The Sociology of Markets Neil Fligstein and Luke Dauter Department of Sociology,University of California,Berkeley,California 94720; email:fligst@uclink4.berkelev.edu,luked@berkeley.edu Annu.Rev.Sociol.2007.33:105-28 Key Words First published online as a Review in Advance on April 4,2007 fields,networks,institutions,performativity,culture,politics The Amual Revie of Sociology is online at Abstract http://soc.annualreviews.org The sociology of markets has been one of the most vibrant fields in This article's doi: sociology in the past 25 years.There is a great deal of agreement 10.1146 /annurev.soc.33.040406.131736 that markets are social structures characterized by extensive social Copyright 2007 by Annual Reviews. relationships between firms,workers,suppliers,customers,and gov- All rights reserved ernments.But,like in many sociological literatures,the theory camps 0360-0572/07/0811-0105S20.00 that have formed often seem to speak by each other.We show that some of the disagreement between theory camps is due to differ- ences in conceptual language,and other disagreements stem from the fact that theory camps ignore the concepts in other theory camps, thereby making their theories less complete.We end by considering deeper controversies in the literature that seem open both to new conceptualization and further empirical research. I05
ANRV316-SO33-06 ARI 24 May 2007 10:6 The Sociology of Markets Neil Fligstein and Luke Dauter Department of Sociology, University of California, Berkeley, California 94720; email: fligst@uclink4.berkeley.edu, luked@berkeley.edu Annu. Rev. Sociol. 2007. 33:105–28 First published online as a Review in Advance on April 4, 2007 The Annual Review of Sociology is online at http://soc.annualreviews.org This article’s doi: 10.1146/annurev.soc.33.040406.131736 Copyright c 2007 by Annual Reviews. All rights reserved 0360-0572/07/0811-0105$20.00 Key Words fields, networks, institutions, performativity, culture, politics Abstract The sociology of markets has been one of the most vibrant fields in sociology in the past 25 years. There is a great deal of agreement that markets are social structures characterized by extensive social relationships between firms, workers, suppliers, customers, and governments. But, like in many sociological literatures, the theory camps that have formed often seem to speak by each other. We show that some of the disagreement between theory camps is due to differences in conceptual language, and other disagreements stem from the fact that theory camps ignore the concepts in other theory camps, thereby making their theories less complete. We end by considering deeper controversies in the literature that seem open both to new conceptualization and further empirical research. 105 Annu. Rev. Sociol. 2007.33:105-128. Downloaded from www.annualreviews.org Access provided by Shanghai Jiaotong University on 02/04/15. For personal use only.
O bow they cling and wrangle,some wbo claim their attempts to understand the origins,op- For preacber and monk the bonored name! erations,and dynamics of markets as social For,quarreling,eacb to bis view they cling. structures,the primary perspectives that have Such folk see only one side of a thing. emerged tend to remain separate and distinct at the theoretical level.Much like the blind (from the text of Jain and Buddhist origin, Udana 68-69,"Parable of the Blind Men and monks and preachers who fail to see the whole the Elephant") of the elephant in Buddha's famous parable, scholars have often focused on a particular so- cial aspect of markets and acted as if it was a INTRODUCTION more general understanding. The sociology of markets has been one of the This theoretical separateness produces most vibrant fields in sociology in the past two problems.First,because many scholars 25 years.!Starting with a trickle of empiri- use similar concepts but identify them by cal and theoretical papers,it has grown to a different terms,confusion results about the river.One of the seminal pieces in the field, degree to which people are saying different Granovetter's(1985)"Economic Action and things.For example,most scholars,regardless Social Structure:The Problem of Embedded- of their approach,believe that culture(shared ness"has been cited over 2500 times since its meanings,normative understandings,identi- publication,making it the most cited paper in ties,local practices)plays an important role sociology in the postwar era.2 Although so- in market projects.Much of this conceptual ciologists have made significant progress in overlap is hidden by the use of jargon (for ex- ample,the use ofterms like frames,logics,per- We want to distinguish the sociology of markets from formativity,scripts,conceptions of control,or the broader project of economic sociology(Fligstein 2001). local knowledge).Thus,scholars who purport Following Polanyi(1957),economic sociology is the gen- eral study of the conditions of the production and repro- to approach their subject matter from a partic- duction of social life.Such a study would include studies ular perspective actually share concepts with of consumption,the family,and the links between states a wide variety of other scholars. and houscholds,schooling,and economic life more broadly (Smelser Swedberg 2005,p.3).The sociology of markets Second,to the degree that scholars are refers more narrowly to the study of one kind of social ex- really saying different things,assessing how change,that of