the answers to our first two guiding questions: How is embeddedness conceptualized in the extant literature? What role does embeddedness play? Figure 3 also includes future directions for embeddedness studies in the field of entrepreneurship and addresses our third guiding question: How can future research inform and add to our knowledge of the embeddedness of entrepreneurs and entrepreneurship? With the ellipses in the model, we stress the need to bring back the cognitive and emotional embeddedness of the entrepreneur in different cultural contexts, and we combine these dimensions with the argument that embedding is a social process. Therefore, the entrepreneur cannot be overlooked. Taking the gaps into account we believe that we can move from a view on embeddedness as a ‘static’ enabler or impediment for entrepreneurship to a dynamic view where entrepreneurship and embeddedness are co-evolving in an interactive process. A more detailed discussion of each of these four main research directions follows below: construct clarity; the agencement of embeddedness; process and practice theories; and embeddedness across levels and phases.

Figure 3. A summary of the present status of embeddedness research and a possible future status.

Discussion about future research: entrepreneurship and embeddedness as coevolving

Construct clarity

Observations from our review show that embeddedness does not lend itself easily to be conceptualized. Embeddedness has its foundation in theory (cf. Granovetter 1985; Polanyi 1944) and demands construct clarity (Suddaby 2010). Following Suddaby (2010), this means that definitions need to be clear and concise, that boundaries and contextual conditions are clarified, that a semantic relationship to other related constructs is clear, and that there is coherence throughout in the use of the construct. Lack of construct clarity leaves the concept of embeddedness underdeveloped.

Admittingly, authors have offered definitions of embeddedness, such as ‘being situated in a context which enables and constrains the activities of actors’ (Korsgaard, Ferguson, and Gaddefors 2015, p. 576) or that ‘embeddedness represents the nature, depth and extent of an individual’s ties into the environment’ (McKeever, Jack, and Anderson 2015, 52). However, in many of the articles, embeddedness is left loosely defined or undefined, and we find that embeddedness is quite often taken for granted. For example, Ndoro, Louw, and Kanyangale (2019) do an excellent job in problematizing immigrant entrepreneurship in order to distinguish it from ethnic, minority and transnational entrepreneurship. However, they fail to do the same with the concept of embeddedness when they merely consider the specific geographical location of immigrant entrepreneurs. This constraint has implications for how embeddedness is operationalized in the literature based on certain aspects, for example, different levels of spatial embeddedness, such as local (Eraydin and Armatli-Köroğlu 2005), regional (Mazzanti, Montresor, and Pini 2011), or national embeddedness (Al-Laham and Souitaris 2008), and for examinations of the role of culture, industry, and the organizational setting (Morrison 2006) and the role of being embedded in an emerging or developed country (Aslesen and Harirchi 2015). Here, authors primarily consider embeddedness in one single context, or if using a mixed embeddedness perspective, embeddedness is multi-fold, such as being both institutional and belonging to a social network (e.g. Burt and Opper 2020). The same goes for social embeddedness, when, often following Granovetter’s (1985) structural and/or relational embeddedness, social embeddedness is operationalized as the number of ties or the strength of ties through network mapping. Even if an alternative way to treat social embeddedness comes through in the literature, for example, McKeever, Anderson, and Jack (2014) examination of how entrepreneurial processes and practices are socially situated, a predominant impression is that embeddedness is measured in one context, on one level, and at one point in time and is generally thought to result in consequences for the entrepreneurial process in a cause-and-effect manner. There is a tendency to place the study in a given context and to refer to this as embeddedness within which the entrepreneur is situated and then leave out further elaborations of the interactions between the two. This means that embeddedness is equated with context and is treated as a binary concept.

By using embeddedness and context as interchangeable, the lack of consistency in the use of the concept runs the risk of developing results that rest on a shaky foundation. The analysis of embeddedness in our entries shows that the confusion between embeddedness and context is rather the rule than the exception. The embedding factors are used as an a priori description of one or more contextual dimensions, as indicated above, by, for example, the region, gender, or social ties. In Johns’s (2006) terminology, this would characterize context as a constant rather than as a shaper of meaning, where embeddedness is problematized in the interaction between the two. We have found few articles that, in addition to stating their results, ask questions, such as ‘what does this study say about embeddedness’ and ‘how does this study contribute to the phenomenon of embeddedness’. Consequently, embeddedness as a concept is not developed to its full potential. An exemption is Salder and Bryson (2019), who problematize the concept of adaptive embeddedness, which results in new resource constellations through constant loops of structural, emotional, and circumstantial embeddedness. Another exception is Vestrum (2014), who adopted a multidimensional perspective on embeddedness and identified four mechanisms that promote embeddedness and one that promotes disembeddedness. Her study shows how the embeddedness of a community entrepreneurship project develops over time in an iterative way and involves different actors and contexts. In embeddedness research, it is important to be clear about the relationship between entrepreneurial action and the context. It is not possible to discuss action without also paying attention to the context; on the other hand, context does not make sense without action. While the entrepreneur is embarking on an entrepreneurial journey, he or she is building structure by relating to context; that is, the entrepreneur is, for example, learning rules and constructing resources through interaction, that is, embedding into entrepreneurship. At the same time, as the entrepreneur embeds into new contexts through his or her interactions, the context might change and develop. A very recent and obvious example of a change in context on a global level is the COVID-19 pandemic, which most certainly will lead to implications for the entrepreneurs’ embedding processes.

