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The Emergence of
Organizations and Markets
John F. Padgett and Walter W. Powell

Prin ceton U ni vers ity P r ess
Princeton & Oxford

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Copyright © 2012 by Princeton University Press
Published by Princeton University Press,
41 William Street, Princeton, New Jersey 08540
In the United Kingdom: Princeton University Press,
6 Oxford Street, Woodstock, Oxfordshire OX20 1TW
press.princeton.edu
The cover displays a cross-section of fossilized stromatolites. These were bacterial colonies formed not long after
the earth cooled. Stromatolites are arguably the earliest
physical record we have of the origins of life. Composite
of photos by Paul Carrara/National Park Service and
Walter W. Powell.
All Rights Reserved
Library of Congress Cataloging-in-Publication Data
The emergence of organizations and markets / edited by
John F. Padgett and Walter W. Powell.
   p. cm.
  Includes index.
  ISBN 978-0-691-14867-0 (hbk.) —
ISBN 978-0-691-14887-8 (pbk.)
  1. Organizational sociology.  2. Organization.
3. Industrial organization (Economic theory)
I. Padgett, John Frederick.  II. Powell, Walter W.
  HM786.E44 2012
 302.3'5—dc23   2012004342

British Library Cataloging-in-Publication Data is
available
This book has been composed in Sabon and Din
Printed on acid-free paper. ∞
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1

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This volume is dedicated to
H a r r ison C . W h i t e ,
il maestro della bottega

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Nihil ideo quoniam natumst in corpore, ut uti
possemus, sed quod natumst id procreat usum.
(Nothing is born in the body for us to use it,
but rather, having been born, it begets a use.)
—Lucretius, De Rerum Natura iv:
834–35 (first century B.C.)

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Contents
Contributorsix
List of Illustrationsxiii
List of Tablesxvii
Acknowledgmentsxix
Chapter 1  ■ The Problem of Emergence
John F. Padgett and Walter W. Powell1
Part I  Autocatalysis

31

Chapter 2  ■  Autocatalysis in Chemistry
and the Origin of Life
John F. Padgett33
Chapter 3  ■ Economic Production as
Chemistry II
John F. Padgett, Peter McMahan,
and Xing Zhong
70
Chapter 4  ■  From Chemical to Social
Networks
John F. Padgett92
Part II  Early Capitalism and State
Formation

115

Chapter 5  ■ The Emergence of Corporate
Merchant-Banks in Dugento Tuscany
John F. Padgett121
Chapter 6  ■ Transposition and
Refunctionality: The Birth of
Partnership Systems in Renaissance
Florence
John F. Padgett168
Chapter 7  ■ Country as Global Market:
Netherlands, Calvinism, and the
Joint-Stock Company
John F. Padgett208
Chapter 8  ■ Conflict Displacement and
Dual Inclusion in the Construction
of Germany
Jonathan Obert and John F. Padgett235

Part III  Communist Transitions

267

Chapter 9  ■ The Politics of Communist
Economic Reform: Soviet Union
and China
John F. Padgett271
Chapter 10  ■  Deviations from Design:
The Emergence of New Financial
Markets and Organizations in
Yeltsin’s Russia
Andrew Spicer316

Chapter 11  ■ The Emergence of the
Russian Mobile Telecom Market:
Local Technical Leadership and Global
Investors in a Shadow of the State
Valery Yakubovich and Stanislav
Shekshnia334
Chapter 12  ■ Social Sequence Analysis:
Ownership Networks, Political Ties,
and Foreign Investment in Hungary
David Stark and Balázs Vedres347
Part IV  Contemporary Capitalism
and Science

375

Chapter 13  ■ Chance, Nécessité, et
Naïveté: Ingredients to Create a New
Organizational Form
Walter W. Powell and Kurt
Sandholtz379
Chapter 14  ■ Organizational and
Institutional Genesis: The Emergence
of High-Tech Clusters in the
Life Sciences
Walter W. Powell, Kelley Packalen,
and Kjersten Whittington434
Chapter 15  ■  An Open Elite: Arbiters,
Catalysts, or Gatekeepers in the
Dynamics of Industry Evolution?
Walter W. Powell and Jason

Owen-Smith466

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viii 

■ 

Contents

Chapter 16  ■  Academic Laboratories
and the Reproduction of Proprietary
Science: Modeling Organizational
Rules through Autocatalytic Networks
Jeannette A. Colyvas and Spiro
Maroulis496
Chapter 17  ■  Why the Valley Went
First: Aggregation and Emergence in
Regional Inventor Networks
Lee Fleming, Lyra Colfer, Alexandra
Marin, and Jonathan McPhie520

Chapter 18  ■  Managing the Boundaries
of an “Open” Project
Fabrizio Ferraro and Siobhán
O’Mahony545
Coda: Reflections on the Study of
Multiple Networks