markets,and to the structuring of that kind much their theoretical views are complemen- of social exchange,under the conditions we call capitalist This focus includes the study of firms,product markets,and tary or contradictory is difficult.When one labor markets as well as their broader linkages to suppliers, viewpoint complements another,theory is ad- workers,and states and the role of local cultures (i.e.,local vanced.Taking into account other possible el- in the sense of belonging to a particular market),systems of meanings insofar as they influence what products are,and ements in the social structuring of markets the role of morality in the generation of particular kinds of yields a more complete view of market pro- markets. cesses.But when theories contradict,scholars 2Recently Jerry Jacobs (2005)calculated the most cited need to understand why their perspectives dif- papers in the American Sociological Revie in the postwar era.The paper with the most citations was DiMaggio fer and how those differences can be usefully Powell's(1983)"Institutional Isomorphism"paper,with explored to further both theory and research. 1700 citations.Granovetter's paper appeared in the Amer- The primary purpose of this review is to be- ican fournal of Sociology and,as far as we know,no one has created a similar list for that journal.But,with almost gin to untangle the theoretical and empirical 2500 citations,it is hard to believe that many papers outdid work on the sociology of markets,clarifying Granovetter's.It should also be noted that the DiMaggio what we know and where scholars really dis- Powell paper has greatly influenced the sociology of mar- kets as well.We argue that this paper has greatly influenced agree. at least one strain of thought in the sociology of markets The literature (and the way that peo- (i.e.,institutional theory).If one takes both of these pa- ple teach their graduate courses)has of- pers as part of the foundation of the field,arguably the two most cited papers in the postwar era are at the core of the ten been divided into three theory groups sociology of markets. (Fourcade-Gourinchas 2007)according to I06 Fligstein·Dauter
ANRV316-SO33-06 ARI 24 May 2007 10:6 O how they cling and wrangle, some who claim For preacher and monk the honored name! For, quarreling, each to his view they cling. Such folk see only one side of a thing. (from the text of Jain and Buddhist origin, Udana 68–69, “Parable of the Blind Men and the Elephant”) INTRODUCTION The sociology of markets has been one of the most vibrant fields in sociology in the past 25 years.1 Starting with a trickle of empirical and theoretical papers, it has grown to a river. One of the seminal pieces in the field, Granovetter’s (1985) “Economic Action and Social Structure: The Problem of Embeddedness” has been cited over 2500 times since its publication, making it the most cited paper in sociology in the postwar era.2 Although sociologists have made significant progress in 1We want to distinguish the sociology of markets from the broader project of economic sociology (Fligstein 2001). Following Polanyi (1957), economic sociology is the general study of the conditions of the production and reproduction of social life. Such a study would include studies of consumption, the family, and the links between states and households, schooling, and economic life more broadly (Smelser & Swedberg 2005, p. 3). The sociology of markets refers more narrowly to the study of one kind of social exchange, that of markets, and to the structuring of that kind of social exchange, under the conditions we call capitalist. This focus includes the study of firms, product markets, and labor markets as well as their broader linkages to suppliers, workers, and states and the role of local cultures (i.e., local in the sense of belonging to a particular market), systems of meanings insofar as they influence what products are, and the role of morality in the generation of particular kinds of markets. 2Recently Jerry Jacobs (2005) calculated the most cited papers in the American Sociological Review in the postwar era. The paper with the most citations was DiMaggio & Powell’s (1983) “Institutional Isomorphism” paper, with 1700 citations. Granovetter’s paper appeared in the American Journal of Sociology and, as far as we know, no one has created a similar list for that journal. But, with almost 2500 citations, it is hard to believe that many papers outdid Granovetter’s. It should also be noted that the DiMaggio & Powell paper has greatly influenced the sociology of markets as well. We argue that this paper has greatly influenced at least one strain of thought in the sociology of markets (i.e., institutional theory). If one takes both of these papers as part of the foundation of the field, arguably the two most cited papers in the postwar era are at the core of the sociology of markets. their attempts to understand the origins, operations, and dynamics of markets as social structures, the primary perspectives that have emerged tend to remain separate and distinct at the theoretical level. Much like the blind monks and preachers who fail to see the whole of the elephant in Buddha’s famous parable, scholars have often focused on a particular social aspect of markets and acted as if it was a more general understanding. This theoretical separateness produces two problems. First, because many scholars use similar concepts but identify them by different