A consequence of not problematizing embeddedness is the tendency to embed the entrepreneur in something given; in turn, this ‘given’ has its borders within a certain context (e.g. Breitenecker et al. 2017; Nikolaev and Wood 2018). This view of embeddedness has implications. It both disciplines and organizes embeddedness indicating that embeddedness is a static condition from which one is able to find one’s way in but less able to break out. Embeddedness disciplines entrepreneurs since they are accepted and successful only if they are able to become part of the community of practice in question and since it is the embeddedness that disciplines the entrepreneur, not vice versa. Embeddedness also organizes since it is a matter of being either embedded or not. It is a state of being that does not change, conveying a deterministic view of entrepreneurship. Based on data from one period in time, a ‘snapshot’ is allowed to determine the embeddedness of an entrepreneur or his or her organization as a ‘matter of fact’ (e.g. Hopp and Stephan 2012; Sieger and Minola 2016; Devigne, Manigart, and Wright 2016; Zhang 2015; Gras and Nason 2015; Aslesen and Harirchi 2015; Mazzanti, Montresor, and Pini 2011; Pahnke et al. 2015; Arregle et al. 2015). We urge future research to challenge this assumption in today’s global and virtual context, where entrepreneurs to a high degree move in and out of boundaries and where there is a virtual reality that makes it impossible to set borders. It is time for the existing division into social, spatial, and institutional embeddedness to be reformulated and/or extended with additional dimensions, such as cognitive and virtual embeddedness. With cognitive embeddedness, we refer to Kistruck and Beamish’s (2010, 738) definition to involve ‘regularities of mental processes that govern individual action’, and for virtual embeddedness, we rely on Morse, Fowler, and Lawrence (2007, 140; drawing on Fowler, Lawrence and Morse, 2004, 648) and define virtual embeddedness as ‘interorganizational linkages that are initiated and maintained through electronic technologies and that provide distinctive solutions to the same problems with exchange relationships that are addressed by socially embedded ties’.

Agencement of embeddedness

In their review on the spatial embeddedness of entrepreneurship research, Trettin and Welter (2011) pointed to a lack of understanding of the everydayness of entrepreneurship due to a missing link between localities and entrepreneurial activities. Welter (2011) has also discussed the recursive links between entrepreneurs and context, where context both influences and is influenced by entrepreneurs. In our review, we make a similar observation, where the agency ascribed to the entrepreneur is very limited in the extant embeddedness literature, which brings us to our second reflection. In all three entrepreneurship phases, we meet an entrepreneur who is depicted as being dependent on his or her embeddedness, whether it be institutional, spatial, or social. The entrepreneur is favoured or disfavoured by these conditions, where the entrepreneur has a set of predetermined conditions to act upon or by which he or she is constrained (e.g. Breitenecker et al. 2017; Nikolaev and Wood 2018). In general, the overall picture conveyed in the extant literature is that embeddedness is a static condition to which the entrepreneur has to react and adapt, and the role of embeddedness is typically unilateral, meaning that any possible interplay is neglected, which implies determinism (cf. Heidenreich 2012). Considering our general idea of an entrepreneur as a creator and driver of change (Beckert 1999) whose ability to act is highly celebrated, the adapted structuralist perception in the studies overlooks the role of the entrepreneur as a change maker. To us, this conception appears to be largely decoupled from the original notion of embeddedness defined by Granovetter (1985), upon whom the majority of the articles in this review build. According to Granovetter, rather than adhering to restrictions or to what a given context has to offer, actors strive for initiative and actions where they are embedded. The over-socialized view of human action assumes that people are obedient to established systems of norms and values; in contrast, the under-socialized view disallows any impact of the social structure on behaviour. Granovetter (1985) rejects both views and instead argues that most behaviour is closely embedded in networks of interpersonal relations. Embeddedness in relation to context is thus an ongoing process, constructed and reconstructed during interaction with the entrepreneur; not only does it shape actors, but it is also shaped by them.

