From Arm’s Length to Bear Hug: Theoretical Clarification and Test of the Value-Conversion Assumption

We examine a core assumption underlying sociological accounts of “embedded” economic relationships: that such relationships constrain self-interested behavior. Our analysis is motivated by two related gaps in work that invokes this assumption of “valueconversion:” (a) the lack of systematic support for the implication that strong ties may lead a capitalist to act against her interests as she herself construes it; and (b) the challenge of identifying the specific features of a embedded relationship that make it different from an arm’s-length tie. We address these gaps by analyzing attrition from an industry peer network (IPN) in the remodeling construction industry. Unique features of the survey data allow us to apply a model from the job and housing mobility literatures, whereby deviations from rationality are revealed in the tendency for an actor’s assessment of the strength of her ties to others in a collectivity (e.g., workplace, neighborhood, or IPN) to lower future mobility even when controlling for her overall assessment of the value of her membership in that collectivity. Our results support this model, which suggests that strong attachment to IPN peers leads a member either to refrain from making effective cost-benefit calculations or to fail to grasp the social constraints that prevent her from acting upon such calculations. Our analysis also shows that the key aspect of tie-strength responsible for value-conversion in this IPN is a mode of social relationship that has received little attention in recent research: the extent to which an actor looks to others as sources of motivation.