Deadline extended to July 29th: Professional Development Workshop, Financial Markets and Organization, at AoM August 2016
July 26, 2016
Emilio Marti and I have extended the deadline for the Professional Development Workshop, “Financial Markets and Organization Theory” that we organizing. The event will take place on Aug 5, 14:15-15:45, in the “Newport Beach/Rancho Las Palmas” room at the Anaheim Marriott, seehttp://my.aom.org/Program2016/SessionDetails.aspx?sid=11641
Our workshop brings together organization theorists who work on financial markets. In Part 1, three scholars will talk about their work: Mary Benner on securities analysts, Paula Jarzabkowski on the reinsurance industry, and Marc Schneiberg on community banking. Part 1 is open to all participants and does not require pre-registration.
In Part 2 of the PDW, you can receive feedback on your work from the presenters and convenors. I would like to encourage you to send us your work. There are still places available and we have extended the submission deadline to July 29. If you are interested, please send an extended abstract or a short version of your paper (up to 3.000 words) to Daniel (D.Beunza@lse.ac.uk).
I hope to see you in Anaheim!
July 24, 2016
Academy of Management PDW: Social Practice Theory: Uncovering Large-Scale,
Systemic Risks in Financial Markets
Date/time: Saturday 6th August between 4:15-6:15pm; California D (Room), Hilton Hotel.
This Professional Development Workshop (PDW) will take forward debates about the value of sociological approaches generally and a social practice theory approach specifically to studying financial markets. The goal is to show how and why practice theoretical approaches can uncover and shed new light on issues in financial markets, for instance how they trade and manage risk. It explores the inherent risks, such as weaknesses arising from global connectivity and a reliance on industry-standards such as ‘models’, within financial markets.
Part one of the PDW focuses on advancing this research agenda through presentations from leading scholars who advocate diverse but complementary theoretical perspectives that, together, develop a compelling picture of the power of sociological approaches to explain large-scale phenomena such as the practice of markets. Part two of the PDW will involve round-table discussions followed by a concluding panel in which the emerging discussions will be woven together.
Rebecca Bednarek, Birkbeck, University of London
Paula Jarzabkowski, Cass Business School, City University London
Paul Spee, University of Queensland
Panel of Leading Scholars:
Paula Jarzabkowski, Cass Business School
Davide Nicolini, Warwick Business School
Hugh Willmott, Cass Business School
Daniel Beunza, LSE
Financial Markets and Organization Theory: Professional Development Workshop at the 2016 Academy of Management
June 13, 2016
Emilio Marti and I are organizing a professional development workshop for organization theorists interested in financial markets.
The event has two parts. In Part 1, three senior scholars of finance and management will talk about their work: Mary Benner on securities analysts, Paula Jarzabkowski on the reinsurance industry, and Marc Schneiberg on community banking. Part 1 is open to all participants and does not require pre-registration.
In Part 2 of the PDW, you can receive feedback on your work from the presenters and convenors. To participate in Part 2, please send an extended abstract or a short version of your paper (up to 3.000 words) to Daniel Beunza (D.Beunza@lse.ac.uk) and Emilio Marti (firstname.lastname@example.org). The submission deadline is July 15, 2016.
When: Friday, Aug 5, 14:15-15:45 (Part 1: 14:15-15:10, Part 2: 15:15-15:45)
Where: Room “Newport Beach/Rancho Las Palmas” at the Anaheim Marriott
Sponsors: OMT, CMS, and SIM
We will also be hosting an informal “OMT coffee” session on that same day at 5:00 pm, at the NFUSE bar in the Anaheim Marriott. Open to everyone.
Hope to see you there!
Further information: http://my.aom.org/Program2016/SessionDetails.aspx?sid=11641
Full description:2016-01-06 Finance and Organization Theory PDW description
The research group “Transnational Political Ordering in Global Finance” at the University of Bremen (Germany) has launched a CfP for the young scholars workshop “Interdisciplinary Perspectives on Global Finance” taking place 21-23 September in Bremen. The purpose of this workshop is to understand the complexities of global finance and to discuss the merit of interdisciplinary approaches to studying finance. The group wants to bring together junior scholars, PhD students as well as Post‐docs, and Junior Professors, with an interest in interdisciplinary exchange, that are conducting empirical research on all aspects of global finance. Moreover, the workshop seeks to identify common themes (empirical and methodological) as well as promising theoretical approaches across disciplines to come to a more encompassing understanding of global finance as a social and political phenomenon. Paper proposals are due on 20 May 2016. Find out more here: http://www.polfinance.uni-bremen.de/young-scholars-workshop/
Why is it so difficult to rein in Wall Street?
