STRUCTURAL EMBEDDEDNESS AND SUPPLIER MANAGEMENT: A NETWORK PERSPECTIVE*

The concept of structural embeddedness refers to the importance of framing suppliers as being embedded in larger supply networks rather than in isolation. Such framing helps buying companies create more realistic policies and strategies when managing their suppliers. Simply put, the performance of a supplier is dependent on its own supply networks. By adopting the concept of structural embeddedness, we learn that a buying company needs to look at a supplier's extended supply network to arrive at a more complete evaluation of that supplier's performance. By doing so, a buying company may do a better job of selecting suppliers for long‐term relationships and may also find value in maintaining relationships with poorly performing suppliers who may potentially act as a conduit to other companies with technological and innovative resources.