Financial Markets in Organization Theory and Economic Sociology

by

Fabrizio Ferraro, Guillermo Casasnovas

• LAST REVIEWED: 25 September 2018
• LAST MODIFIED: 25 September 2018
• DOI: 10.1093/obo/9780199846740-0152

Introduction

As the organization theory field shifted its attention toward organizational relationships with the environment and market processes, scholars started to study directly financial markets and financial processes, leveraging existing theories (institutional theory, embeddedness, culture, status, social influence) and developing novel ones (categories, performativity). In doing so, their work increasingly converged with the theoretical and empirical interests of economic sociologists, and thus the following bibliography cover studies in both organization theory and economic sociology. Many of the studies listed below were primarily concerned with advancing a specific theoretical agenda, rather than explaining financial markets per se, but in this bibliography we organized them to better appreciate how these findings can collectively further our understanding of financial markets, and their impact on corporations and society. In defining the scope of this bibliography, we included articles published both in sociology and management journals but did not review the vast literature published in economics, finance, and accounting. In terms of topics, we included studies focused on the financial sector, but excluded studies of bank lending, venture capital, and IPOs, as they were mostly focused on understanding these processes from the corporate perspective, rather than from the one of the financial sector and financial markets.

Handbooks, Edited Collections, and Review Papers

No handbook covers studies of financial markets strictly from an organization theory perspective, yet Knorr Cetina and Preda 2006 and Knorr Cetina and Preda 2012 have collected empirical articles on specific topics. Review articles have covered different aspects of this literature, such as Carruthers and Kim 2011 on the sociology of finance and Brauer and Wiersema 2017 on securities analysts. See also Davis and Kim 2015 under Professionalization, Financialization, and Financial Crisis and Goranova and Ryan 2014 under Shareholder and Stakeholder Engagement.

• Brauer, M., and M. Wiersema. “Analyzing Analyst Research: A Review of Past Coverage and Recommendations for Future Research.” Journal of Management 44.1 (2017): 218–248.

  DOI: 10.1177/0149206317734900

  This article reviews the literature on analysts in the various domains of strategic management research. By organizing, synthesizing, and analyzing extant research efforts on this topic, the authors advance the knowledge on the influence of this important organizational stakeholder on firms and investors and the context in which analysts operate, and provide recommendations for future research.

• Carruthers, B. G., and J.-C. Kim. “The Sociology of Finance.” Annual Review of Sociology 37.1 (2011): 239–259.

  DOI: 10.1146/annurev-soc-081309-150129

  The authors review the growing sociological interest in finance by focusing on processes such as disintermediation, securitization, integration, liberalization, globalization, and interdependence. The article reveals the importance of politics, corporate governance, social factors, and theoretical and material devices in shaping financial practices, and offers directions for future research around social inequality, informal sectors, valuation, and social networks.

• Knorr Cetina, K., and A. Preda. The Sociology of Financial Markets. Oxford: Oxford University Press, 2006.

  This edited book includes chapters by many economic sociologists that have been central in our understanding of how financial markets work and how they are influenced by broader social structures. The book covers important topics such as embeddedness, globalization, materiality, emotions, gender differences, culture, conflicts of interest, status, and the role of politics.

• Knorr Cetina, K., and A. Preda, eds. The Oxford Handbook of the Sociology of Finance. Oxford: Oxford University Press, 2012.

  With contributions from top scholars in the sociology of finance, this handbook covers a range of theoretical approaches and empirical phenomena. There are chapters on the governance of financial institutions, the inner workings of financial markets, the organization of information, new perspectives on financial crises, geographical differences, and historical approaches.