Reforming Wall Street has become a key issue in the ongoing presidential primaries.
Bernie Sanders in particular has used his rival’s close ties to the financial industry, including speaking fees and political donations, to suggest Hillary Clinton wouldn’t rein in Wall Street. At the same time, Sanders has tried to highlight his own independence, declaring:
If I were elected president, the foxes would no longer guard the henhouse.
Clinton has tried to dispel the notion that Wall Street donations affect her judgment or independence, claiming her regulatory plan is actually tougher than Sanders’.
These exchanges underscore a crucial point: almost a decade after the 2008 financial crisis, the reforms that many Americans have demanded remain incomplete. Claims of independence, including by Republicans such as Donald Trump, are one way for candidates to suggest that they would be able to bring about real change.
Who would be the best candidate to do so is an important question. But first we must understand this underlying dilemma: why has it been so difficult to reform Wall Street following the worst financial crisis since the Great Depression?
This led us to a more fundamental question: whose voice matters most in determining how the financial industry should be run?
Given how much anger there still is at Wall Street, the answer may be surprising.
An authoritative voice
In a forthcoming research paper, we argue that major change has been so difficult because Wall Street’s top executives ensure that the authoritative voice on the financial industry remains theirs. In other words, no one else understands how it works, so no one else can tell it what to do.
Consequently, other stakeholders, such as customers, investors, policymakers, academics, other businesses and society at large, have been sidelined.
But how do the executives manage this? Based on systematic analysis of data from the Financial Crisis Inquiry Commission and media, we found that how industry elites use public rhetoric shines some light on this, revealing clear patterns.
First, executives highlight only the positives of their banks to help make strong claims of expertise. A quick glimpse of this can be seen in this 2010 quote from former Bear Stearns CEO James Cayne defending his bank (which nearly collapsed during the crisis before being acquired by JPMorgan Chase):
Our capital ratios and liquidity pool remained high by historical standards… Subsequent events show that Bear Stearns’ collapse was not the result of any actions or decisions unique to Bear Stearns… The efforts we made to strengthen the firm were reasonable and prudent.
Second, they work to gain trust by using language that suggests care for stakeholders, including clients but also society. As just one example, JPMorgan CEO James Dimon told the commission why he and his bankers should be trusted:
Throughout the financial crisis, we continued to support our clients’ financing and liquidity needs. For example, we helped provide state and local governments financing to cover cash flow shortfalls… JPMorgan Chase is also at the forefront in doing everything we can to help families meet their mortgage obligations.
Complementing this, they focus on discrediting others – whether regulators or other market players – by forcefully questioning their expertise and trustworthiness. For example, former Morgan Stanley CEO John Mack projected blame on the state to question its expertise:
From a policy perspective, (the financial crisis) made clear that regulators simply didn’t have the tools or the authority to protect the stability of the financial system as a whole.
Lehman’s demise was caused by uncontrollable market forces and the incorrect perception and accompanying rumors… Those same forces threatened the stability of other banks – not just Lehman… This loss of confidence, although unjustified and irrational, became a self-fulfilling prophecy and culminated in a classic run on the bank.
Essential actors in a complex system
In summary, industry elites rhetorically construct themselves as essential actors in the field due to their expertise in managing their organizations in a complex system and their trustworthiness in terms of caring for multiple stakeholders. Simultaneously, they sharply critique the failings and motives of others.
This really matters because, in a domain that outsiders find difficult to understand, using such public rhetoric reinforces what social psychologists call “epistemic authority” – in this case the authority of elite financial industry executives.
The idea is simple: those who are considered to have expertise and are trustworthy rank high on epistemic authority. Their voices carry more weight and acceptance on crucial matters related to their field. And those who are lower down in this hierarchy are unable to pose a credible challenge.
Research from social psychology shows that those with higher epistemic authority on a subject are turned to earlier as a source of information, given priority, inspire higher confidence and are more likely to lead to actions that reflect their wishes.
Hence this is how Wall Street can both be reviled by much of American society yet maintain its status as the primary authority on the financial industry.