Walter W. Powell and John F.
Padgett566
Index of Authors571
Index of Subjects573

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Contributors
John F. Padgett is a social scientist at the University of Chicago, with a primary appointment in
the Department of Political Science and courtesy
appointments in the Departments of Sociology
and History. He is also a visiting professor in the
Faculty of Economics and Management at the
Universitá di Trento in Italy. He was an external
faculty member at the Santa Fe Institute from
1996 to 1999 and from 2005 to 2009 and a research professor there from 2000 to 2004.
Walter W. Powell is a sociologist at Stanford
University, with a primary appointment in the
School of Education and courtesy appointments
in the Schools of Business and Engineering, and
in Sociology, Communication, and Public Policy.
He is co-director of Stanford’s Center on Philanthropy and Civil Society. He has been an external faculty member at the Santa Fe Institute
since 2001.
Peter McMahan is a Ph.D. student in the sociology department at the University of Chicago.
His research interests center on microsociological foundations of group processes, with a focus
on mathematical and statistical modeling.
Xing Zhong is a research fellow at Duke University, having received her Ph.D. from the sociology department at the University of Chicago

in 2009. Her research interests include the emergence and evolution of networks, the social contexts and processes of technological innovation,
and the development of organizational capabilities in emerging markets.
Jonathan Obert is a Ph.D. student in the political science department at the University of
Chicago. His research interests include American
political development and the creation of police
and internal security forces, as well as processes
of state formation more generally.
Andrew Spicer is an associate professor of
international business at the Moore School of
Business at the University of South Carolina.
His research has examined privatization policies
and outcomes in post-communist countries; the
role of Western ideas and international organizations in shaping market reform policies; and the

effects of national context and national identity
on managers’ ethical evaluations in international
business settings.
Valery Yakubovich is an associate professor
of management at the ESSEC Business School
in France. He received his Ph.D. in sociology
from Stanford University and, prior to joining
­ESSEC, taught at Chicago Booth and the Wharton School. His current projects explore organizational innovations in virtual firms and regional
high-tech clusters, the interplay between formal
hierarchies and social networks in large Russian
firms, and the co-production of knowledge and
social relations in organizations.
Stanislav Shekshnia is an affiliate professor
of entrepreneurship at INSEAD and a senior
partner at Ward Howell/Zest Leadership talent
equity. His research concentrates on leadership,

leadership development, and effective governance in emerging markets and organizations.
David Stark is the Arthur Lehman Professor of
Sociology and International Affairs at Columbia
University where he directs the Center on Organizational Innovation. His recent book, The
Sense of Dissonance: Accounts of Worth in Eco­
nomic Life (Princeton University Press, 2009),
uses ethnographic methods to study the organizational structures that contribute to reflexivity.
With Balázs Vedres, he coauthored “Structural
Folds: Generative Disruption in Overlapping
Groups” (American Journal of Sociology, 2010).
Their current research on the historical network
properties of creative teams is supported by the
National Science Foundation.
Balázs Vedres is an associate professor of sociology at the Central European University in
Budapest. His research furthers the agenda of
understanding historical dynamics in network
systems, combining insights from historical sociology, social network analysis, and studies of
complex systems in physics and biology. His
work combines historical sensitivities to temporal processes with a network analytic sensitivity
to patterns of connectedness cross-sectionally.
His article with David Stark (American Journal

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■ 

Contributors

of Sociology, 2010) analyzes generative tensions
in the historical evolution of business groups.
The article won the 2011 Viviana Zelizer Award
for best article in economic sociology, as well as
the 2011 Roger V. Gould Prize.
Kurt Sandholtz is a doctoral candidate at Stanford’s Center for Work, Technology, and Organization, and a visiting instructor at BYU Marriott
School of Management. His work has appeared
in Organization Studies and Strategic Entrepre­
neurship Journal.
Kelley Packalen is an associate professor of
entrepreneurship in the School of Business at
Queen’s University in Kingston, Ontario. Her
research is at the intersection of entrepreneurship and organization theory. She is broadly
interested in the connection between the career
biographies of founders and the networks they
develop for their nascent firms. Kelley received
her Ph.D. in industrial engineering from Stanford University.
Kjersten Whittington is an assistant professor of sociology at Reed College. In addition to
regional dynamics, her research addresses how
the structural and network organization of firms
influences scientists’ career trajectories and innovative output. Her work on this topic focuses on
sex disparities in productivity in light of inventor
collaborations across academic and industrial
science contexts. She is also studying gender and
motherhood dynamics among science professionals and, with collaborators, gendered decision making in venture capital contexts.
Jason Owen-Smith is an associate professor of
sociology and organizational studies at the University of Michigan. He examines how science,
commerce, and the law cohere and conflict in

