The Social Embeddedness of Transactions: Evidence from the Residential Real Estate Industry

Information and communications technologies (ICT) are becoming pervasive in the residential real estate industry and affecting the work lives of real estate agents. Drawing on data from a regional study of the residential real-estate industry in the United States, we focus on the disintermediation or, more accurately, the re-intermediation of real estate agents in the sales process. We examine how real estate agents are (1) taking advantage of new ICT in their work, and (2) protecting themselves from others wishing to displace their position in the real estate value chain. Our analysis draws on two contrasting theoretical approaches to better explain the roles of agents. That is, real estate transactions are conceptualized as economic activities (buy/sell transactions) set within social structures that agents help to develop. Firstly, transaction-cost economics is used to explain the nature of a real estate transaction. From this analysis we develop a set of generic market coordination structures to profile the role of the agent in the real estate transaction process. Secondly, the concept of social capital is used to structure an analysis of ICT-induced changes to the process. Social capital is conceptualized as the set of social resources that an agent possesses that are embedded in relationships. This analysis indicates that real estate agents are using social capital and relational forms of coordination in order to protect and affirm their places within the real estate value chain. These social relationships provide structures that define both the behavior of the agent, buyer, and seller (and other contributors) and the various transactions that make up the sale of a residential property. We conclude by drawing implications for research on disintermediation and for the practices of market intermediaries.