terms, confusion results about the degree to which people are saying different things. For example, most scholars, regardless of their approach, believe that culture (shared meanings, normative understandings, identities, local practices) plays an important role in market projects. Much of this conceptual overlap is hidden by the use of jargon (for example, the use of terms like frames, logics, performativity, scripts, conceptions of control, or local knowledge). Thus, scholars who purport to approach their subject matter from a particular perspective actually share concepts with a wide variety of other scholars. Second, to the degree that scholars are really saying different things, assessing how much their theoretical views are complementary or contradictory is difficult. When one viewpoint complements another, theory is advanced. Taking into account other possible elements in the social structuring of markets yields a more complete view of market processes. But when theories contradict, scholars need to understand why their perspectives differ and how those differences can be usefully explored to further both theory and research. The primary purpose of this review is to begin to untangle the theoretical and empirical work on the sociology of markets, clarifying what we know and where scholars really disagree. The literature (and the way that people teach their graduate courses) has often been divided into three theory groups (Fourcade-Gourinchas 2007) according to 106 Fligstein · Dauter Annu. Rev. Sociol. 2007.33:105-128. Downloaded from www.annualreviews.org Access provided by Shanghai Jiaotong University on 02/04/15. For personal use only
whether scholars use (a)networks(Burt 1992; come to be created and sold,and in how the Granovetter 1974,2005;White 1981,2002), local cultures of particular markets form what (b)institutions(Dobbin 1994;Fligstein 1990, institutionalists call the institutionalization of 2001;Powell DiMaggio 1991),or (c)perfor- particular markets. mativity (Beunza Stark 2004,Callon 1998, Although these three approaches encom- Callon Muniesa 2005,MacKenzie Milo pass a large portion of the work done in the 2003,MacKenzie 2005)as explanatory mech- sociology of markets,they are by no means anisms in the emergence and ongoing dynam-exhaustive.Along with considering these par- ics of markets.Scholars in the network tradi-ticular perspectives with the goal ofextracting tion have focused on relational ties between what sociologist have learned about markets actors as the material ofsocial structure.Insti-and what remains to be resolved,we consider tutionalists focus on how cognition and action in this review the degree to which the differ- are contextualized by market rules,power,and ent theory groups offer incomplete represen- norms.The performative school of thought tations of the social structuring of markets. views economic action as a result of calculative The division of the field into networks,in- processes involving the specific technologies stitutions,and performativity excludes other and artifacts that actors employ. theoretical perspectives that should also be at This division of the field overemphasizes the core of thinking about markets as social the extent to which these perspectives are structures.We focus on two important ap- in fact separate theory groups.All three ap- proaches that have been underplayed in the proaches rely on viewing markets as social are- literature:political economy and population 宝 nas where firms,their suppliers,customers, ecology. workers,and government interact,and all Political economy has pioneered thinking three approaches emphasize how the connect- about the linkages between states,law,and 的 edness of social actors affects their behavior. markets and the historical emergence of sys- Network analysis is a technique for finding tems of governance.The literature on the social structures in relational data.It is not a comparative study of capitalist arrangements 1002 theory of the underlying relationships in the and their effects on various outcomes,includ- data and the mechanisms that they represent.ing economic development,is part and par- Scholars who use network techniques invoke cel of the sociology of markets.Institutional 2 theoretical constructs like power,resource de- theory is the approach that most frequently pendence,cooptation,information,and trust adds political economy into its analyses.It to explain the social structures that emerge focuses on the role of governments and law from their analyses.These mechanisms are in the creation of particular features of mar- common to institutional theory and to other kets,for example the types of alliances and theories relevant to the sociology of markets. forms of cooperation that are legal or forms of Institutional theorists are interested in how property rights(Campbell Lindberg 1990, field-level phenomena diffuse to make fields Carruthers Ariovich 2004).But network isomorphic,often through social networks theorists and scholars interested in perfor- (Davis 1991).Performativists have explicitly mativity have generally ignored the possible connected their approach to network theory effects of government and law and the role in what Callon(1998)calls the actor-network of preexisting relationships between the own- approach.The actor-network approach views ers of firms,managers,workers,and govern- notonly humans,butalso objects andartifacts,ments on market processes.This makes their techniques,and ideas as agents embedded in accounts of particular markets incomplete networks of calculative relations.In addition, Population ecology is the branch of or- performative approaches overlap with institu- ganizational theory that deals most directly tional theory in their interest in how products with the effects of competition on the www.anmalreviews.org The Sociology of Markets I07
