competition,as economics implied.The cri- that sectors that join all interested parties look tique of management theory's focus on in- quite similar to the set of actors that po- ternal organizational processes led organiza- litical economy focuses on,i.e.,firms,gov- tional theorists in two directions. ernments,and workers.DiMaggio Powell Hannan Freeman (1977)argued that (1983)extended these arguments and called scholars had paid too much attention to such environments "organizational fields,"a adaptive processes in organizations.Instead,term that has caught on.The field metaphor they studied the emergence of organizational implies that firms watch one another,engage forms at the level of populations.They im-in strategic behavior vis-a-vis one another, plied that market opportunity brought for-and look to one another for clues as to what ward the birth of firms.But the character of constitutes successful behavior.DiMaggio the market,i.e.,the resources that could be Powell's main focus was how firms in organi- exploited by firms,would determine which zational fields came to resemble one another 3J0'SMOIA3IEnUUE MMM wO forms of organization would survive.The through processes of mimetic,coercive,and main problem that competition created for normative isomorphism. firms,from Hannan Freeman's perspective,In 1981,White produced a sociological was resource dependence(Pfeffer Salancik view of what he thought firms do in markets. 1978).Many firms could not get the resources His central argument was that firms in pro- 'OO u they needed to survive,and this led to high duction markets position their organizations rates of failure at the beginning of market vis-a-vis one another.Using the price and rel- opening projects.Despite population ecol-ative quality of their product,they signal to ogy's focus on competition,scholars in this each other what kind of producer they want to field realized that the formation of market be.This signaling produces what White called boundaries was a social process and that the a market that he defined as a reproducible formation of niches often reflected the ability role structure.White's view combines some of firms to segregate their markets(Carroll insights from economics about how price can 1985,Hannan Freeman 1988).Firms de-be used as a signal(Spence 1974)with the or- 1002 pend on legitimacy,and external shocks to a ganizational sociology focus on the construc- niche,such as the introduction of a law,can tion of fields or niches. have a profound effect on the dynamics of a While organizational scholars examined niche (Ranger-Moore et al.1991,Ingram social processes structuring the relationships Rao 2004,Haveman Rao 1997).Recently,between organizations,scholars in stratifica- ecologists have begun to focus on how firms tion and labor markets looked anew at the role form identities and how these identities form of firms in resource distribution.During the markets(Carroll Swaminathan 2000). 1960s and 1970s,the main approach sociol- While population ecology viewed the en- ogists used to examine labor markets was the vironment of the firm as“hard,”and thus the status attainment model.This view focused on main mechanism of selection was the avail-how individuals were sorted into a relatively ability of the scarcest resource,institutional fixed set of positions according to their per- theory posited that the environment was at sonal characteristics,such as family origins, least partially a social construction.Scott education,gender,and race(Blau Duncan Meyer(1982)called such environments "sec-1967,Hauser Featherman 1977).Because tors"and described the socially constructed the status attainment model views the linkages environment of firms as a function of all the between individuals and their socioeconomic other organizations that might impinge on a outcomes as mainly a function of their per- particular organization.They included gov- sonal characteristics,the problem of the de- ernments,suppliers,workers,and customers mand for labor,and thus the role of the firm, as part of such a social construction.We note was outside its purview. www.annualreviews.org The Sociology of MarketsANRV316-SO33-06 ARI 24 May 2007 10:6 competition, as economics implied. The cri￾tique of management theory’s focus on in￾ternal organizational processes led organiza￾tional theorists in two directions. Hannan & Freeman (1977) argued that scholars had paid too much attention to adaptive processes in organizations. Instead, they studied the emergence of organizational forms at the level of populations. They im￾plied that market opportunity brought for￾ward the birth of firms. But the character of the market, i.e., the resources that could be exploited by firms, would determine which forms of organization would survive. The main problem that competition created for firms, from Hannan & Freeman’s perspective, was resource dependence (Pfeffer & Salancik 1978). Many firms could not get the resources they needed to survive, and this led to high rates of failure at the beginning of market opening projects. Despite population ecol￾ogy’s focus on competition, scholars in this field realized that the formation of market boundaries was a social process and that the formation of niches often reflected the ability of firms to segregate their markets (Carroll 1985, Hannan & Freeman 1988). Firms de￾pend on legitimacy, and external shocks to a niche, such as the introduction of a law, can have a profound effect on the dynamics of a niche (Ranger-Moore et al. 1991, Ingram & Rao 2004, Haveman & Rao 1997). Recently, ecologists have begun to focus on how firms form identities and how these identities form markets (Carroll & Swaminathan 2000). While population ecology viewed the en￾vironment of the firm as “hard,” and thus the main mechanism of selection was the avail￾ability of the scarcest resource, institutional theory posited that the environment was at least partially a social construction. Scott & Meyer (1982) called such environments “sec￾tors” and described the socially constructed environment of firms as a function of all the other organizations that might impinge on a particular organization. They included gov￾ernments, suppliers, workers, and customers as part of such a social construction. We note that sectors that join all interested parties look quite similar to the set of actors that po￾litical economy focuses on, i.e., firms, gov￾ernments, and workers. DiMaggio & Powell (1983) extended these arguments and called such environments “organizational fields,” a term that has caught on. The field metaphor implies that firms watch one another, engage in strategic behavior vis-a-vis one another, ` and look to one another for clues as to what constitutes successful behavior. DiMaggio & Powell’s main focus was how firms in organi￾zational fields came to resemble one another through processes of mimetic, coercive, and normative isomorphism. In 1981, White produced a sociological view of what he thought firms do in markets. His central argument was that firms in pro￾duction markets position their organizations vis-a-vis one another. Using the price and rel- ` ative quality of their product, they signal to each other what kind of producer they want to be. This signaling produces what White called a market that he defined as a reproducible role structure. White’s view combines some insights from economics about how price can be used as a signal (Spence 1974) with the or￾ganizational sociology focus on the construc￾tion of fields or niches. While organizational scholars examined social processes structuring the relationships between organizations, scholars in stratifica￾tion and labor markets looked anew at the role of firms in resource distribution. During the 1960s and 1970s, the main approach sociol￾ogists used to examine labor markets was the status attainment model. This view focused on how individuals were sorted into a relatively fixed set of positions according to their per￾sonal characteristics, such as family origins, education, gender, and race (Blau & Duncan 1967, Hauser & Featherman 1977). Because the status attainment model views the linkages between individuals and their socioeconomic outcomes as mainly a function of their per￾sonal characteristics, the problem of the de￾mand for labor, and thus the role of the firm, was outside its purview. www.annualreviews.org • The Sociology of Markets 111 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