We want to take this notion one step further and argue that agency is a practice of doing, acting, and reacting in a recursive iteration between entrepreneurs and their contexts to shape embeddedness. This would mean that we need to understand how this interaction takes place, what informs the entrepreneur’s actions, what these actions are, how the context responds, how the embedding changes and what implications this condition has for entrepreneurship. Gherardi (2016) suggests that it is the practices, per se, that have agency, and she labels this construct agencement.

For future research, this conception has epistemological implications since it means that knowledge is not ‘out there to be found’ but, rather, is created in a mutual process in the agencement process. Embeddedness is based on a performative view; i.e. embeddedness is socially constructed. Theoretically, the translation model (Latour 1984) may be useful in our thinking about embeddedness. The movement of the practices of entrepreneurship is dependent on peoples’ decisions and choices concerning what to do with them or whether to let them be. There is no force that initiates the movement of the action – it is rather the attention given to it that counts. All actors’ actions bear the same relevance and importance; the actors translate and interpret the actions, and together, they define the embeddedness. Everyone adds value to the chain of activities by interpreting, translating and transforming them into something in line with their present situation as part of a continuous translation and transformation process. The actions will thus have an effect in one way or the other, not that the activity itself is the effect but, rather, the action that is being translated and transformed in a certain way has an effect. This means that there is no activity that is or is not, that favours or hinders, or that embeds or disembeds entrepreneurship. It is in the social interaction between the actors that these interactions are interpreted and acted upon. This makes embeddedness a fluid phenomenon that is not easily predefined and, above all, is not a static condition. Following this reasoning, we suggest that it is more pertinent to discuss the agencement of embeddedness rather than the entrepreneur’s agency.

Process and practice theories of embeddedness

The findings of the articles in this review show how embeddedness can contribute to developing further knowledge about entrepreneurship and entrepreneurial processes. Although research has hitherto produced valuable insights into the importance of context and aspects of embeddedness, we see few contributions that advance the concepts of embeddedness and the embeddedness processes. We perceive a need for researchers to distance themselves from the static connotation of embeddedness since entrepreneurs are always embedded and embeddedness is a continuous process, something layered and fluid, rather than a state. Only a handful of articles focus specifically on the process of embedding (e.g. Jack and Anderson 2002; Keating, Geiger, and McLoughlin 2014; Vestrum and Rasmussen 2013; Reay, Golden-Biddle, and Germann 2006; Salder and Bryson 2019). These articles show that the process of embedding is continuously ongoing, is negotiated and is characterized by both structure and agency.

Further, the present review reveals that we know surprisingly little about what entrepreneurs actually do, feel and think when they interact with their context. Therefore, we see a need to include more relational theories and arguments by including the sociocognitive and emotional aspects of the entrepreneur and the ongoing features and patterns of social activities, which calls for rigorous process and practice studies (cf. Dacin, Ventresca, and Beal 1999). A few articles consider the microlevel of everyday life activities (Bakas, Duxbury, and Vinagre de Castro 2019; Ekinsmyth 2013; Jack and Anderson 2002; Jonsson 2015), but they are the exceptions that confirm the rule. Therefore, the practice perspective can be a fruitful way forward. Here, the microdimensions in the interactions between the entrepreneur and his or her embeddedness are the focus. The practice perspective theoretically relies on Schatzki’s (2001) practice theory, which suggests that practices are embodied in human activities, which in turn implies an interest in microprocesses and daily activities related to outcomes. Embedding thus refers to the continuous and detailed processes and practices that constitute the actors’ making and remaking of embedding issues and activities/actions. Therefore, resources such as social networks, social ties, and institutional benefits, are not things that the entrepreneur has or possesses or something that exists; rather, resources come into play in the entrepreneur’s actions and activities (cf. Pret and Carter 2017).