contemporary societies and economies. Together
with collaborators, Jason works on projects
that examine the dynamics of high-technology
industries, the commercialization of academic
research, and the science and politics of human
embryonic stem cell research.
Jeannette A. Colyvas is an assistant professor
in the School of Education and Social Policy
and (by courtesy) Sociology and the Institute
for Policy Research at Northwestern University. She holds a Ph.D. from Stanford University.
Her published work has appeared in Manage­
ment Science, Research Policy, Minerva, Socio­
logical Theory, and Research in Organizational
Behavior. Jeannette’s current research examines
university-industry interfaces, focusing on the
translation of basic science into commercial

application and its ramifications for careers,
identities, and public science.
Spiro Maroulis is an assistant professor in the
School of Public Affairs at Arizona State University, and Associate Director for Policy Informatics at the ASU Decision Theater. His research
addresses problems involved with understanding the relationship between individual and
collective behavior, particularly why strategic
initiatives and change efforts so often provoke
resistance and unanticipated responses inside organizations. Spiro received his B.S.E. from Duke
University, M.P.P. from Harvard University, and
Ph.D. from Northwestern University.
Lee Fleming is the director of the Coleman
Fung Institute of Engineering Leadership in the
UC–Berkeley College of Engineering. Previously

he was the Albert Whitehead III Professor of
Business Administration at the Harvard Business School. Working with large databases, he
has empirically modeled invention as a process
of recombinant search, the social networks of
inventors, and the emergence of leadership in
open innovation communities. He is currently investigating how non-compete contracts influence
inventor mobility, firm strategy, and regional
dynamics.
Lyra Colfer holds a Ph.D. in information, technology, and management from Harvard University. Her research examines the relationship
between organizational structure and product
architecture. She has applied multiple methods to
evaluate the mirroring hypothesis, which posits
that the structure of a development organization
“mirrors” the design of the product it develops.
She is currently working in the commercial software industry as a strategic consultant.
Alexandra Marin is an assistant professor of
sociology at the University of Toronto. Her research examines how social networks operate in
the labor market, focusing on how information
holders make choices to share or withhold information. She is currently examining occupation
closure and its effects on status attainment and
network-based job search in the Canadian labor
market.
Jonathan McPhie is currently a product manager at Google, Inc. While there, he has worked
on a variety of projects covering online communications, web search, location services, and social networking. Jonathan previously worked as
a research associate at Harvard Business School,
where he conducted analyses of collaboration
patterns in the U.S. patent database. Jonathan

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Contributors  ■  xi



holds bachelor’s and master’s degrees in computer science from Harvard University.
Fabrizio Ferraro is an associate professor of
strategic management at IESE Business School.
He holds a Ph.D. in management from Stanford University. He has studied the emergence
of novel organizational forms and institutions,
including open-source software communities
and sustainability reporting. He is now studying the emergence of the socially responsible
investing field in finance and, more broadly, the
relationship between social values and financial
investing. He has published in the Academy of
Management Journal, Academy of Management
Review, and Organization Science. His article
“Economics Language and Assumptions: How
Theories Can Become Self-fulfilling” won the
2006 Best Paper Award from the Academy of
Management Review.

Siobhán O’Mahony is an associate professor
at the Boston University School of Management. Her research explores how technical and
creative projects organize. She has examined
high-­technology contractors, open source programmers, artists, music producers, Internet
start-ups, and corporate consortiums. She is
interested in how people create organizations
that promote innovation, creativity, and growth

without replicating the bureaucratic structures
they strive to avoid. Her work has appeared in
Administrative Science Quarterly, Organiza­
tion Science, Academy of Management Journal,
Research in Organizational Behavior, Research
Policy, Research in the Sociology of Organiza­
tions, Industry and Innovation, and the Journal
of Management and Governance.

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Illustrations
1.1. Multiple-network ensemble in
Renaissance Florence
6
1.2a. Partnership systems in Renaissance
Florence: genesis
13
1.2b. Partnership systems in Renaissance
Florence: catalysis

13
1.3a. Dedicated Biotechnology Firms
(DBFs): genesis
14
1.3b. Dedicated Biotechnology Firms
(DBFs): catalysis
14
1.4a. Medieval corporations in Dugento
Tuscany: genesis
17
1.4b. Medieval corporations in Dugento
Tuscany: catalysis
17
1.5a. Joint-stock companies in early
modern Netherlands: genesis
18
1.5b. Joint-stock companies in early
modern Netherlands: catalysis
19
1.6a. Nineteenth-century Germany:
genesis through conflict displacement
20
1.6b. Nineteenth-century Germany:
catalysis21
1.7a. Soviet Central Command economy:
genesis22
1.7b. Soviet Central Command economy:
catalysis23
1.8a. Chinese market economy: genesis
24

