The Welds of political economy and economic sociology have also used the idea of networks to conceptualize markets and market dynamics, and to describe the relationship between states and markets. Baker’s (1984) study of social relationships on the Xoor of the Chicago stock exchange was among the Wrst to call attention to social networks underpinning market exchange. He demonstrated that even in the archetypical market, actual patterns of buying and selling were shaped by social relationships. Social networks helped to manage the uncertainty that traders experienced in the stock market.
Drawing on Polanyi’s description of the social embeddedness of markets, Granovetter (1985) provided a seminal statement of the network approach to markets. Much like Powell’s argument that network organizations were diVerent from either markets or hierarchies, Granovetter argued that many economic transactions were shaped by social relationships that build on norms of trust and reciprocity. His statement spawned serious research on the way in which embedd- edness shaped economic decision-making and cooperation. Notable studies include Brian Uzzi’s several studies of the banking, garment, and law industries and Mizruchi and Stearns’ (2001) study of bank decision-making.
Another well-developed line of economic sociology research examines inter- locking corporate boards. This work treats the overlapping memberships of boards of directors as a social network that connects otherwise independent Wrms together. Notable studies include Mizruchi’s (1992) analysis of interlocking direct- orates to explain political campaign contributions and Davis’s (1991) analysis of the diVusion of managerial strategies (the ‘‘poison pill’’) through interlocking directorates.
A range of other research has described the structure and dynamics of markets in network terms. Important exemplars include Powell, Koput, and Smith-Doerr’s (1996) analysis of knowledge creation in the biotech industry in terms of interWrm networks, Padgett’s (2001) study of networks underpinning the emergence of modern banking in Renaissance Florence, and Stark and Bruzst’s (1998) description of the evolution of post-Communist East European markets in network terms. Political scientists Anno Saxenian (1996) and Richard Locke (1994) have also used network ideas to describe regional economies and the logic of state intervention in these economies.