Challenging this authority requires strong political will. Campaign donations and lobbying play an augmenting role to ensure we don’t even get close to posing a credible challenge. “The Blob” of regulating agencies (from the Treasury Department to the Securities and Exchange Commission) moves together with an “army of Wall Street representatives and lobbyists that continuously surrounds and permeates them,” according to former Congressional staffer Jeff Connaughton. The result is that no credible challenge is mounted, and the epistemic authority of industry executives prevails.
Who gets the final word
The diluted nature of these changes shows how much authority industry executives have acquired since the Great Depression. Many of the regulations imposed in its aftermath, such as Glass-Steagall, have been repealed.
While all these issues are important, how do we get started?
Our research suggests the key obstacle to initiating radical change is that the top executives maintain the final word on “their” industry, while others whose lives are greatly affected by it have little voice. While other factors such as donations and lobbying certainly also play a role in preventing change, little attention has been paid to the importance of authority.
It is this authority that allows them to reduce the power of the state to regulate their industry by using their perch as “experts” to question the government’s capacity to do so effectively. Fuld, for one, continues to defend the expertise of his Lehman team while blaming the entire crisis and his own bank’s collapse on the government. Such rhetoric contributes to an environment where state bodies have little authority to intervene in the industry in the first place, and the donations and lobbying take care of the rest.
The financial industry also undermines tougher rules by taking key jobs at regulatory bodies – a problem known as the “revolving door” between Wall Street and Washington. Three recent Treasury secretaries, for example, were former executives at Goldman Sachs – hence Sanders’ concern about the foxes guarding the henhouse.
Other academics have documented the disproportionate power of the financial industry on other businesses; about a devotion to financial industry practices leading to long-term erosion of investment, competitiveness and prosperity; and more broadly about how its practices have reshaped everyday life in society and contribute to socioeconomic inequality.
But unless we can find a way to overcome the financial industry’s epistemic authority so true reform is possible, its negative repercussions on the economy and society will not change.
It takes a team to rein in Wall Street
And that is perhaps why many voters see presidential candidates’ independence from the financial industry as crucial.
Among the many other salient issues, the fact that not much has been done to change things after a financial crisis that damaged so many lives continues to raise hackles. It also likely breeds resentment against a system that has allowed things to continue as if nothing happened. That may lead people to extreme positions against what they perceive as an unfair system and into the hands of outsiders who embody that anger.
As one GOP voter put it: Democrats “are as eager to see Sanders nominated as I am to see Trump.”
But voters may be confusing simple claims of independence – such as on donations – with actual substantive plans for reform. Beyond the claims, actual change will depend on who is able to challenge the authority of the industry elite.
So here it may be more useful for voters to consider who each candidate would pick to lead the agencies charged with regulating the financial industry and advise the president on these issues. Sanders’ assertion that he’d steer clear of resumes that include Goldman Sachs tells us who he wouldn’t pick but not who’s on the short list.
Thus, the key question is: who would put together the right team to counter the dominance of industry elites? A team comprising those who stand outside the immediate circle of top industry executives (i.e., no conflict of interest) and yet can counter their epistemic authority (i.e., with expertise and trustworthiness)?
That will be tough. But creative ways of building such a team will be needed. Such efforts are essential to challenge the industry, push it to pay more attention to other stakeholders – as opposed to navel gazing – and ultimately lead to a more positive impact on the economy and society.
Suhaib Riaz, Assistant Professor of Management, University of Massachusetts Boston; Sean Buchanan, Assistant Professor of Business Administration, University of Manitoba, and Trish Ruebottom, Assistant Professor of Strategic Management, Brock University
February 15, 2016
University of North Carolina Wilmington
The Super Bowl is a favorite American pastime. Akin to asking someone if they will watch the event is equivalent to ensuring someone has a warm home in which to share the holidays.
In general, 1/3 of America watches the football-sporting event every year. Super Bowl 50, garnered 114 million viewers. For comparison, 126 million viewers turned out for the 2012 presidential election.
I consider the Super Bowl as a type of ‘State of the Union.” The commercials, halftime show, network’s computer graphics depict a good portion of America’s consciousness at that moment. It reflects what Americans’ value, their hopes and their fears.
This snapshot in time and heightened public attention (a whopping 4+ hours) is of great value and symbolizes common ground. Consider a 30 sec commercial slot during the 1st Super Bowl in 1967 sold for $298,045 (in 2015 US dollars) whereas, the same time allotment last week sold $5M.
