Unbalanced embeddedness of ethnic entrepreneurship: The Israeli Arab case

Ethnic entrepreneurs’ networks are analysed on the basis of three complementary dimensions: intensity and complexity of networks; power relations; and entrepreneurs’ horizons of awareness. The analysis is based on two theoretical propositions. First, firms located in the periphery are weakly embedded in national markets due to their external depended relations. Second, local firms use the tendency to embed themselves in their home regions as a strategy to improve their position in external power relations. The inquiry of Arab industry in Israel suggests that the form and degree of embeddedness of any given firm is affected by the existence of both separate economic milieus: Arab and Jewish. The findings lead us to suggest two concepts. First, over‐embeddedness, which characterises Arab firms that are highly embedded in the local milieu, operate under the influence of kinship structures and a petrified supportive tissue that downgrades networks into cohesive coalitions opposing structural changes. Second, under‐embeddedness, which characterises firms that manage to develop and maintain wide inter‐ethnic dependent sets of networks, but due to lack of power fail to transform them into more rewarding exchanges.