ANRV316-SO33-06 ARI 24 May 2007 10:6 whether scholars use (a) networks (Burt 1992; Granovetter 1974, 2005; White 1981, 2002), (b) institutions (Dobbin 1994; Fligstein 1990, 2001; Powell & DiMaggio 1991), or (c) performativity (Beunza & Stark 2004, Callon 1998, Callon & Muniesa 2005, MacKenzie & Milo 2003, MacKenzie 2005) as explanatory mechanisms in the emergence and ongoing dynamics of markets. Scholars in the network tradition have focused on relational ties between actors as the material of social structure. Institutionalists focus on how cognition and action are contextualized by market rules, power, and norms. The performative school of thought views economic action as a result of calculative processes involving the specific technologies and artifacts that actors employ. This division of the field overemphasizes the extent to which these perspectives are in fact separate theory groups. All three approaches rely on viewing markets as social arenas where firms, their suppliers, customers, workers, and government interact, and all three approaches emphasize how the connectedness of social actors affects their behavior. Network analysis is a technique for finding social structures in relational data. It is not a theory of the underlying relationships in the data and the mechanisms that they represent. Scholars who use network techniques invoke theoretical constructs like power, resource dependence, cooptation, information, and trust to explain the social structures that emerge from their analyses. These mechanisms are common to institutional theory and to other theories relevant to the sociology of markets. Institutional theorists are interested in how field-level phenomena diffuse to make fields isomorphic, often through social networks (Davis 1991). Performativists have explicitly connected their approach to network theory in what Callon (1998) calls the actor-network approach. The actor-network approach views not only humans, but also objects and artifacts, techniques, and ideas as agents embedded in networks of calculative relations. In addition, performative approaches overlap with institutional theory in their interest in how products come to be created and sold, and in how the local cultures of particular markets form what institutionalists call the institutionalization of particular markets. Although these three approaches encompass a large portion of the work done in the sociology of markets, they are by no means exhaustive. Along with considering these particular perspectives with the goal of extracting what sociologist have learned about markets and what remains to be resolved, we consider in this review the degree to which the different theory groups offer incomplete representations of the social structuring of markets. The division of the field into networks, institutions, and performativity excludes other theoretical perspectives that should also be at the core of thinking about markets as social structures. We focus on two important approaches that have been underplayed in the literature: political economy and population ecology. Political economy has pioneered thinking about the linkages between states, law, and markets and the historical emergence of systems of governance. The literature on the comparative study of capitalist arrangements and their effects on various outcomes, including economic development, is part and parcel of the sociology of markets. Institutional theory is the approach that most frequently adds political economy into its analyses. It focuses on the role of governments and law in the creation of particular features of markets, for example the types of alliances and forms of cooperation that are legal or forms of property rights (Campbell & Lindberg 1990, Carruthers & Ariovich 2004). But network theorists and scholars interested in performativity have generally ignored the possible effects of government and law and the role of preexisting relationships between the owners of firms, managers, workers, and governments on market processes. This makes their accounts of particular markets incomplete. Population ecology is the branch of organizational theory that deals most directly with the effects of competition on the www.annualreviews.org • The Sociology of Markets 107 Annu. Rev. Sociol. 2007.33:105-128. Downloaded from www.annualreviews.org Access provided by Shanghai Jiaotong University on 02/04/15. For personal use only