An exemplary work in our review is Keating, Geiger, and McLoughlin (2014), who shift their perspective from resources as a noun to ‘resourcing’ as a practice. These authors follow an entrepreneurial endeavour over time in its early phase and rather than focusing on who the entrepreneurs know, they show how the entrepreneur, through differing practices, engages in social practices of resourcing. The study shows the value of understanding embeddedness ‘from within’; it also reveals and how the activities of and actions taken by the entrepreneur and other actors unfold over time and how this and contextual factors become embeddedness. Embeddedness is thus created in this here and now. Even if Jack and Anderson (2002) portray embeddedness as a given, they make use of Gidden’s structuration theory in an undertaking to show the close interaction of entrepreneurs as agents with their context as structure. The process and practice perspective is not new, but it is scarce. Johannisson (2011) refers to ‘entrepreneuring’, which denotes the activity-based perspective of entrepreneurs in their embedding process. Methodologically, applying a practice perspective thus implies that embeddedness is not an antecedent but evolves with actions and interactions and requires the study of microprocesses. We therefore suggest that future research should take support from micro-social theories (e.g. Blumer’s (1969) symbolic interaction theory; Collins (2004) interaction ritual chain theory; Cook, O’Brien, and Kollock (1990) exchange theory; and Weick’s (1995) sense-making theory, where social structures as patterns of repetitive microinteractions (by and between individuals) can be translated into the macro level (organizational and societal levels). Such theories, coupled with enactive research (Johannisson 2011), ethnographic designs and/or virtual methods, lend themselves to considering micro aspects of, for example, emotion, power, cognition, and virtual factors. This suggestion does not mean that we only see room for in-depth qualitative studies. Recently, there has been growing interest in applying big data analytics to entrepreneurship studies, as doing so enables dynamic studies of behaviour and microprocesses and can be both exploratory and confirmatory (Schwab and Zhang 2019).

Across levels and across phases

Few contributions of this review advance the embeddedness processes, even if research has hitherto produced valuable insights into the importance of context and aspects of embeddedness. We believe that there is a need to shed more light on the complexity and multidimensionality of embeddedness. This means not only that embeddedness can enrich entrepreneurship studies but also that entrepreneurship studies can also enrich our understanding of embeddedness. To do this requires that embeddedness, in combination with other theoretical perspectives, be brought to the forefront instead of being placed in the background. When taking on such a task, we argue that multilevel studies will be beneficial. The concept of mixed embeddedness exemplifies an interinstitutional approach to embeddedness, opening the possibility to consider multiple levels and contexts. Mixed embeddedness involves capitals and values of the situational context as much as the entrepreneurs’ background experiences and life history. The concept has also been shown to be able to bridge the past and present when past experiences provide mechanisms and links to activate the present social context (Storti 2014). Further, Vestrum (2014) conducted a multilevel analysis by studying the development of a music festival in rural Norway, showing that entrepreneurial processes are formed through social and cultural processes over time. Embeddedness is characterized by the process in which external and local communities and community entrepreneurs interact with each other. In this type of research, embeddedness is viewed as ‘a process of becoming part of [social] structures’ (Jack and Anderson 2002, 468) rather than as one explained by why one thing leads to another. Most frequently, however, studies in our review have primarily drawn on one or two levels and one or two dimensions of embeddedness. This limits the possibility to develop a deeper understanding of and contribution to embeddedness. A recent study that can stand as a role model is Salder and Bryson (2019), who show that embedding can lead to new configurations of resources in recurrent and repetitive interactions on several levels of embeddedness – the structural, the circumstantial and the emotional.

Thus, to break with mainstream research on embeddedness and to capture something fluid and something layered, a process perspective that takes varying degrees of embeddedness and multiple levels into account is beneficial. The field of sociology offers a rich tradition of studies of everyday life in general (Goffman 1959), considering that depending on background, experiences, skills, and context, entrepreneurs act differently and take different actions. By studying the everyday life of entrepreneurs, it is possible to acknowledge the relational, institutional, and cultural contexts that entrepreneurs interact within. Everyday life studies of entrepreneurs will help us develop a better understanding of embedding (and disembedding) processes and learn about embeddedness in a complementary way.

Depending on the context(s) that the entrepreneur is embedding into and the type of organization that he or she is creating, processes may differ. An entrepreneur starting a new venture in a well-established field faces one type of embedding process, while an entrepreneur starting a venture in a new field faces another type of process. Embeddedness is a ‘living’ phenomenon that changes over time and is affected by a set of factors. Most importantly, entrepreneurs are not ‘caught’ in one defined embeddedness; rather, they operate in a set of different embedded contexts and relate to embeddedness in relation to different stakeholders. Thus, for example, an entrepreneur may relate to the social embeddedness in which they feel very confident; simultaneously, however, they may operate in an institutional embeddedness that is perceived as less familiar or even as a threat. Importantly, the contexts themselves are not static but also vary over time. Future research is therefore encouraged to study embeddedness as operating on a continuum along which, depending on an individual entrepreneur’s situation, he or she can be ‘spotted’ at different points both within but also across the three phases. Embeddedness is not fixed and permanent but changeable. Embeddedness is probably better depicted as a continuum depending not only on the situation of the entrepreneur but also on the changes in the context/s.

