Stoyan V. Sgourev

Peer Capitalism: Parallel Relationships in the U.S. Economy1

We gain insight into the reasons why capitalists maintain social relationships with one another by analyzing a largely unexamined type of relationship—that which links “parallel peers” or noncompeting enterprises in the same industry—and an institution—the industry peer network or IPN—that is specifically designed for supporting small, exclusive groups of parallel peers. A wide array of qualitative and quantitative data show parallel relationships in general, and IPNs in particular, to be surprisingly prevalent, especially in light of the focus of past research on horizontal and vertical relationships and institutions. In addition, analysis of parallel relationships and the institutions that cultivate them sheds light on key mechanisms by which capitalist enterprises learn from one another and motivate one another to achieve higher performance.

How Paris Gave Rise to Cubism and Picasso: Ambiguity and Fragmentation in Radical Innovation

In structural analyses of innovation, one substantive question looms large: What makes radical innovation possible if peripheral actors are more likely to originate radical ideas but are poorly positioned to promote them? An inductive study of the rise of Cubism, a revolutionary paradigm that overthrew classic principles of representation in art, results in a model where not only the periphery moves toward the core through collective action, as typically asserted, but the core also moves toward the periphery, becoming more receptive to radical ideas. The fragmentation of the art market in early 20th-century Paris served as the trigger. The proliferation of market niches and growing ambiguity over evaluation standards dramatically reduced the costs of experimentation in the periphery and the ability of the core to suppress radical ideas. A multilevel analysis linking individual creativity, peer networks, and the art field reveals how market developments fostered Spanish Cubist Pablo Picassos experiments and facilitated their diffusion in the absence of public support, a coherent movement, and even his active involvement. If past research attests to the importance of framing innovations and mobilizing resources in their support, this study brings attention to shifts in the structure of opportunities to do so.

“Notable” or “Not Able” When Are Acts of Inconsistency Rewarded?

Atypical practices of crossing categories or genres are generally discouraged in the market, but the ideal of the Renaissance mind1 persists. Building on recent work elaborating the need to reward the greater risk associated with atypicality for it to survive, this article provides the first systematic, direct evidence for such a reward. We focus on stylistic inconsistency—mixing distinct artistic styles. In a between-subject experimental design, 183 subjects estimated the aesthetic and market value of consistent and inconsistent sets of artworks by Pablo Picasso in three status conditions. Controlling for cognitive difficulties posed by inconsistency, we show that inconsistency is rewarded (i.e., evaluated higher than consistency on aesthetic value) only at high status. Status cues guide perception so that inconsistent works by a prominent artist are given the benefit of the doubt and interpreted as a sign of creativity. The association with creativity leads to a reward for atypicality in the absence of tangible proof that it performs better than typicality.

LEAVING IN DROVES: Exit Chains in Network Attrition

The article examines the emergence of “exit chains”—temporal clusters in attrition, which are expected but rarely documented. Studying attrition in an industry peer network (IPN), we compare the three modes of leaving: as an initial exit in a chain (“leader”), a subsequent exit in a chain (“follower”), and a stand-alone exit (“loner”). Combining regression and simulation techniques, the analysis affirms the role interdependence between leader and followers, whose rationales for leaving are distinct but complementary, one internal based on exchange imbalances, the other external based on exposure to peer influence. Exit chains are depicted as a by-product of social embeddedness and the inherently high costs of relationship termination.

Breaking up is hard to do: Irrational inconsistency in commitment to an industry peer network

This paper strengthens the basis for a key claim of contemporary economic sociology — that strong ties among capitalists cannot be reduced to rational considerations. Support for this claim has been limited by reliance on an external standard of rationality, whereby irrationality in commitment to a partner or network is based on an observer’s evaluation of an actor’s interests. In this article we address this limitation by developing an internal standard for assessing the rationality of an actor’s commitment, which is derived from Davidson’s (1980) definition of akrasia or ‘incontinence.’ In addition, we clarify the mechanisms that produce ‘akratic’ commitment among capitalists: (a) short-term emotions that overwhelm rational calculation; and (b) a sense of loyalty that leads one to incorporate others’ interests into one’s own. Finally, we provide systematic evidence of akratic commitment and the proposed mechanisms from studies of an industry peer network in the remodeling construction industry.