production of markets.Scholars who use this pendence or mediate competition.But other approach have drawn on network or institu- scholars who view the links between produc- tional analyses (Baron et al.1999,Haveman ers and consumers as pivotal to the produc- Rao 1997).But population ecology has tion of markets emphasize the role of trust and not figured into the core of the sociology of culture(i.e.,commonly held meanings about markets,primarily because it has developed the product,its morality,and its usefulness) a vocabulary and set of methods that do not in those relationships as key to understand- easily translate into many of the current ap-ing market processes.Granovetter(1985)ar- proaches to social structure.This is unfortu- gued early on that the main purpose of em- nate because several developments in popula- beddedness in markets was that it increased tion ecology have paralleled those in the other the trust between buyers and sellers.Zelizer approaches.We show how many ideas in pop-has taken the relationship between produc- ulation ecology have been expressed in a dif-ers and consumers in a different direction. ferent language in the other points of view Her argument is that consumers must be con- and argue that the insights of population ecol-vinced not just of the utility of the products ogy should be added more explicitly to schol-they buy and the trustworthiness of those who arly thinking about the social structuring of sell them,but also of the morality of the prod- markets. uct(Zelizer 1983,1994,1997).Her more cul- After one notes the similar ideas that run tural approach alerts scholars to the problem through the literature,including the less rec-of framing products so that consumers find ognized areas of contribution,there remain them not just useful,but in concert with their a number of interesting problems that stem values. from theoretical differences.Scholars in the A third source of disagreement is that performative tradition have presented their some scholars view market structures as either perspective as a critique of the predominant emergent or in equilibrium,whereas others sociological modes of understanding markets. argue that markets are always changing.The Their basic idea is that economic action is possibility for a sociological definition of mar- about calculation,and that how the qualities ket equilibrium is intriguing.White(1981), of goods are calculated (i.e.,the amenability of for example,has defined a market as a"repro- goods to calculation,the calculative capacities ducible role structure."This idea implies that of actors,and the interaction between them the social processes that occur when a market in the act of exchange)is crucial to under-is formed are different from the social pro- standing market structure.These scholars ar-cesses that occur once a more stable set of so- gue that the tools actors have at their disposal cial relationships appear.Population ecology to interpret and define their economic worlds has an implied theory of what could be called and how they organize interaction over ex- punctuated equilibrium.At the beginning of change are created by and enact ideas about markets,there is often a period of turmoil how economic activity should and does oper-and change followed by some stasis and per- ate.We interpret the performative argument haps a second period of turmoil.The alterna- as an attempt to insert cultural understandings tive view is that markets are always fluid,with of actors into the core of the social construc- products,processes,and advantage constantly tion of markets. shifting.Here,equilibrium solutions to the A second disagreement focuses on link-problem of what other market actors will do ages between producers and consumers.Many never form (Nelson Winter 1982).These analyses of markets focus exclusively on pro- different views of market dynamics are impor- ducers and their competitive relationships. tant because they imply very different ways of Here,attention is given to how social struc- looking at the social structuring of a market. tures resolve the myriad forms of resource de- On the one hand,if actors trying to find a place Fligstein·Dauter
ANRV316-SO33-06 ARI 24 May 2007 10:6 production of markets. Scholars who use this approach have drawn on network or institutional analyses (Baron et al. 1999, Haveman & Rao 1997). But population ecology has not figured into the core of the sociology of markets, primarily because it has developed a vocabulary and set of methods that do not easily translate into many of the current approaches to social structure. This is unfortunate because several developments in population ecology have paralleled those in the other approaches. We show how many ideas in population ecology have been expressed in a different language in the other points of view and argue that the insights of population ecology should be added more explicitly to scholarly thinking about the social structuring of markets. After one notes the similar ideas that run through the literature, including the less recognized areas of contribution, there remain a number of interesting problems that stem from theoretical differences. Scholars in the performative tradition have presented their perspective as a critique of the predominant sociological modes of understanding markets. Their basic idea is that economic action is about calculation, and that how the qualities of goods are calculated (i.e., the amenability of goods to calculation, the calculative capacities of actors, and the interaction between them in the act of exchange) is crucial to understanding market structure. These scholars argue that the tools actors have at their disposal to interpret and define their economic worlds and how they organize interaction over exchange are created by and enact ideas about how economic activity should and does operate. We interpret the performative argument as an attempt to insert cultural understandings of actors into the core of the social construction of markets. A second disagreement focuses on linkages between producers and consumers. Many