Hence, BudLight ran a commercial referencing America’s polarized Congress to begin a discussion about the things America agrees on: comedians, raunchy innuendoes (big ‘cauc’-us, hehe!), and of course cheap beer. (BudLight’s affiliated beer “family” Budweiser is known for the ever-classic Super Bowl commercial Bud-Weis-Er frogs).
This year’s Super Bowl took place in San Francisco.
The event drew out less affluent locals protesting against the reduced accessibility of the city for living, working and enjoyment caused by new concentrations of wealth in the tech industry. The conditions prevail throughout the Bay Area, including San Jose, home of the “Silicon Valley.” (I write a bit about this and some of the complexities it surfaces for underlying value conflicts in debates over disaster losses in the US.)
In an era of heightened political concern over income inequality, PayPal’s Super Bowl commercial (above) is brilliant if not also a bit ironic. PayPal, headquartered in San Jose, aired a 45 second ad cleverly spinning unique concepts of ‘Old Money’ and ‘New Money.’
Old Money, the ad suggests, is white, plump, aging men or rather, the founding leaders of the United States of America. Old Money is stock markets, banks, and Jetsons era television.
New Money, on the other hand, is ethnically, generationally and professionally diverse. New Money is alternative energy, technology, and athleticism.
Old Money and New Money are both ideas of concentrated wealth. By using the idiom, PayPal suggests money has the opportunity to shift hands but not necessarily distribute more equitably.
A WSJ article about the ad reveals that PayPal recently split from Ebay and their motive is to encourage broader participation in their service. Whether use of the service comes from old American white men or young Chinese entrepreneurial women, PayPal skims a percentage for providing their service.
According to PayPal’s ad, then, New Money is not about who has money (though clearly PayPal has quite a bit), but who oversees markets. That is, New Money makes the rules; it has political power. This is not so different from Old Money.
And so, similar to President Obama’s claim during his final State of the Union, “The United States of America is the most powerful nation on Earth. Period,” The Super Bowl provides an opportunity for power to captivate: on the gridiron, in cities, over markets, and in our living rooms.
February 2, 2016
As part of a broader project – Performances of Value: Competition and Competitions Inside and Outside Markets – we call for papers for a workshop on Competition(s) that will take place on June 10-11, 2016 at the Copenhagen Business School. Costs for travel, lodging, and meals for workshop participants will be covered by a grant from The Leverhulme Trust. Organizers: David Stark (PI), Elena Esposito, Kristian Kreiner, Celia Lury, Fabian Muniesa, and Christine Musselin.
For more information about the project,
What’s valuable? This question – whether at the personal, organizational, or societal level
- is increasingly being answered through various forms of competition. These can be through the prices of market competition but they can also be through the prizes of contests, ratings, rankings, and other forms of organized competitions.
The Competitions workshop will explore the relationship between market competition and organized competitions. The phrase, “they are competing,” might refer, for example, to banks competing on the credit card market. But, in addition to such market competition, it could also refer to organized competitions and games such as the World Cup, architectural competitions, book prizes, Twitter scores, university rankings and other types of contests. Thus, alongside market competition as a coordinating mechanism of valuation in the economy we also find organized competitions. In the first type we find actors competing on markets. In the second type, we find contests with entry rules, judges, and prizes granted to the announced winners. On one side, competition is an ongoing, seamless, and seemingly endless process; on the other, competitions are discrete, bounded in time and location.
While market competition has been the subject of sustained attention, studies of organized competitions are more scarce and are rarely brought together. For the Copenhagen workshop, we are particularly interested in studies of organized competitions, addressing questions such as (but not limited to) the following:
- How are competitions (whether in sports, arts, business, politics, or science) staged and structured?
- How do scoring systems evolve? How do new performance metrics emerge?
- How do judges and juries go about reaching judgements?
- What are the roles of audiences and experts?
- What happens when forms of competition move from one domain to another?
- How are social agents equipped with competitive dispositions? What devices, tools and settings enable forms of competitive agency?
- Should we assume that everyone wants to win or that everyone accepts to play the games of competition? What are the consequences of not joining in?
Abstracts of no longer than 500 words should be submitted by February 15, 2016. If the abstract is accepted, a full paper will be required by May 15, 2016. All submissions should be made to Ana.Gross@warwick.ac.uk.