Academic journal article Polish Sociological Review

Does Competition Eliminate Social Ties?: The Case of the Russian Retail Market

Academic journal article Polish Sociological Review

Does Competition Eliminate Social Ties?: The Case of the Russian Retail Market

Article excerpt


Conventional economic theories assume that competing firms act independently. This theoretical assumption is applied to economic policies and anti-trust legislation. In contrast, economic sociology describes competition as a special type of social action that is oriented towards others. More specifically, to remain in the market, competing firms monitor one another and cooperate by establishing inter-organisational social ties. This paper demonstrates that increasing market pressures, including higher levels of competition and stronger bargaining power among exchange partners, does not disrupt social ties but promotes them. Data for the analysis were collected in 2007 from 501 managers of retail chains and their suppliers in five Russia's cities (Moscow, Saint Petersburg, Yekaterinburg, Novosibirsk, and Tyumen). The sample includes firms of different sizes that operate in the food and electronics sectors of the consumer market.

Keywords: economic sociology, embeddedness, markets, Russia, social networks

JEL classifications: A120 relations of economics to other disciplines, P31 socialist enterprises and their transitions, Z13 economic sociology, economic anthropology


Economics and sociology use a variety of concepts to describe competition as a key element of market coordination. Competition is usually treated as a market force that is pitted against social relations. Thus, competition and social relations are presented as opposites that hinder one another. This perspective, shared by many economists and sociologists, is referred to as the "Hostile Worlds" approach (Zelizer 2005: 336). The Hostile Worlds approach associates competition with atomised actions that deny social ties. Increasing competitive pressures are believed to disrupt social ties, and in turn, coordination based on social ties is thought to eliminate competition.

However, competition and social relations are not always in opposition to one another. Competition may be conceived of as a network of relations that govern conflict and cooperation as well as their intersection between independent actors (Zelizer 2005: 336). The objective of this paper is to move beyond the analytical separation of competition and cooperation and develop a sociological concept of competition that

is infused with social ties. Competition does not necessarily destroy social ties, and it may even stimulate their formation. Competitive pressures increase interdependence among competitors such that they affect each other's strategic choices. Mutual dependence generates uncertainty among competitors that drives them to cooperate to address this uncertainty (Gulati and Gargiulo 1999:1443).

To develop a sociological concept of competition, I describe how different types of social ties are associated with competitive pressures. First, I investigate a variety of social ties and show which types of social ties lead to coordination. The analysis of social ties is often confined to formal network ties and strategic alliances (e.g., interlocking directorships, joint investments, exchange of technologies, associational networks) (Mizruchi 1996; Stuart 1998; Westney 2001; Trapido 2007), but informal inter-firm relationships are largely neglected (Smith-Doerr and Powell 2005: 385). I address both formal and informal ties to demonstrate that informal inter-organisational ties are also important and more extensive than formal ties.

It is important to understand the impact of competition and other relevant market forces on the formation of social ties, which involve mutual awareness between market sellers and their interaction in inter-organisational networks. This relationship is not thoroughly researched. Research has largely concentrated on the impact of social ties on economic performance (for example, see: Uzzi 1996). Many scholars treat the emergence of social ties as a contingent process (Powell 1990) and only take network formation into account to understand the dissemination of information, the diffusion of innovations, and the inter-firm mobility of workers (Powell, Koput and SmithDoerr 1996; Powell 2001: 58-61; Trapido 2007). …

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