1.8b. Mao’s communist economy and
party: catalysis
25
2.1. Examples of catalytic and
autocatalytic chemical cycles
35
2.2. The chemoton
37
2.3. Simplified chemistry of life
38
2.4. Reductive citric-acid cycle
42
2.5. Changes in understanding of the tree
of early life
45
2.6. The hypercycle model of Eigen
and Schuster
47
2.7. Full-blown genetic autocatalytic
machinery48
2.8. Autocatalysis of polymers
52
2.9. Jain and Krishna’s ecological model
of autocatalysis
54
2.10. Fontana’s λ-calculus model of
autocatalysis55

3.1. Representative 5-skill hypercycles
at equilibrium

77
3.2. Survival of autocatalytic networks:
hypercycle chemistry
78
3.3. Survival of autocatalytic networks:
ALL chemistry
82
3.4. Survival of autocatalytic networks:
ALL chemistry, 3+ cycles
82
3.5. Population of cells: ALL chemistry
83
3.6. Rule complexity: ALL chemistry
84
3.7. Subsystem complexity: ALL
chemistry85
3.8. Free riding: ALL chemistry
87
4.1. Hypercycles linked through
“International Trade”
100
4.2. Hypercycles linked through
“Reciprocity”106
4.3. Cellular autocatalysis or “Families” 107
4.4. Functional aggregation of linked
hypercycles112
5.1. Sequence of emergence of Dugento
Tuscan merchant-banks
128
5.2. Total number of papal letters,

1243–68131
5.3. Number of papal letters
mentioning Italian bankers
131
5.4. Italian bankers in extract from
liberate rolls of king of England
134
6.1. Multiple-network ensemble in
Renaissance Florence
171
6.2. Number of cambio bankers, by
social class, in the fourteenth century 196
7.1. Migration and homology: the birth
of Netherlands and the joint-stock
company210
8.1. Late nineteenth-century Germany
as dual inclusion
237
8.2. Conflict displacement
238
8.3. Hieratic authority
240
8.4A and B. War with Austria (1866)
242
8.4C. War with Austria: conflict
displacement at political party level
243
8.5. Kulturkampf (1871–75)
250
8.6A–C. Antisocialism and protectionism

(1878–1989)253

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xiv 

■ 

Illustrations

8.6D. Hieratic authority during
antisocialism and protectionism
(1878–95)254
8.7. Hieratic authority during
post-Bismarck rise of mass interest
groups (1890s)
259
9.1. Communist dual hierarchy
273
9.2. Production autocatalysis in the
Soviet heavy-industry sector
281
9.3. Chinese state ownership of
economic enterprises after Great
Leap Forward
287
9.4. The politics of Deng Xiaoping’s
economic reform

292
9.5. Soviet dual hierarchy, including
Gorbachev’s extension to soviets
304
10.1. Interaction between national,
market, and organizational levels
of activity
317
10.2. Number of licensed financial
brokers and voucher investment
funds, October 1992–October 1995
322
10.3. Unlicensed financial companies in
Moscow, 1993–94
323
12.1. Schematic of a political tie between
a firm and a party
356
12.2. Area chart of large firm
capitalization357
12.3. An example of a firm’s network
sequence360
13.1. The intersection of science,
finance, and commerce—three
models401
14.1. Location of U.S. biotechnology
companies, 1980
443
14.2. Location of U.S. biotechnology
companies, 2002

443
14.3. Boston local network, 1988
445
14.4. Boston local network, 1998
446
14.5. Boston, Bay Area, and San Diego,
1990, 1996, and 2002
448
14.6. New York, New Jersey, and
Philadelphia, 1990, 1996, and 2002
452
14.7. Washington-Baltimore, Research
Triangle, NC, and Houston, 1990,
1996, and 2002
453
14.8. Seattle and Los Angeles, 1990,
1996, and 2002
454
14.9. Anchor tenant vs. 800-lb. gorilla
455
14.10. Transposition
456
14.11. Sample selection on networks?
458
15.1. Trends in collaborative activity,
1985–2004473
15.2. Annual counts of newly formed
and concluding ties, 1988–2004
474

15.3. Distributional features of the elite,
1988–2004475
15.4. New elite ties, 1990, 1996, 2002
477
15.5. Main component with an
embedded 2-core in 1984, all ties
480
15.6. The elite (4-core) in 1990, new
and continuing ties
481
15.7. The elite (5-core) in 1996, new
and continuing ties
483
15.8. The elite (5-core) in 2002, new
and continuing ties
485
16.1. Schematic representation of
scientific knowledge production
510
16.2. Evolution of agent-based model
over time
512
16.3. Multilevel scientific production
networks512
16.4. Distribution of patentability
thresholds513
16.5. Transaction types over time with
preemptive adaptation on and off
514
16.6. Final patentability thresholds