analyses of markets focus exclusively on producers and their competitive relationships. Here, attention is given to how social structures resolve the myriad forms of resource dependence or mediate competition. But other scholars who view the links between producers and consumers as pivotal to the production of markets emphasize the role of trust and culture (i.e., commonly held meanings about the product, its morality, and its usefulness) in those relationships as key to understanding market processes. Granovetter (1985) argued early on that the main purpose of embeddedness in markets was that it increased the trust between buyers and sellers. Zelizer has taken the relationship between producers and consumers in a different direction. Her argument is that consumers must be convinced not just of the utility of the products they buy and the trustworthiness of those who sell them, but also of the morality of the product (Zelizer 1983, 1994, 1997). Her more cultural approach alerts scholars to the problem of framing products so that consumers find them not just useful, but in concert with their values. A third source of disagreement is that some scholars view market structures as either emergent or in equilibrium, whereas others argue that markets are always changing. The possibility for a sociological definition of market equilibrium is intriguing. White (1981), for example, has defined a market as a “reproducible role structure.” This idea implies that the social processes that occur when a market is formed are different from the social processes that occur once a more stable set of social relationships appear. Population ecology has an implied theory of what could be called punctuated equilibrium. At the beginning of markets, there is often a period of turmoil and change followed by some stasis and perhaps a second period of turmoil. The alternative view is that markets are always fluid, with products, processes, and advantage constantly shifting. Here, equilibrium solutions to the problem of what other market actors will do never form (Nelson & Winter 1982). These different views of market dynamics are important because they imply very different ways of looking at the social structuring of a market. On the one hand, if actors trying to find a place 108 Fligstein · Dauter Annu. Rev. Sociol. 2007.33:105-128. Downloaded from www.annualreviews.org Access provided by Shanghai Jiaotong University on 02/04/15. For personal use only
in a market can collectively produce equilib- whether a particular set of social structures rium,then the goal of actors in this market protects incumbents or,rather,fosters eco- becomes the preservation of that order.This nomic growth and competition. implies relationships of power and domina- In this review,we discuss the intellectual tion in markets.On the other hand,if firms are roots of the sociology of markets and how the resigned to live in a world where reproducing field evolved from problems posed in nearby one's position is not possible,then social re-fields.We then examine the crystallization of lationships become temporary arrangements the major ideas in the sociology ofmarkets and that allow one to get information or secure in doing so discuss what we know.Finally,we cutting edge technology.Because change is consider what the real differences of opinion ubiquitous,one chooses one's friends for their are and suggest avenues for future research. usefulness,and when that usefulness ends,one moves on. Finally,sociologists generally have a com- CONTEMPORARY ROOTS OF plicated relationship to the problem of THE SOCIOLOGY OF MARKETS whether a given set of social arrangements is Many good reviews have been written about efficient.The fact that so many kinds of so-the intellectual history of the sociology of cial relationships exist in markets has led to markets as a field(Biggart&Beamish 2003, the argument thatsocialrelationshipsexist be-Fourcade-Gourinchas 2007,Krippner 2001, tween market actors to solve market problems Lie 1997,Smelser Swedberg 1994,Trigilia such as agency costs(Fama Jensen 1983)2002).Our goal in this section is to put this 宝 and transaction costs(Williamson 1985)and literature together in a different way.Rather to promote trust between buyers and sell-than focusing on the roots of the sociology of ers.Some sociologists seem prepared to ac-markets in classical theory,we focus on the cept that social structures could be efficient contemporary fields of study that contributed (Baker 1984,Uzzi 1996).From this point of to the intellectual ferment around the soci- view,social structures in markets operate to ology of markets.In particular,we trace the 100c reduce information costs,give firms access to influence ofnearby fields on the different per- knowledge about what the competition is do- spectives in the sociology of markets. ing,allow market actors to trust one another, New fields of social inquiry are built in re- and reduce resource dependencies.These so-lation to other fields of social inquiry.When 夏 cial structures provide firms with information scholars working within one field find them- that allows them to learn and adapt and,in do-selves in a dialogue with scholars working ing so,compete effectively.But other scholars on similar problems in other fields,some- are agnostic on this question(Fligstein 1990,times a new field of inquiry is created.At Podolny 1993).For them,social structures the outset,new fields involve scholars