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Open Access Publications from the University of California

Embedded Transactions and Market Consequences: Interorganizational Dynamics in the American Legal Services Industry

  • Author(s): Kim, Harris H
  • et al.

Sociological research on status attainment has increasingly recognized the role of social networks. The bulk of extant scholarship on networks and stratification, however, deals exclusively with the information and control benefits of network embeddedness. Organizational scholars, on the other hand, have paid increasing attention to another, relatively unexplored, aspect of social networks, which has to do with the conferral of status via network affiliations. The argument is that because of the inherent uncertainty surrounding product or service quality, potential consumers often rely on the status of the producer’s (provider’s) past or existing transactional partners as a proxy for the focal actor’s capacity to deliver high-quality goods (services). In this paper, I import this key theoretical insight to the study of income stratification among Chicago lawyers. I hypothesize that a lawyer benefits not only from having access to social capital that provides timely information about opportunities, but also from the endorsement by highstatus network partners, given that a lawyer’s performance quality is uncertain, even unknowable. I also hypothesize that the effect of ties to high-status alters, net of control and social capital variables, varies according to the level of uncertainty in the market for lawyers. I find strong empirical support for our network-as-status contingency argument.

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