Espacios. Vol. 33 (9) 2012. Pág. 5

Economic Sociology and its Contribution to Operations Management Field: An Exploratory Study

Sociologia Económica e sua Contribuição para operações de campo de Gestão: Um Estudo Exploratório

Enise Aragão dos Santos 1 e Cristiane Biazzin Villar 2

Aprobado: 15-05-2012

Contenido

• 1. Introdução
• 2. Economic Sociology – Origins and Concept
• 3. Current Stream
• 4. Research Methodology
• 5. The Sociology of Economic Studies in Operations and Supply Chain Management
• 6. Conclusion
• References
• Appendix

ABSTRACT:
The aim of this paper is to analyze the concept of Economic Sociology and its current usage in Operations and Supply Chain Management studies. Based on a qualitative approach, we have examined articles and papers about sociology and operations management. Although the findings of this paper are still preliminary, it offers an initial understanding of the Economic Sociology field, its classical references, as well as its key conclusions and contributions. Furthermore, it gives an overview of empirical studies that used the economic sociology to study Operations and Supply Chain Management.
Key-words: Economic sociology; Operations Management; Supply Chain Management

RESUMO:
O objetivo deste artigo é analisar o conceito de Sociologia Económica e seu uso atual em Operações e estudos de Supply Chain Management. Com base em uma abordagem qualitativa, examinamos artigos e trabalhos sobre sociologia e gestão de operações. Apesar de os resultados deste trabalho são ainda preliminares, ele oferece uma compreensão inicial do campo de Sociologia Econômica, suas referências clássicas, bem como as suas principais conclusões e contribuições. Além disso, dá uma visão geral de estudos empíricos que utilizaram a sociologia econômica para estudar Gestão de Operações e Supply Chain.
Palavras-chave: Sociologia Económica, Gestão da Cadeia de Suprimentos, Gestão de Operações

1. Introduction

The most popular theoretical approach in studying operations management has been the theories of Transaction Cost and of Competitive Advantage, either Porterian analysis or resource-based approach (Pilkington and Fitzgerald, 2006, Burgess, Koroglu and Singh, 2006). As a consequence, there is a possible exhaustion of operations studies due to the use of the same theories, what some authors call "doing more of the same type of research will most likely produce more of the same order of results " (Burgess, Singh and Koroglu, 2006 p.721). The aim of this study is to present an exploratory approach to the concept of Economic Sociology (EC), its current usage as well as possible opportunities for research within the Operations (OM) and Supply Chain Management (SCM) field. Based on a qualitative approach, we have examined articles and papers about sociology and operations management.

This paper is relevant when studying operations management not only because it provides a review of the literature, but also once it presents a new theoretical approach, rarely used in OM studies. In accordance with Kilduff’s (2007) concerns about the contribution of this method, this study sums it up in pragmatic way, encouraging the production of new integrative insights, important to provide the reader the possibility of having a broader view of Economic Sociology (Lepine and King, 2010).

The main contributions of this paper are: (i) to provide an initial understanding of the Economic Sociology field, its classical references, as well as its key conclusions ad contributions; and (ii) to offer an overview of empirical studies that used the economic sociology to study Operations and Supply Chain Management.

This paper is structured in seven sections. Firstly, it analyses the history and the concept of economic sociology, as well as its current branches. Then, it details the methodological procedures used in this study and presents the state of the art of this theoretical approach in Operations and Supply Chain Management. We conclude showing future research opportunities.

2. Economic Sociology – Origins and Concept

According to Swedberg (1993), the idea of economic sociology was already present in Max Weber’s studies since Weber focused on analyzing the polarization between the historical and theoretical approaches in economic investigations, what was later called as “a war of methods” (Methodenstreit). The findings of Emile Durkheim, Karl Marx and Karl Polanyi were extremely important to a better understanding of the social structure of exchanges; these authors demonstrated that the economic sphere is independent from the social sphere, opposite to the classical economists’ beliefs (Granovetter, 1985).

