ABSTRACT
Since Granovetter (1985; 1992) proposed his embeddedness approach, many studies on Chinese organizations have investigated the role of trust in building and managing networks between manufacturers and their vendors (Hamilton, Zeile, and Kim 1990; Chang and Kao 1996; Luo 1997). In studying small and medium-sized garment fi rms, specifi cally those not utilizing modern large-scale assembly lines, “pseudo-familial ties” in the broadest sense were found to be the main source of outsourcing relations (C. H. Chen 1994: 219; 1995; Hamilton and Kao 1990). Because mutual trust is embedded in social connections, maintaining social relationships is thought to be as important as pursuing profi t. Network governance of this sort thus relies on reciprocity and social control, rather than formal regulation and authority (Powell 1990). The term “weighted balance of social relations and business interests” precisely describes the art of governing an outsourcing network of this type (C. H. Chen 1994; 1995).