Brokerage as Catalysis: How Diaghilev’s Ballets Russes Escalated Modernism:

The analysis elaborates and illustrates a proposition on brokerage that is implicit in existing research—that through self-assembling their ties, brokers may trigger chains of events with systemic consequences that they can only partly control or benefit from. By relaxing the assumption of strategic control, the analysis contributes to reducing the discrepancy between micro and macro levels of analysis. This approach is illustrated with the case of the Ballets Russes (1909–1929) and its founder Sergei Diaghilev, who revolutionized the arts in the early 20th century by aggregating developments in dance, music, design and literature. The role of a catalyst emerges in connecting artists on the supply side and in matching supply and demand for novelty. Catalysis was triggered by the interaction between identity and field-level fragmentation when the personal network of an unusually multifaceted broker became a platform for the interpenetration of heretofore disconnected social networks. However, in escalating Modernism Diaghilev’s brokerage contributed to the demise of the social world that generated the Ballets Russes.

Lake Wobegon Upside Down: The Paradox of Status-Devaluation

This paper examines a cognitive bias whereby respondents in postcommunist Bulgaria systematically decrease their self estimates on material welfare in contrast to the well-established status-enhancement bias. The analysis shows that the main reason for the occurrence of status-devaluation is the experience of relative deprivation in postcommunism, reflected in unfulfilled expectations and the perception of status loss relative to socialism. The bias is reinforced by a process of network closure under conditions of high uncertainty and accelerated social change. More homogeneous personal networks provide reference points, which make high-status actors more likely to see themselves as low-status.

When too many are not enough: Human resource slack and performance at the Dutch East India Company (1700–1795):

Slack is an elusive concept in organizational research, with studies documenting a variety of relationships between slack and firm performance. We advocate treating slack not as a resource, but as a practice – a sequence of events and responses over time. A longitudinal analysis of the Dutch East India Company (1700–1795) highlights the use of slack as a response to a resource constraint (the shortage of skilled labor). After documenting the negative performance effects of skill shortage, we identify a trade-off in the use of human resource slack (number of sailors above what is operationally required), in which slack enhanced operational reliability, but reduced efficiency. Derived from a historical context, this trade-off has contemporary relevance and is helpful in reconciling contradictory evidence on slack.

Dangerous Liaisons: Bridging Micro and Macro Levels in Creativity Research

Research on creativity is generally at the level of the individual, but scholars are beginning to offer conceptual frameworks at higher analytical levels: careers, social network s and institutional field s. This work approaches creativity as emerging from biographical transposition and relational flows across social network s. Ambiguity and heterogeneity are the raw materials of creativity, unfolding through mechanisms of spillover , transposition and recombination . The chapter reviews work in the macro-level tradition and discusses the existing gap between micro and macro levels in creativity research. Bridging this gap involves a dual process: showing how structural processes create idea-conducive conditions and how personality and identity make it possible to harness the conditions. To that end, a cross-level method is proposed, encompassing identity , network s and the field . It is applied to two cases: Laclos’ novel Les Liaisons Dangereuses and Diaghilev’s Les Ballets Russes. If generally believed that creativity is facilitated by openness, it can also be helped by blockage, when blocked mobility inverses career paths and transposes ideas and practices across social domains. As shown, unexpected career shifts introduce contradictions, force improvisation and promote emotional ambivalence—factors associated with the capacity to forge new connections. People do not always make new combinations: these are sometimes made for them.

Strange Bedfellows: Art and Finance or the Monet-ization of Art

Abstract The process of commercialization of art is often referred to as “monetization,” denoting the use of art as an investment class. I discuss the reverse mechanism, defined as “Monet-ization,” where investment is overlaid with artistic value, and unproven art is imbued with aesthetic qualities. This mechanism is derived from a historical overview of key periods in the history of art, such as the flourishing of new genres in early 17th century Dutch art and the rise of Modern art in the early 20th century. An analysis of original data on the leading art collectors in the world in the period 1990–2015 highlights the tendency for collectors with an “investor” profile and eclectic taste to buy contemporary art. Combining artworks from diverse periods and styles, eclectic personal collections contribute to the conversion of economic into aesthetic value by way of spill-overs across genres and to the attribution by association of “old” value to “new” art. The “Monet-ization” process helps elucidate how paradigm shifts occur in the art world and how innovation survives under conditions of insufficient demand.