(50 runs) even reward structure
515
16.7. Final patentability thresholds
(50 runs) favor patents reward
structure515
16.8. Final patentability thresholds
(50 runs) favor patents reward
structure516
16.9. Final patentability thresholds by
alpha and reward structure (50 runs) 516
17.1. Box plots of the size of the largest
connected component relative to the
entire network of patented inventor
collaborations by U.S. Metropolitan
Statistical Area
522
17.2. Time series of histograms of
component size frequency of Boston
and Silicon Valley
523
17.3. Largest component of Boston,
1986–90, by assignee and importance
of inventions
524
17.4. Largest component of Boston,
1986–90, by technology type and
usage of scientific literature
525
17.5. Largest component of Silicon
Valley, 1986–90, by assignee and

importance of inventions
527
17.6. Largest component of Silicon
Valley, 1986–90, by technology type
and usage of scientific literature
528
17.7. Applied Materials component,
Silicon Valley’s fifth largest
component in 1989, by assignee and
importance of inventions
531

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Illustrations  ■  xv



17.8. Xerox PARC and Hewlett Packard
component, Silicon Valley’s fourth
largest component in 1989, by assig­nee and importance of inventions
532
17.9. Raychem component, Silicon
Valley’s third largest component in
1989, by assignee and importance of
inventions534
17.10. Boston’s largest component in
1989, by assignee and importance of

inventions538
17.11. Size of component after removal
of specified proportion of component’s

nodes, for Boston and Silicon Valley’s
largest components in 1989
17.12. Size of component after removal
of specified proportion of component’s
nodes, for Boston and Silicon Valley’s
second largest components
18.1. Media citations of Debian GNU/
Linux, 1997–2002
18.2. Degree distribution of the Debian
network, 1997–2002
18.3. Log-log plot of the cumulative
degree distribution of the Debian
network, 1997–2002

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Tables
3.1. Distribution of cycle lengths (ALL
chemistry)86
5A.1. Bonsignori company members
and their transactions, 1250–56
146
5A.2. Bonsignori company members
and their transactions, 1261–63
147
5A.3. Bonsignori company members
and their transactions, 1265
148
5A.4. Bonsignori company members
and their transactions, 1266–67
149
5A.5. Bonsignori company partners
and their capital, 1289
149
5B.1. Scali company members and their
transactions, 1229–59
150
5B.2. Scali company members and their
transactions, 1261–69

152
5B.3. Scali company members, 1282–84 153
5C.1. Tolomei company members
and their transactions, 1223–60
154
5C.2. Tolomei company members
and their transactions, 1262–79
156
5C.3. Scotti and Tolomei company
members and their transactions,
1255–62157
5D.1. Ricciardi company members
and their transactions, 122?–1266
158
5D.2. Ricciardi company members
and their transactions, 1272–86
160
5D.3. Ricciardi company members,
doing business with Pope Martin IV
162
6.1. Industrial composition of 1385–99
partnership systems
175
6.2. Social and political embedding of
businessmen in multiple companies
176
6.3. Political mobilization of cambio
bankers and international merchants 181
6.4. Political and social embedding of
cambio bankers

183
6.5. Political and social embedding of
merchant-bankers184
6.6. Political and social embedding of
cambio banking partnerships
189
6.7. Political and social embedding of
merchant-banker partnerships
190

6.8. Relative experience of nonfamily
cambio banking partners
197
6.9. Family types of cambio banking
partnerships199
10.1. Banks and the loans-forshares deal
326
10.2. From design to emergence
329
11.1. Relative market share of cellular
operators in Moscow and
St. Petersburg
335
11.2. Ownership of the cellular
operators in Moscow and
St. Petersburg
337
11.3. Cellular telephony penetration
rates in Moscow and St. Petersburg,
1993–2000338

12.1. Scenario 1: domestic networks
crowding out foreign capital
350
12.2. Scenario 2: foreign eradication
of networks directly and by
demonstration effects
351
12.3. Scenario 3: a radically
dual-segregated economy
351
12.4. Distribution of large-firm
capitalization by type, Hungary,
2001351
12.5. Local network positions
359
12.6. Pathways’ typical sequences of
network positions
361
12.7. Sizable foreign ownership in 2001 363
12.8. Capitalization in firms with
political ties in 2001
368
12.9. Network sequence pathways,
political ties, and foreign ownership
369
13.1. Prominent early biotech firms
388
13.2. Distinctive features of early
biotech firms
390

13.3. Science vs. commerce:
a continuum
394
13.4. Two variants of a new form
398
13.5. Publication and citation counts
for ten-year period post-IPO
399
13.6. The creation of novelty, stepby-step405

