The Emergence of Embedded Relations and Group Formation in Networks of Competition

Abstract

This study examines how and when small networks of self-interested agents generate a group tie or affiliation at the network level. A group affiliation is formed when actors (a) perceive themselves as members of a group and (b) share resources with each other despite an underlying competitive structure. We apply a concept of structural cohesion to small networks of exchange and identify two dimensions of such networks that foster a group affiliation: the network-wide potential for inclusion in exchanges and the inequality of structural power. These structural properties are theorized to generate positive emotions and cognitions that promote collectively oriented behavior toward others in the exchange network, even if such behavior runs counter to individual self-interest. We theorize and test how and when such structural properties give rise to embedded social relations, thereby forging connections between micro theories of exchange and macro theories of social embeddedness.