Market Embeddedness and Corporate Instability: The Ecology of Inter-industrial Networks

This paper studies the effect of inter-industrial control on the survival of Israeli firms. It examines how relationsbetweenenvironments modify relationswithinenvironments. More specifically, this paper studies how the social organization of the competition at the aggregate level (industry) affects outcomes at the individual (firm) level. Using trade data and national accounts statistics, we specify and test the hypothesis that an industry's corporate instability is negatively associated with its social capital (comprised from its market embeddedness and political embeddedness). Our findings show that industry's corporate instability within industries is associated with the industry's structural embeddedness in the network of input–output transactions, the degree of control it has over its external transactions, and its political leverage.