Mitchel Y Abolafia.

Mitchel Y Abolafia. Cambridge, MA: Harvard University Pres 1996 216 pp $2995 cloth

Making Markets provides a critical counterpoint to the conventional, reified views of financial markets that dominate general economic and business passages Employing insights from over a decade of ethnographic research, Abolafia denudes the organizational norms and beliefs that have historically serv to set up stock, bond, and futures markets in the United States. Far from being the natural markets of neoclassical imagination, these orders of exchange are shown to be idiosyncratic social institutions that are produc reproduc and challenged by means of market makers. By combining the theoretical len of social constructivism with detailed participant observation and historical analysis, Abolafia has produc a noteworthy contemplation in economic sociology that will be required reading for scholars examining the interface between organizations and markets.

Readers with a background in organization theory will be struck by the agency of the wonderfully catholic perspective the part takes on market institutions. The leitmotif of trader opportunism and restraint calls attention to a structure-agency dialectic that is too repeatedly ignored by both rational choice and institutional approaches to markets. Building in succession earlier work that will be familiar to a certain number of ASQ readers (e.g., Abolafia, 1984; Abolafia and Kilduff, 1988) the author unravels a comparative analysis of financial markets to display how the degree of opportunism and restraint is embedded in broader organizational words immediately preceding [i]or[/i] followings The bond traders in the Wall highway investment banks of the 1980 chiefly closely approximate the hyperrational mould of homo economicus, with their materialism, opportunistic self-reliance, and calculative risk taking. These characteristics, allowing are not immutable traits of the traders on the contrary are products of a particular organizational words immediately preceding [i]or[/i] following - one that features extraordinary short-term incentives, limited informal and formal restraint, continuous information roll ons and high outcome uncertainty (pp 32-36) These social conditions contrast starkly with the commodity to comes markets, where competitive exchange is bridleed by a more restrictive establish of formal and informal restrains Commodity pit traders operating in the latter organizational adjoining matter are far less likely to engage in economic opportunism and far more likely to value social (eg reputational) capital.

The book's discussion of the interplay between opportunism and restraint is fulnessed by attention to the different institutional uncompounded bodys that operate in these financial markets, be they cognitive, normative, or regulative (see Scott 1995) While institutional economists who analyze market constraints chiefly often deal with regulatory uncompounded bodys - e.g., explicit incentive forms and sanctions - Abolafia addresses a broader put of normative and cognitive issues. The ostensible hyperrationality of constraint traders, for instance, relies onward a set of cognitive biases to edit continuous information follows from electronic, print, and interpersonal sources (pp 23-24) As boundedly rational agents, the traders must learn what subset of indicators and interpretations are socially valued from the perspective of their firm or Wall road itself. Even in the absence of regulatory constraints, cultural lordships limit the opportunities that traders will attend to. Abolafia's treatment of like cognitive factors is insightful however abbreviated. Given the recent ruffle of interest in culture and cognition in the two the general organizations literature and more specific treatments of financial markets (eg Zuckerman, 1999) readers may lament the lack of detailed attention to to what degree participants construct industry and market categories and evaluations. This opportunity to be connected market processes with the literature upon organizational forms, legitimacy, and performance is largely missed in Making Markets.

The normative dimension of market institutions receives more extensive treatment than the cognitive. In the words immediately preceding [i]or[/i] following of commodity futures trading, Abolafia finds that normative controls of business conduct tend to be invoked in succession a far more frequent basis than the external regulatory constraints favored according to economic or legal scholars. This emphasis onward normative self-regulation is hardly surprising, given the definitional conundrum pos by the agency of so-called market tampering, a conundrum that remains unresolv despite the Commodities Exchange Act and the Commodity to comes Trading Commission regulations. At best, the application of regulatory constraints in the to comes market context is situation-specific; at worst, it is simply random. Without saying in such a manner explicitly, Abolafia's nuanced analysis broadens the vent of traditional institutional perspectives forward financial markets to address normative proper spheres that undergird them.

The book's catholic approach also widens to matters of qualitative research design. Early chapters intrust with an agency the lens of comparative statics, addressing differences between the uniting markets of the late '80 and the what is yet to bes markets of the late '70 and early '80 These ethnographic analyses are add toed with historical information on market evolution. Turning to the novel York Stock Exchange (NYSE), the historical dimension of markets takes center stage, as Abolafia traces the legacy of rule for NYSE specialists and this occupation's proverbial fall from grace. The balance between comparative/ethnographic and historical/archival research emphasizes the diverse potencys of qualitative analysis.