Group Affiliation and Market Embeddedness in American Enterprise

In this article, Polanyi's (1944) notion of society as constituted by three forms of economic integration (market exchange, reciprocity, and redistribution) is applied to entrepreneurship. In advanced capitalism, the market-exchange relationship is the dominant form of economic integration; secondary relationships of reciprocity and redistribution, however, co-exist alongside relations of market exchange. Following Polanyi (1944), this article introduces an "embedded market" approach to enterprise. The embedded market approach considers the differential effects of primary and secondary relationships on entrepreneurial outcomes. The traditional ethnic entrepreneurship paradigm suggests that resource mobilization based on ethnic group membership is essential for entrepreneurial success, as measured by participation and earnings. The embedded market approach reconsiders ethnic group membership, along with other politically-influenced human social groupings (e.g. class, gender, nativity, and race) as non-essential relationships of reciprocity. In this conception, group affiliation provides the basis for compensatory relief from market uncertainty in the form of social capital. Ultimately, the embedded market approach provides a systematic and comprehensive approach to understanding the role of group affiliation in facilitating ethnic and "non-ethnic" enterprise in America.