By definition, the economic sociology is understood as the usage of the structure of references, variables and forms of sociological explanation in complex activities related to production, distribution, exchange and consumption of scarce resources and services (Smelser and Swedberg, 1994). Nowadays, the economic sociology significantly contributes to organizational analysis, by offering an overview on how the economic actors, despite their interests, are influenced by the interaction and the social structure. Consequently, there are diverse issues on the agenda when one assumes that the economic arena is made up of many social mechanisms, such as trust, cooperation and competition (Swedberg, 1993).

The so called New Economic Sociology is not only the sociological treatment of economic variables, but it also includes the construction of a systematic body of knowledge formed by questions that create a debate and divide the actors in groups. Based on Max Weber’s (1949) writings, Swedberg (2004, p. 7) states that: "the economic sociology studies both the economic sector in society (economic phenomenon) and how this phenomenon influences the rest of the society (economically conditioned phenomenon) and the way the rest of society influences them (economically relevant phenomenon). "

Nevertheless, when economics and sociology are studied together, it is perceived a greater scope of interests and methodological innovation. If, until the 1980s, economic sociologists had focused on institutions and paid close attention to issues related to control, sanctions and rules, in the last two decades, gender, social networks and culture have become key elements in the analysis.

The first milestone of the American New Economic Sociology can be found in the papers of Mark Granovetter, specifically with the development of the term of embeddedness, originally used by Karl Polanyi (1980). Granovetter was also responsible for making the networks analysis as an approach to economic sociology more common. It has been seen as an influence of his teacher Harrison White, author of Markets from Networks (2001).

According to the current stream of the new economic sociology (NES), organizations and markets are social constructs that vary depending on the institutions and the context and are placed in different production systems. The NES emphasizes the investigation of actions and collective enterprises, social roles, norms, and sanctions. Furthermore, it studies the modifications in institutional arrangements that shape historical and economic ties as well as social networks that are established by social workers in a given market sphere. According to Granovetter, the focus of the Economic Sociology is neither on the curves of supply and demand nor on the price consideration as the only source of information in a market, as in economics; it does not focus as well on the legal framework that supports market transactions, as in economic law.

Understanding the relationship between economic action and social structure is the key to comprehend the work of Granovetter (1985), who uses the concept of embeddedness to demonstrate how social relations affect economic behavior and institutions. From an embeddedness point of view, the actors have an aim within the social relations system. The author highlights that economic action and results are affected by the actors and the structure of the network. The enmeshment of economic actions in social relations (power, sociability, friendship, approval, trust) is a critical variable for economic agents to make a decision, modifying the way preferences and rationality are discussed.

The studies of Granovetter have been the basis for further developments. On one hand, some authors aimed at identifying possible types of embeddedness; whilst Hess (2004) recognized three basic types (societal, network and territorial), Törnroos and Halinen (1998) identified six different types (social, technological, market, political, temporal and spatial). On the other hand, others authors, like Zukin and DiMaggio (1994), planning on expanding the original concept, incorporated cognitive, cultural and political dimensions.

Moreover, several authors use the idea of embeddedness as a possible approach to social networks (Borgattti and Foster, 2003). Others, in turn, try to link truths about weak ties with different conceptions of embeddedness and / or make use of the analysis method of  networks, whichwas heavily used by Granovetter to study the embeddedness in social relations (Burt, 1992; Lin, 2001).

The European economic sociology, less known in Brazil, the papers of Laurent Thévenot, Luc Boltanski, Michel Callon, and Pierre Bourdieu, who introduced key concepts for this approach, such as habbits, field, capital and interest. Whereas Boltanski and Thévenot draw attention to the analysis of traditions that guide economic actions (justification standard models), Callon and Bruno Latour focus on science and technology, developing a theory of actors and networks (actor-networks-theory) (Swedberg, 2004).