bor- can operate to mitigate the effects of competi-rowing one another's perspectives and look- tion.In this view,firms try to control markets ing for mechanisms and models that might by using their size,technology,and access to help explain new objects of inquiry.In this governments to promote a status hierarchy of case,political economy,the sociology of la- incumbents and challengers.Incumbent firms bor markets,and organizational theory pio- use their advantages to signal to their princi-neered thinking about the sociology of mar- pal competitors what they will do to defend kets,and the cross-pollination ofideas in these the existing market order.For these scholars,fields formed the basic insights leading to the social structure of markets exists to pro-the establishment of the sociology of mar- duce this order.One way to make progress on kets as a field in its own right.Scholars in this issue is to problematize efficiency.The all these fields doubted that economics could sociology of markets gives us tools to decide sufficiently make sense of what happens in www.anmalreviews.org The Sociology of Markets 109
ANRV316-SO33-06 ARI 24 May 2007 10:6 in a market can collectively produce equilibrium, then the goal of actors in this market becomes the preservation of that order. This implies relationships of power and domination in markets. On the other hand, if firms are resigned to live in a world where reproducing one’s position is not possible, then social relationships become temporary arrangements that allow one to get information or secure cutting edge technology. Because change is ubiquitous, one chooses one’s friends for their usefulness, and when that usefulness ends, one moves on. Finally, sociologists generally have a complicated relationship to the problem of whether a given set of social arrangements is efficient. The fact that so many kinds of social relationships exist in markets has led to the argument that social relationships exist between market actors to solve market problems such as agency costs (Fama & Jensen 1983) and transaction costs (Williamson 1985) and to promote trust between buyers and sellers. Some sociologists seem prepared to accept that social structures could be efficient (Baker 1984, Uzzi 1996). From this point of view, social structures in markets operate to reduce information costs, give firms access to knowledge about what the competition is doing, allow market actors to trust one another, and reduce resource dependencies. These social structures provide firms with information that allows them to learn and adapt and, in doing so, compete effectively. But other scholars are agnostic on this question (Fligstein 1990, Podolny 1993). For them, social structures can operate to mitigate the effects of competition. In this view, firms try to control markets by using their size, technology, and access to governments to promote a status hierarchy of incumbents and challengers. Incumbent firms use their advantages to signal to their principal competitors what they will do to defend the existing market order. For these scholars, the social structure of markets exists to produce this order. One way to make progress on this issue is to problematize efficiency. The sociology of markets gives us tools to decide whether a particular set of social structures protects incumbents or, rather, fosters economic growth and competition. In this review, we discuss the intellectual roots of the sociology of markets and how the field evolved from problems posed in nearby fields. We then examine the crystallization of the major ideas in the sociology of markets and in doing so discuss what we know. Finally, we consider what the real differences of opinion are and suggest avenues for future research. CONTEMPORARY ROOTS OF THE SOCIOLOGY OF MARKETS Many good reviews have been written about the intellectual history of the sociology of markets as a field (Biggart & Beamish 2003, Fourcade-Gourinchas 2007, Krippner 2001, Lie 1997, Smelser & Swedberg 1994, Trigilia 2002). Our goal in this section is to put this literature together in a different way. Rather than focusing on the roots of the sociology of markets in classical theory, we focus on the contemporary fields of study that contributed to the intellectual ferment around the sociology of markets. In particular, we trace the influence of nearby fields on the different perspectives in the sociology of markets. New fields of social inquiry are built in relation to other fields of social inquiry. When scholars working within one field find themselves in a dialogue with scholars working on similar problems in other fields, sometimes a new field of inquiry is created. At the outset, new fields involve scholars borrowing one another’s perspectives and looking for mechanisms and models that might help explain new objects of inquiry. In this case, political economy, the sociology of labor markets, and organizational theory pioneered thinking about the sociology of markets, and the cross-pollination of ideas in these fields formed the basic insights leading to the establishment of the sociology of markets as a field in its own right. Scholars in all these fields doubted that economics could sufficiently make sense of what happens in www.annualreviews.org • The Sociology of Markets 109 Annu. Rev. Sociol. 2007.33:105-128. Downloaded from www.annualreviews.org Access provided by Shanghai Jiaotong University on 02/04/15. For personal use only