Embeddedness is thus not isolated or anchored in only one specific context; rather, it depends on coexisting factors mostly attributed to relations among entrepreneurs, groups, organizations, and institutions. For example, embedding is best understood in its cultural, industrial and organizational contexts, where an entrepreneur provides bridging mechanisms to tie in to all of them. Embedding, in this sense, plays a key role in different layers of personal, organizational, national, sociospatial and interpersonal relations for managing activities. Institutional embeddedness defines the pattern of institutional influence on the different layers. Those processes are part of the entrepreneurial process and are made sense of by the entrepreneur him- or herself. We argue that the embedding process of the entrepreneur, cognitively and emotionally, needs to be investigated.

One way of understanding embeddedness in future entrepreneurship research is to critically study how the process of embedding is characterized in the three phases of entrepreneurship by applying zones of development (ZPD, Vygotsky 1978). This implies a focus on cognitive and emotional processes of entrepreneurship and a consideration of other issues, for example, how entrepreneurs share knowledge and ideas in social interaction, how value manifestations are formed, and how this might differ in the different phases. In the early phase, embeddedness is, for example, important to handle the liabilities of newness. Networks are important. A newcomer in a network probably learns more and develops more new ties than a person who has participated for a longer time in the network. However, the newcomer might influence the network by bringing new resources, e.g. ideas and contacts. By studying the embedding of the entrepreneur into different social contexts, future research is encouraged to focus on the cognitive and emotional processes of entrepreneurship in the early phase. Thereby, further understanding on the interconnectedness between different contexts can be developed. However, we also encourage studies to pay attention to what occurs within a network when newcomers enter and when entrepreneurs, who probably challenge rules, regulations, norms and values, experience processes of resistance. Understanding such embedding processes would be valuable.

Entrepreneurs in the mature phase are to a large degree already embedded in networks, which can enable growth and innovation. This position can also lead to defiance (Uzo and Mair 2014) and an escalation of commitment (Devigne, Manigart, and Wright 2016); it is a challenge to prevent overembeddedness from resulting in lock-in effects. Few studies in the review focus on over-embeddedness, indicating a gap. Again, the cognitive processes of entrepreneurship can assist us to develop new research avenues. The taken-for-granted, established structures that work well are difficult to question. Nevertheless, it might create a lock-in effect when the entrepreneur or the firm stops questioning and stops developing. By challenging the taken-for-granted, room is given for development. This is especially fruitful in the field of entrepreneurship, which is supposed to differ from more traditional management studies.

Entrepreneurs who exit entrepreneurship by selling or closing a firm leave an organization. Thereby, they leave a certain structure. However, this does not necessarily mean that they leave the process of entrepreneuring; they might engage in a new project or process. There are several ways to exit – by selling or closing down; there are several reasons for exiting entrepreneurship: it may be voluntary or involuntary. Regardless, the entrepreneur has developed valuable skills and competences, and in some cases, their embeddedness may remain. There are surprisingly few studies on embeddedness and the exit phase, showing that this phase is underexplored and opening up avenues for studies where such a focus can provide new knowledge. Thus, following the embedding process over several phases and across levels has the potential to provide novel insights into the dynamics of embeddedness.

Concluding remark

This review has shown that embeddedness research has enriched our understanding of entrepreneurship. However, less is known about how entrepreneurship can enrich our understanding of embeddedness. This implies that context and embeddedness should no longer be used interchangeably. In the existing literature, the entrepreneurs’ agency has become lost and the entrepreneur has become reactive to the embeddedness. The review also showed that embeddedness plays different roles depending on the entrepreneurial firm’s life cycle stage. However, there is room for holistic and longitudinal embeddedness approaches that consider the three phases together. Finally, the majority of the extant literature is cross-sectional, focusing on one level of embeddedness. Process and practice perspectives and micro-social theories can advance the field to be more dynamic in character. In short, we have seen the need to move embeddedness from an enabler or impediment for entrepreneurship to embeddedness co-evolving with entrepreneurship.

Disclosure statement

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Supplementary material

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Notes

1. The embeddedness position was initially associated with the substantivist school in anthropology, particularly the works of Karl Polanyi (Polanyi, Arensberg, and W 1957), and with the idea of the moral economy in history and political science (Thompson 1971; Scott 1976). Polanyi highlighted a relationship between economics and the social spheres of society in his work ‘Our Obsolete Market Mentality’ (1947, 114), stating that ‘instead of the economic system being embedded in social relationships, these relationships were now embedded in the economic system’. Granovetter (1985), influenced by Polanyi, describes embeddedness as the contextualization of economic activity in ongoing patterns of social relations.