QUALITY, EXCHANGE, AND KNIGHTIAN UNCERTAINTY

Joel M Podolny; Greta Hsu

doi:10.1016/S0733-558X(02)20004-X

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Research in the Sociology of Organizations

ISSN: 0733-558X
Series editor(s): Professor Michael Lounsbury

Subject Area: Organization Studies

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QUALITY, EXCHANGE, AND KNIGHTIAN UNCERTAINTY

Document Information:
Title:	QUALITY, EXCHANGE, AND KNIGHTIAN UNCERTAINTY
Author(s):	Joel M Podolny, Greta Hsu
Volume:	20 Editor(s): Vincent Buskens, Werner Raub, and Chris Snijders ISBN: 978-0-76231-005-0 eISBN: 978-1-84950-202-3
Citation:	Joel M Podolny, Greta Hsu (2003), QUALITY, EXCHANGE, AND KNIGHTIAN UNCERTAINTY, in Vincent Buskens, Werner Raub, and Chris Snijders (ed.) The Governance of Relations in Markets and Organizations (Research in the Sociology of Organizations, Volume 20), Emerald Group Publishing Limited, pp.77-103
DOI:	10.1016/S0733-558X(02)20004-X (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
Abstract:	Sociologists have long recognized that stable patterns of exchange within a market depend on the ability of market actors to solve the problem of cooperation. Less well recognized and understood is a second problem that must be solved – the problem of Knightian uncertainty. This chapter posits that the problem of Knightian uncertainty occurs not only in the market; it underlies a variety of exchange contexts – not just markets, but art worlds and professions as well. These three exchange contexts are similar in so far as a generally accepted quality schema arises as an important solution to the problem of Knightian uncertainty; however, the quality schemas that arise in these three contexts differ systematically along two dimensions – the complexity of the schema and the extent to which the “non-producers” have a voice in the determination of the quality schema. By comparing and contrasting the way in which quality schemas arise in these three domains, this chapter (1) gives some specificity to the notion of quality as a social construction; (2) provides some preliminary insight into why a particular good or service becomes perceived as a market, artistic, or professional offering; and (3) offers an imagery for conceptualizing the mobility of goods and services between these three domains.