3. Current Stream

Since 1985, markets economic sociology has been studied in a different way and, in a broad sense, it can be split in three streams:

1. Social networks or structuralism: Mark Granovetter and Harrison C. White are the main exponents, but Ronald Burt - methods, competition; Wayne E. Baker - stock exchange, advertising market; and Brian Uzzi - textiles sector - can also be included.
2. Institutionalism: mainly the papers of Neil Fligstein. It focus on explaining how cognition and action are defined by market rules, power and norms.
3. Performativity: key authors are Michel Callon, Fabian Muniesa and Donald MacKenzie - financial models, social definition of price, credit. It assumes that economic action is a result of calculation processes, technologies and tools employed by social actors in markets, such as economic theories.

Two other streams can be identified: (1) the culture approach to business and market organizations. Different authors can be included in this category, such as Viviana Zelizer, Mitchell Abolafia (social aspects of a stock exchange daily life), Paul DiMaggio & Walter Powell (organizations, culture, networks, Internet), and Lynette Spillman (business associations, culture); and (2) the approach developed at the Max Planck Institute for the Study of Societies in Germany, which combines markets types and aims at summing up the findings of the aforementioned branches.

In this approach, Beckert and Streeck (2008) analyze how problems in coordination can be solved in the market exchange process and how specific solutions can affect the contours of economic transactions in terms of efficiency and distribution. For both authors, three markets coordination problems can be distinguished: goods and/or services evaluation, competition structure and achievement of cooperation between actors in a conflict of interests. According to them, companies and regulatory bodies play a crucial role in shaping the market: as a result, studying these institutions is extremely important for markets sociology.

In accordance with it, Möllering (2007, 2005) points out that markets cannot solely be defined as an interaction place between buyers and producers. Regulatory organizations such as government agencies, trade unions, professional bodies and business associations also play an important role in the constitution of the market social structure.

Another important author within Max Planck is Patrik Aspers (2009, 2007, 2005, 2001), who also focuses on the social constitution of markets and on the link between economic sociology and other disciplines. Moreover, he reviews the papers of classical authors such as Weber, Simmel, Veblen, Marshall, Pareto, Parsons, Schütz, and even Nietzsche. Cornelia Woll, who studies lobbies, businessmen and business association in France, must also be mentioned.

Table 1: Major authors of Contemporary Economic Sociology: a thematic synthesis
Source: Adapted from Fontella (2009)

As the table 2 illustrates, the papers of Uzzi (1997) and Granovetter (1973, 1985, 1992 and 2005) are the most important in the area.

Table 2: Authors and main papers
Source: Compiled by the authors based on data from ISI Web of Knowledge

The interest for economic sociology has significantly grown in the last few years. Graph 1 shows that quoting of the papers of Granovetter and Uzzi have increased considerably.

Graph 1: Evolution of quotation from Granovetter and Uzzi papers
Source: Compiled by the authors based on data from ISI Web of Knowledge

4. Research Methodology

The research methodology adopted in this study was a descriptive and explanatory bibliometric analysis. To meet the aim of this study, it was developed a survey based on the following keywords: "economic sociology" + "supply chain", "economic sociology" + "operations." The preliminary research was initiated by searching the top ten OM journals listed by Meredith et al (2011) and other academic journals that cover the topic of “research operations” in its editorial liner. The authors also included other journals listed on EBSCO website, using the same keywords. The summary of the journals searched is presented in Table 3 and the full list of papers can be found in Appendix A.

Table 3: Evolution of quotation from Granovetter and Uzzi papers
Source: Compiled by the authors based on data from ISI Web of Knowledge

Despite the clear possibility of using this approach in theoretical studies of operations and supply chain management, it is clear that few writers have explored this in their studies. In the next section, a detailed analysis of the results of this research is presented, assessing the level of usage of this theoretical approach on operations and its current contribution.

5. The Sociology of Economic Studies in Operations and Supply Chain Management

From the sample collected, it was noted that most studies that are grounded in economic sociology explore issues concerning the relationship between the parties, the attempts to develop the embeddedness achievement and the strength of links between actors in the supply chain. It was noticed that some papers mix (and on several occasions confuse) economic sociology with other theoretical approaches as social capital theory, exchange theory, theory of networks, making the analysis of the current usage of ES fragile.