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xviii 

■ 

Tables

13.7. What happened to the first
generation?407
14.1. Trends in biomedical patenting,
by metropolitan region
437
16.1. Laboratory approaches to
commercializing research, 1970–82
502
16.2. Recombined laboratory
approaches to commercializing

research, 1970–82
505
16.3. Empirical claims about science
production and ABM mechanisms
508
17.1. Summary of reasons for
aggregation and non-aggregation
in Silicon Valley and Boston
526
17.2. Patent analysis of component
robustness542

18.1. Growth in the Debian keyring
network550
18.2. Descriptive statistics of Debian
developers, 2001–2
550
18.3. Correlation coefficients in 2001
551
18.4. Correlation coefficients in 2002
551
18.5. Logistic regression coefficients
for the regression of New
Maintainer Committee membership
on selected independent variables
in 2001
557
18.6. Logistic regression coefficients
for the regression of New
Maintainer Committee membership

on selected independent variables
in 2002
557

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Acknowledgments
This book grew out of sustained conversations
about evolution, novelty, and history at the Santa
Fe Institute (SFI). John Padgett was a research
professor at SFI from 2000 to 2004 and an external faculty member from 1996 to 2000 and
from 2004 to 2009. Woody Powell has been an
SFI external faculty member since 2001. From
1999 to 2009, Padgett and Powell co-directed
an SFI program, the Co-evolution of States and
Markets, originally supported financially by SFI
and eventually by the Hewlett Foundation. The
project was also supported financially by an NSF
grant to Padgett through its Human and Social
Dynamics initiative. This book is a product of
that SFI program and of the many people who
have contributed to it over the years.
Because of this institutional lineage, thanks
go first to the SFI leaders who had the faith and
the commitment to invest in the long-term vision of this book with its multiyear time horizon—especially Ellen Goldberg, president of SFI
from 1996 to 2003, and Erica Jen, former vice
president and current science board member at

SFI. The Santa Fe Institute was and is a very special place where natural scientists from a variety of disciplines interact with social scientists
from a variety of disciplines. Intellectual reaches
of this magnitude are very unlikely to succeed,
but SFI over the years has somehow managed to
foster a series of innovative and out-of-the-box
contributions by remaining committed to this
mind-contorting stretch. Of course, interdisciplinarity is not enough for coherent conversation.
One also needs topics or themes where joint
conversation makes independent sense to both
sides, and enough time and patience to carry it
through. Evolution and the generation of novelty were the animating themes of our SFI program. These topics are at the frontier of sectors
of the natural sciences ranging from biochemistry to systems biology. They are also at the frontier of historically oriented social science, as long
as past abuses of evolutionary thinking in the
social sciences and in politics are kept squarely
in view. A mechanical transposition of biological

mechanisms to “cultural evolution” in human
systems dooms the project to intellectual failure
in social science and in history. But SFI’s glory
has always been that it encourages deep rethinking of basic theories from new perspectives—to
the benefit of the natural sciences as well as the
social sciences. That SFI does so is due to the
taste of its leaders. Ellen Goldberg and Erica Jen
were those types of leaders. Ginger Richardson
and Susan Ballati also deserve special thanks
among the SFI staff (here, here for science being
led by women!).
The structure of the SFI program Co-­evolution
of States and Markets was an annual, monthlong research working group, with rotating
membership, assembled each summer by Padgett

and Powell at Santa Fe. Recurrent participants
were Walter Fontana, Sanjay Jain, David Stark,
and Douglas White. The chemist Fontana was an
informal co-leader and inspiration of our group.
He is the one who introduced Padgett and the
rest of us to the core concept of autocatalysis as
well as much else in systems biology and evolutionary chemistry.1 The physicist Jain is a formal
modeler of autocatalysis with wide and deep interests in biology and economics. The sociologist Stark brought a theoretical commitment to
cognitive reflexivity and hybridity, as well as a
substantive knowledge of Eastern Europe. The
mathematical anthropologist White brought
modeling and data-analysis skills in the field of
social networks. Because of post-project changes
in direction, not all of these core participants appear in this final volume, but they were within
the conversational heart and soul of this venture.
Besides the authors whose work appears in this
book, the mostly historically oriented other participants in the SFI co-evolution program over
the years have included Julia ­Adams, Christopher Ansell, Dan Carpenter, Bruce Carruthers,
1
Fontana and Buss used the different label of “self-­
maintaining organization” for this concept (see chapter 2).
For an amusing, not altogether serious profile of Padgett and
Fontana at the beginning of this program, see SFI Bulletin 13
(Summer 1998): 14–17.

