In contrast to the dominant transition framework that examines organizational forms in Eastern Europe according to the degree to which they conform to or depart from the blueprints of already existing capitalisms, this essay exam ines the innovative character. born of necessity. in whicb actors in the postsocialist setting are restructured by re defining and recombining resources. Instead of conceiving these recombinations as accidental aberrations. it explores their evolutionary potentials. Its starting premise is that the actual unit of entrepreneurshp is not the isolated indi vidual personality but the social networks that link firms and the actors within them. Drawing on recent develop ments in evolutionary theory. it cautions that although all-encompassing privatization and marketization might fos ter adaptation in the short run. the consequent loss of organizational diversity will impede adaptability in the long run. *This essay was written while David Stark was a Fellow at the Center for Advanced Study in the Behavioral Sciences supported by grants from the National Science Foundation #SES-9022192 and from the U.S. Department of State Title VIII Funds Grant #1006-304101. Our thanks to Bill Barnett, Pascal Boyer, Geoff Fougere, Istvan Gabor, Szabolcs Kemeny, Ger ald McDermott, and Monique Djokic Stark for their criticisms of an earlier draft. Address correspondence to David Stark Center for Advanced Study in the Behavioral Sciences, 202 Junipero Serra Blvd., Stanford CA 94305 (or to stark@casbs. stanford.edu).