Purchasing Behavior in Embedded Markets

Abstract

This article explores the concept of market embeddedness and its impact on purchasing behavior in a consumer market. Embeddedness exists when consumers derive utility from two sources simultaneously: from attributes of the product and from social capital found in preexisting ties between buyers and sellers. This framework is applied to the home party method of direct sales. We find that the degree of social capital present, as measured by the strength of the buyer-seller tie and buyer indebtedness to the seller, significantly affects the likelihood of purchase.