Social embeddedness in supply chain and its paradoxical impact on operation performance

Abstract

This paper aims to analyze structural and relational embeddedness effects in operational performance in terms of productivity and quality gains. We investigated furniture companies and its customers and suppliers ties. Specifically, we analyze how relational embeddedness - trust and solidarity - reinforces structural embeddedness, which was evaluated from outsourcing costs and sales concentration. Our results point out that customers’ relational embeddedness improves quality performance, whereas with suppliers leads to productivity gains. We found two paradoxical effects. First, lower levels of trust and solidarity generates negative effect on suppliers of structural embeddedness in productivity, but at higher levels these effects are positive. Second, the contradiction can be observed when we found a positive effect of two types of immersion combination in productivity, but negative on quality.