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Acknowledgments

Elizabeth Clemens, Sam Cohn, Bruce Kogut,
Paul McLean, Elena Obukhova, Pip Pattison,
Charles Sabel, and Brian Uzzi.
For Padgett, end-game thanks go to the University of Trento, especially to Paolo Collini,
dean of the faculty of economics and management, and to Enrico Zaninotto, director of the
social science Ph.D. school. Padgett recently was
given a part-time faculty position there, in large
part because of their intellectual support of this
project and its write-up. They and the Hewlett
Foundation jointly sponsored a final conference
that brought together chapter authors with University of Trento critics and discussants in the
spectacular mountain village of Schenna in the
high Tyrolean Alps. Special thanks go to Johanna
Mair and her family for hosting us in their lovely
resort hotel in Schenna. The University of Trento
added an evolutionary-economics sensibility to
this volume and may even deserve co-parentage with SFI as institutional lineage. Massimo
Warglien at the University of Venice, Alessandro
Lomi at the University of Bologna,2 Anna Grandori at Bocconi University, Massimo Egidi at
Luiss University, Fabio Pammolli and Massimo
Riccaboni at IMT-Lucca, Andrea Ginsburg and
David Lane at the University of Modena, and
Richard Goldthwaite in Florence also deserve
shout-outs on the Italian front. Padgett has guest
taught at most of these places.

All of the thanks just mentioned involve the
recent past. The deepest intellectual tap root
of this book, however, is Harrison White. Two
books have emerged out of the four-year seminar that White and Padgett co-taught at Harvard in the early 1980s—this one and the first
edition of White’s Identity and Control.3 Knowledgeable readers will appreciate how differently
our theoretical answers have evolved, but the
foundational questions in these two books overlap strongly. “Structural” for Harrison meant
not social determinism but the iteration of often
clashing relational logics. He was obsessed with
how social interaction, at fairly macrohistorical scales, constructed persons, and he infected
Padgett with his obsession. Together we pored
through obscure history book after history book,
looking to uncover insightful gems and to construct always tentative “theories of the week.”
Lomi is now at the University of Lugano.
Harrison C. White, Identity and Control: A Structural
Theory of Social Action (Princeton: Princeton University Press,
1992).
2
3

Apart from any particular theory or statistical
technology, Harrison imparted to his graduate
students and assistant professors (including Ron
Breiger) the capacity to hold multiple perspectives in our minds simultaneously and the desire
to ask big questions. That is why this volume is
dedicated to him.
At the University of Chicago, Padgett continued to teach a historically oriented graduate
course on organizations, perhaps with a little
more structure than the wildly exuberant Harvard course. Hundreds of pages of written lectures have been produced for this Chicago course
over the years, some of which have developed

into chapters for this book. At Chicago, Padgett
also had the distinct pleasure of running a weekly
workshop for twenty years, Organizations and
State Formation, with frequent co-leadership
by the late Roger Gould and then by Gary Herrigel. I give thanks to them and to all my students, in particular Chris Ansell, Dan Carpenter,
Bruce Carruthers, Jungwoon Choi, Zhiyuan Cui,
­Lauren Duquette, Wendy Espeland, Kevin Esterling, Dan Levinthal, Santi Furnari, Blair Gifford,
Elizabeth McGhee Hassrick, Michael Heaney,
Carla Hess, John Kenny, Steve Laymon, Doowan
Lee, Dan McFarland, Paul McLean, P
­ eter McMahan, Martina Morris, Jonathan Obert, Elena
Obukhova, Sarah Parkinson, Roger Peterson,
Katalin Prajda, Michael Reinhard, Ethel Santacroce, Andrew Schrank, Bat Sparrow, Guy Stuart,
Xing Zhong, and Kuba Zielinski.
And finally to the deepest tap root of them
all, and not just in matters intellectual. Wendy
Griswold knows more about the ebbs and flows
of this project, these people, and these ideas
than anyone else. She is the love of my life. To
her, I owe not just thanks but everything. Ray
and ­Olivia, our kids, have felt this lengthy work
effort loom large in background of their lives,
causing extended absences from home by dad
but also fun family trips. Both kids have grown
up to be independent, active, and loving young
adults, precious gifts to their parents. Distinct
as we are, we make a good foursome. Had she
lived, my mother also would have been pleased;
her love continues to flow through all of us.
For Powell, annual visits to SFI were also

highly generative. Conversations with Jennifer
Dunne, Doyne Farmer, Doug Irwin, José Lobo,
John Miller, Mark Newman, and Geoff West
were especially rewarding. Doug White and
Ken Koput were crucial to my understanding
of modeling and visualizing network dynamics;

