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Bill Gates has recently promoted the notion of a "frictionless capitalism." But even if it were other than a myth, it would not be a good idea because it would mark the end of innovation. Friction can be productive when it helps us to be reflective about what we have taken for granted. Innovation occurs when generative friction stimulates reflexivity to recognize new recombinations.

Game Changer: The Topology of Creativity

In this paper, Mathijs de Vaan, Balazs Vedres, and I study the social sources of creative success in the video game industry. Teams are most creatively successful when they are composed of overlapping groups that are cognitively heterogeneous.

American Journal of Sociology, 120(4):1144-1194, January 2015.

The Sense of Dissonance

Search is the watchword of the information age, but in this study of innovation David Stark examines a different kind of search - when we don't know what we're looking for but will recognize it when we find it. Drawing on John Dewey's notion of collaborative inquiry, Stark uses ethnography to study the perplexing situations in which actors search for what's valuable. His cases include machine tool makers in Hungary, new media workers in Silicon Alley, and derivatives traders on Wall Street. In coping with uncertainty, organizations benefit from the friction of competing criteria of worth. The dissonance of diverse principles can lead to discovery.

Social Times of Network Spaces: Network Sequences and Foreign Investment in Hungary

In this paper, Balazs Vedres and I develop a social sequence analysis to identify distinctive pathways whereby firms use network resources to buffer uncertainty, hide or restructure assets, or gain knowledge and legitimacy. In place of properties of the global network, we focus on variation in local properties. In place of a single system time, we model the processes of social times. Our contribution to a more historical network analysis does not simply include time as a variable but, instead, recognizes time as variable.

American Journal of Sociology, March 2006, 111(5):1367-1411.

Attention Networks: A Two-Mode Network View on Valuation

When multiple agents allocate their attention across multiple situations, they create an attention network. In this paper, Matteo Prato and I study how attention networks shape cognition. We argue that how we value something depends on the viewpoints from which we assess it (the background of other objects across which we allocate our attention) and the views of others to which we are differentially exposed because of the network structure of attention. We analyze US financial analysts' stock coverage portfolios and their estimates of listed firms' earnings per share from 1993-2011. The study is based on some 10,994,000 analyst-firm observations.

Ethnic Diversity Deflates Price Bubbles

In this paper from the Proceedings of the National Academy of Sciences, Sheen Levine and I (together with other co-authors) examine a prominent marekt failure: price bubbles. We propose that bubbles are affected by ethnic homogeneity in the market and can be thwarted by diversity. Using experimental markets in Southeast Asia and North America, we find that market prices fit true values 58% better in ethnically diverse markets. In homogenous markets, overpricing is higher and traders\' errors are more correlated than in diverse markets. The findings suggest that homogeneity promotes conformity. Price bubbles arise not only from individual errors or financial conditions, but also from the social context of decision making. Informing public discussion, our findings suggest that ethnic diversity disrupts conformity and leads to better information processing.

Proceedings of the National Academy of Sciences, November 18, 2014.

Permanently Beta

Researchers in science and technology studies have long-recognized that the design process is not completed when manufacturers ship out a new product. Instead, users complete the design process when they resist some uses inscribed in the product, identify other affordances, and modify the product. All products, and especially new and unfamiliar ones, entail considerable interpretive flexibility. The new user innovation communities make this insight a part of corporate strategy. Instead of a hit or miss approach, they actively foster communities of users and involve their participation at ever-earlier stages of the design process. This is search when you don't know what you're looking for, relying on the users to recognize it when they find it.

Society Online: The Internet In Context. Sage, 2003, pp. 173-88.

Rooted Transnational Publics: Integrating Foreign Ties and Civic Activism

In the literature on globalization there is a widespread belief that civic associations with transnational ties are uprooted from their domestic societies. Laszlo Bruszt, Balazs Vedres, and I contend that there is not a forced choice between foreign ties and domestic integration. In fact, we find that transnational organizations are more domestically integrated than those without such ties. We base our argument on a survey of 1,002 of the largest civic organizations which we conducted in Hungary. We specify several forms of domestic integration and several forms of transnational ties. By demonstrating a systematic relationship between the patterns of foreign ties and the patterns of domestic integration, we chart three emerging forms of transnational publics.

Theory and Society 2006 35(3):323-349.

What's Valuable?

This essay is the concluding chapter for The Worth of Goods: Valuation and Pricing in the Economy, edited by Patrik Aspers and Jens Beckert (Oxford University Press, 2011). I start with an insight of John Dewey's that the terms price, prize, and praise all share a common Latin root. To this triplicate I add a fourth, perform, using these four concepts as a device to discuss the papers in the volume. In one section, I address the phenemon of Top Ten lists: On-line ratings and rankings by consumers now provide vast sources of data on prizing and appraising - new means to register value judgments in the economy.

Concluding chapter of The Worth of Goods: Valuation and Pricing in Markets, Patrik Aspers and Jens Beckert, eds. Oxford University Press, 2011, pp. 319-338.

From Dissonance to Resonance: Cognitive Interdependence in Quantitative Finance

How do traders deal with the fallibility of their models? The answer, Daniel Beunza and I show in this ethnographic study of an arbitrage trading room is to use devices for dissonance that disrupt the taken-for-granted and prompt them to reconsider the assumptions built into their databases. Warning: the same socio-technical networks of reflexive modeling that are a source for correction can also lead to the amplification of error.

Economy and Society, 2012, 41(3):1-35.

Political Holes in the Economy: The Business Network of Partisan Firms in Hungary

When firms reach out to allies in the political field, the logic of partisanship can constrain the choice of business partners in the economy. Balazs Vedres and I interviewed CEOs and politicians in Hungary and constructed a dataset of all senior managers and boards of directors of the largest 1,696 corporations and the complete set of all political officeholders. Firms of either left or right political affiliation exhibit a preference for partnerships with firms in the same political camp while avoiding ties with firms in the opposite camp. Subsequently, firms with politically balanced boards seize a brokerage opportunity to occupy the political holes in the economy opened up by the growing division between left and right.

American Sociological Review, October 2012, 77(5):700-722.