From the analysis of abstracts of “operations” papers that used economic sociology as a theoretical approach, it was a structured "word cloud" using the tool Wordle (www.wordle.com) with the most cited words in the papers (Figure 1 and 2). Tag clouds have been widely used in the literature to represent virtually the most frequent words in a context (Francisco, 2011).

Figure 1: Cloud created from abstracts from OM papers that use the theory of economic sociology.
Source: Compiled by the authors

It can be seen that there is an emphasis on words like "relationship" and "networks", supporting the perception that this theoretical approach has been used in studies of relationships, particularly in the supply chain field. This insight is reinforced when the keywords of the articles are analyzed.

Figure 2: Cloud created using the keywords from  OM papers that use the Economic Sociology theory.
Source: Compiled by the authors

In order to better understanding the use of Economic Sociology lens on Operations Management studies, it will be shown some examples of researches that make models constructions possible.

Slotegraaf and Grewal (2007) studied embeddedness capabilities as a factor of competitive advantage, more precisely, they investigated the extent to which the embeddedness of these capabilities can contribute and influence decision-making in organizations.

To assess the topic “embeddedness with suppliers", Koufteros et al. (2007) raised questions from the literature review and validation with executives, reaching issues that take into account the time of the relationship ("our firm has been building a long-term relationship with its suppliers"); level of involvement ("our firm has been involved in developing partnerships with its suppliers" and "our firm has been involved in developing its suppliers"); and cooperation ("our firm has been creating a cooperative relationship with its suppliers").

The paper of Oke and Walumbwa (2008) used the strength of ties as a mediator between power and performance. For the achievement of the "strength of ties," the authors took into account the following issues:

1. Goals similarity: "I believe that the members of this network work towards attaining similar goals";
2. Interest in continuing the relationship: "I would be interested in continuing my relationship with other members of this network, even after the project ends" and "Even if we had other options, we would remain in this network";
3. Conflict: "There is very little friction between the participants";
4. Closeness level between the actors: "Our relationship with the other members is best as close and personal" and "There is a good working relationship between the members of this network".

6. Conclusion

The use of different perspectives of organizational analysis provides new analytical and methodological basis for understanding the dynamics of organizations and the redirection of organizational studies (Sacoman Neto and Truzzi, 2002). Such approach is relevant because of the ambiguity and contradictions found in “operations” studies. The initial aim of this study was to explore the concept of economic sociology and its widespread usage in operations and supply chain management. To this end, this research initially explored the origins and theoretical conceptualization of said approach, identifying its classical as well as its current references.

It has been perceived that when applying the theory in operations and supply chain management studies, the papers examines the relationship between the parties, developing ways to make the embeddedness and the strength of ties possible.

This paper is relevant for operations and business relationship management studies since it provides more than a simple review of the literature; it presents an organized view on a theoretical approach rarely used when one is studying operations. In accordance with the concern raised by Kilduff (2007) on the contribution of such methodological approach, this study synthesizes the approach in a pragmatic theoretical fashion and encourages the production of new integrative insights, which would provide the reader with the possibility of having a broadened view of economic sociology (Lepine and King, 2010).

A worrying fact is the conflicted view of the economic sociology with other theoretical approaches, such as social capital theory, exchange theory, theory of networks, thus making the analysis of economic sociology superficial. However, this situation creates the opportunity for a deep and detailed exploration of this theory. This paper’s main contribution is a preliminary understanding of economic sociology, its classical references, assumptions and main constructs, thus providing an overview and a source of reference to the empirical studies of operations and supply chain management, which had employed this theoretical approach.

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Appendix A

1 Universidade de Mogi das Cruzes. Brazil. E-mail: enise.santos@hotmail.com
2 Cristiane Biazzin Villar. Brazil. E-mail: cristianevillar@hotmail.com