Does Competition Eliminate Social Ties?: The Case of the Russian Retail Market

Conventional economic theories assume that competing firms act independently. This theoretical assumption is applied to economic policies and anti-trust legislation. In contrast, economic sociology describes competition as a special type of social action that is oriented towards others. More specifically, to remain in the market, competing firms monitor one another and cooperate by establishing inter-organisational social ties. This paper demonstrates that increasing market pressures, including higher levels of competition and stronger bargaining power among exchange partners, does not disrupt social ties but promotes them. Data for the analysis were collected in 2007 from 501 managers of retail chains and their suppliers in five Russia's cities (Moscow, Saint Petersburg, Yekaterinburg, Novosibirsk, and Tyumen). The sample includes firms of different sizes that operate in the food and electronics sectors of the consumer market.