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Acknowledgments  ■  xxi



conversations with Dan McFarland and Jim
Moody were critical as well.
At Stanford, early drafts of Powell’s work
were regularly presented at the Stanford Institute
for Economic Policy Research (SIEPR) workshop. Thanks to Tim Bresnahan, Paul David,
and Jenny Kuan for comments and sustaining
the workshop. A Berkeley-Stanford work-inprogress conference with Dave Mowery and
Bronwyn Hall and their students and P
­ owell’s
students was very fruitful. Research support
from the Columbia-Stanford project on Biomedical Innovation was much appreciated, as were
the associated feedback and interactions with
Annetine Gelijns, Dick Nelson, Nate Rosenberg,
and Bhaven Sampat. Throughout this work, conversations with economist colleagues have been
priceless, and Alfonso Gambardella, Franco

Malerba, Doug North, and Fabio Pammolli deserve thanks for sharing ideas.
Financial support from several NSF grants
and SFI sponsored the Powell “lab” and its
weekly meetings from 2000 to 2007. The earliest members—Jason Owen-Smith, Kjersten
Whittington, James Evans, Stine Grodal, Caroline Simard, Brandy Aven, Andrew Nelson, Kelley Porter Packalen, Jeannette Colyvas, Andrew
Parker, Jarrett Spiro, and Kaisa Snellman—were
indispensable in forging a robust intellectual
community. I owe them all my thanks and love.
The lab subsequently morphed into the Networks and Organizations workshop, with too
many participants in recent years to even try to
list here. But Dan Wang deserves a shout-out
for being an anchor for that workshop. Current and former faculty colleagues Steve Barley,
Kathy Eisenhardt, Henning Hillman, and Dan
McFarland have provided ample commentary
on work in progress, as have long-term friends
Neil Fligstein and Marc Schneiberg. I had the
great fortune to be assigned Tanya Chamberlain
as an assistant when I arrived at Stanford, and
she has been with me through the entire time on
this book. All of my text, tables, and figures were
fashioned into shape by Tanya. Without her
work, care, acute sense of organization, and professionalism, this volume would not have been
completed. I owe her immense thanks and appreciation for all we have been through together.
Earlier versions of Powell’s chapters were
tried out in many places, but several deserve
special mention. Initial drafts of chapters 13–15
were presented at the University of Oxford as
the Clarendon Lectures in Management. The

late Anthony Hopwood, the Dean of the Saïd

School, and David Musson of Oxford University
Press were most genial hosts, and Victor Seidel
arranged a lovely stay at Trinity College. A term
at the Judge Institute at Sidney Sussex College
at the University of Cambridge provided a subsequent opportunity to present the work. Dame
Sandra Dawson, then Dean of the Judge, was a
gracious host. A fellowship year at the Center
for Advanced Study in the Behavioral Sciences
provided a conducive environment to make further progress on the manuscript. Conversations
about the book with Marion Fourcade, John
Lucy, Andy Markovits, Martin Ruef, and Kate
Stovel were highlights of the year. Finally, completing the book was made possible by spending
much of spring 2011 at the University of Chicago Booth School of Business. Ron Burt had the
good sense to know that John and I needed face
time together to get the book finished.
As this project was launched, Powell moved
from the University of Arizona to Stanford. I
had the good luck that Ken Koput continued to
work with me and that Jason Owen-Smith followed me to Stanford. The move to Palo Alto
was further eased when my “adopted” father,
Charles Perrow, continued his wonderful habit
of following my moves, first to Yale, then Arizona, and for the past decade at Stanford. Every
idea has been listened to, and every page read,
by Chick. His friendship has been a constant for
over three decades. When this project began, my
son, Ian, was nine years old. His sharpest memories of Santa Fe are likely to be our whitewater
rafting of the Taos Box stretch of the Rio Grande
River or trips to Anasazi ruins in Bandelier National Park. But I also deserted Ian and my wife,
Marianne Broome Powell, just as we were moving into a fixer-upper house on the Stanford
campus. I got to go to “work” in Santa Fe as

they rebuilt our new home. Their love and tolerance of many absences have made my scholarship possible. Marianne was always willing to
educate me about the biomedical sciences, and
as Ian grew into a college student, he read chapters and made critical comments. They lived all
the details of this project, both its joys and challenges. Neither of them will ever really know
how much they have helped and sustained me.
At Princeton University Press, Eric Schwartz,
Karen Carter, and Peter Dougherty have been
tolerant, professional, and encouraging, steadfast in their support. Jennifer Backer tackled
the immense typescript manuscript and edited

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xxii 

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Acknowledgments

it with great care and good humor. J. Naomi
Linzer composed an excellent index.
Finally, at the end of the day, John and Woody
need to thank each other. We have been dogged

in tracking down every intellectual lead, both for
ourselves and for each other. Long-term collaboration and constructive feedback don’t get any
better than this.

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The Emergence of
Organizations and Markets

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