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Third parties who refer clients to expert service providers help clients navigate market uncertainty by curating well-tailored matches between clients and experts and by facilitating post-match trust. We argue that these two functions often entail trade-offs because they require referrers to activate network relationships with different experts. While strong ties between referrers and experts promote trust between clients and experts, the presence of such ties reduces the likelihood that intermediaries refer clients to socially distal experts who may be better suited to serve clients' needs. We examine this central and unexplored tension by using full population medical claims data for the state of Massachusetts. We find that when primary care physicians (PCPs) refer patients to specialists with whom the PCPs have strong ties, patients demonstrate more confidence in the specialists' recommendations. However, a strong tie between the PCP and specialist also reduces the expertise match between a patient's health condition and a specialist's clinical experience. These findings suggest that the two central means by which referrers add value may be at odds with one another because they are maximized by the activation of different network ties.

Stratification in professional careers arises in part from interpersonal dynamics in client-expert dyads. To reduce perceived uncertainty in judgments of the quality of experts, clients may rely on ascriptive characteristics of experts and on pairwise, relational factors to assess the advice they receive. Two such characteristics, expert gender and client-expert gender concordance, may lead to differences in clients' trust in expert advice. To explore these issues, we investigate the incidence of patient-initiated second opinions (SOs) in medicine. In an examination of millions of medical claims in Massachusetts, we find that male patients are much more likely than female patients to obtain an SO if the first specialist they consult is female. Moreover, when the first specialist a patient consults is gender non-concordant and the patient seeks an SO, male patients are substantially more likely to switch to a same-gender specialist in the SO visit. Because patients who lack confidence in the advice of the first-seen specialist infrequently return to this specialist for medical services, female specialists generate lower billings. Analyses of medical spending in follow-up visits suggest that gendered patterns in questioning the advice of medical experts have the potential to contribute substantially to the gender pay gap in medicine.

Most existing theories of relationship formation imply that actors form highly cohesive ties that aggregate into homogenous clusters, but actual networks also include many "distant" ties between parties that vary on one or more social dimensions. To explain the formation of distant ties, we propose a theory of relationship formation based on the characteristics of "settings," or the places and times in which actors meet. We posit that organizations form relations with distant partners when they participate in two types of settings: unusually faddish ones and those with limited risks to participants. In an empirical analysis of our thesis in the formation of syndicate relations between U.S. venture capital firms from 1985 to 2007, we find that the probability that geographically and industry distant ties will form between venture capital firms increases with several attributes of the target-company investment setting: (1) the recent popularity of investing in the target firm's industry and home region, (2) the target company's maturity, (3) the size of the investment syndicate, and (4) the density of relationships among the other members of the syndicate.

In this paper, we examine the ecological consequences of initial public offerings (IPOs) and acquisitions, specifically how the spatial distribution of these events influences the location-specific founding rates of new companies. We explore whether relatively small spatial units (metropolitan statistical areas) in close geographic proximity to firms that recently have been acquired or experienced an IPO exhibit high new venture creation rates and whether the magnitudes of these effects depend on regional differences in statutes governing the freedom of employees to move between employers. Count models of biotechnology firm foundings establish three findings: (1) IPOs of organizations located contiguous to or within an MSA accelerate the founding rate within that MSA, (2) acquisitions of biotech firms situated near to or within an MSA accelerate the founding rate within the MSA, but only when the acquirer enters from outside of the biotech industry, and (3) the enforceability of post-employment non-compete covenants, which is determined at the state level, strongly moderates these effects.

We show that fraudulent firms allocate resources differently than honest companies. Resources obtained through fraudulent means are likely to be viewed as unearned gains and are less likely to be invested in productive activities, such as recruiting talent. We posit that honest and fraudulent companies also invest in different types of innovation: honest firms pursue technically significant innovations, while fraudulent companies are likely to make smaller investments in less challenging inventive opportunities that contribute to the appearance rather than the substance of innovation. We test these predictions in a longitudinal dataset tracking the personnel recruitment and patenting activities of 467 Chinese high technology firms, all of which applied for state-funded innovation grants. We identify fraud by comparing two sets of financial books prepared by each company in the data in the same fiscal year, which are legally required to be identical but are discrepant in over 50 percent of cases, in a direction that benefits the firm. We find that relative to honest companies, fraudulent firms are more likely to receive state grants and are less likely to recruit new employees or produce important inventions in the post-grant period.