Granovetter first criticizes much of the new institutional economics as crudely functionalist because the existence of an economic institution is often explained merely by the functions it performs for the economic system. He argues that, even in the new institutional economics, there is a failure to recognize the importance of concrete personal relations and networks of relations-what he calls "embeddedness"-in generating trust, in establishing expectations, and in creating and enforcing norms.

DEFINE: Introduces Granovetter's concept of 'embeddedness' — concrete personal relations and networks that generate trust, expectations, and norms.

Coleman, SocialCapitalCreation-1988, loc. 28