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Functionalism Revisited: A practice based Functionalism
Unformatted Document Text:  Functionalism Revisited 14 exist some social factors (mostly through interlocking positions or personal relations), most parts of business alliances and other economic activities involve strategic decision-making. The subjects of Uzzi’s study were small size firms in the New York-based garment industry. Though not exclusively mentioned, the CEOs in the study consider their business much more personal in comparison to large size companies. These types of business activities may result in relation-oriented business practices, rather than market-oriented practices. That is, the institutional arrangement (in Uzzi’s term) or systematic characters might influence how the patterns of interorganizational collaboration develop. Uzzi mentions the institutional arrangement during the 80’s influenced the nature of business in a significant way. As big retailers such as Macy’s, Bulocks, A&S, and so on were purchased by corporate conglomerates such as Federated Inc., patterns of arms-length (market-oriented) type of business arose or companies exclusively relied upon embedded relations got out of such business practices (dealing with big department stores). This may suggest an incident of interactions between the regularity of big corporations and that of small companies; and creation of new structure – structure in Giddens’ term. Baker’s study finds that institutionalization emphasizes the formal aspect of business transaction. Dismissing, if not ignoring, the strategic aspect of business decision may result in a problematic interpretation of economic industry. Second, more importantly, Gulati’s (1995) and Uzzi’s (1997) argument favors a closed network system even though the general goal of their argument aims at explaining the expansion of network through established links. Their perspectives neither explain the beginning of the interorganizational relationship, nor provide the rationale for witnessing new members (ones who have no links to existing members) of the networks (see also Stuart, 1998). Such a gap exists because the approaches do not account for systematic or institutional influences. In computer software and hardware industry, for example, focusing on more market-orientation factors – in comparison to relation-oriented factors – seems common. The significant incident that influenced such tendency might be the interrelation between Microsoft and IBM during the early 80s. The relationship that was perceived as relations in the first place turned out to be Microsoft’s outgrowth, which significantly affected IBM in many ways. Scott’s study (2000) on computer hard disk manufacturers IOR also suggest that buyers tend to strategically avoid relying on only one source for their manufacturing disks; and choose a rather generic technology which can be always replaced with other companies’ product. In relation to the institutional theory, such incidents seemed to have a significant impact on interorganizational formation – hence, exert a mimetic influence over formation of organizational interrelationship.

Authors: Kim, Hyo.
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Functionalism Revisited 14
exist some social factors (mostly through interlocking positions or personal relations), most parts of
business alliances and other economic activities involve strategic decision-making. The subjects of
Uzzi’s study were small size firms in the New York-based garment industry. Though not exclusively
mentioned, the CEOs in the study consider their business much more personal in comparison to large size
companies. These types of business activities may result in relation-oriented business practices, rather
than market-oriented practices. That is, the institutional arrangement (in Uzzi’s term) or systematic
characters might influence how the patterns of interorganizational collaboration develop. Uzzi mentions
the institutional arrangement during the 80’s influenced the nature of business in a significant way. As
big retailers such as Macy’s, Bulocks, A&S, and so on were purchased by corporate conglomerates such
as Federated Inc., patterns of arms-length (market-oriented) type of business arose or companies
exclusively relied upon embedded relations got out of such business practices (dealing with big
department stores). This may suggest an incident of interactions between the regularity of big
corporations and that of small companies; and creation of new structure – structure in Giddens’ term.
Baker’s study finds that institutionalization emphasizes the formal aspect of business transaction.
Dismissing, if not ignoring, the strategic aspect of business decision may result in a problematic
interpretation of economic industry. Second, more importantly, Gulati’s (1995) and Uzzi’s (1997)
argument favors a closed network system even though the general goal of their argument aims at
explaining the expansion of network through established links. Their perspectives neither explain the
beginning of the interorganizational relationship, nor provide the rationale for witnessing new members
(ones who have no links to existing members) of the networks (see also Stuart, 1998). Such a gap exists
because the approaches do not account for systematic or institutional influences.
In computer software and hardware industry, for example, focusing on more market-orientation
factors – in comparison to relation-oriented factors – seems common. The significant incident that
influenced such tendency might be the interrelation between Microsoft and IBM during the early 80s.
The relationship that was perceived as relations in the first place turned out to be Microsoft’s outgrowth,
which significantly affected IBM in many ways. Scott’s study (2000) on computer hard disk
manufacturers IOR also suggest that buyers tend to strategically avoid relying on only one source for
their manufacturing disks; and choose a rather generic technology which can be always replaced with
other companies’ product. In relation to the institutional theory, such incidents seemed to have a
significant impact on interorganizational formation – hence, exert a mimetic influence over formation of
organizational interrelationship.


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