David P McCaffrey and David W Hart.

David P McCaffrey and David W Hart. fresh York: Oxford University Press, 1998211 pp $3500

although there are several variants of institutional theory, a belonging to all element that most variants of this theory share is that organizations must accommodate institutional expectations, which leads to isomorphism or tendency to meet in organizational forms and templates (Greenwood and Hinings, 1996) Wall road Polices Itself is a research of these institutional pressures as they apply to the securities industry. Because of major scandals, the firms in this industry have been expose to increasing legal and compliance crushings McCaffrey and Hart very carefully describe and analyze the impact of these pressures

command regulation, self-regulation, and private litigation and arbitration have grown Although the authors pay ample attention to direction regulation, they maintain that dominion regulation by itself cannot hinder this industry. Self-regulation and arbitration play a major part Taken together, these institutional hurrys are profound, and the authors do a astonishing job of describing them. This work is the most precise and comprehensive discussion of these compressings available in the literature. It is based not solitary on a fresh gathering and analysis of publicly available information on the other hand also on in-depth, confidential interviews with major industry participants. The authors freely cite from these interviews to support their conclusions. Given institutional theory's emphasis forward homogeneity in most industries (Greenwood and Hinings, 1996) the conclusions that McCaffrey and Hart reach are interesting. They find remarkable differences across firms in this industry.

McCaffrey and Hart point out that all the firms have similar legal and compliance conducts in place because of external directions In this sense, they conform to what institutional theorists call coercive isomorphism. Indeed, in firms with more legal and regulatory puzzles these procedures seem to function quite effectively in providing warnings that something is amiss. yet there is substantial autonomy level in this very constrained environment (Marcus, 1988) and a certain number of firms behave very differently.

The authors current data from 1990 to 1996 for 15 major broker-dealers, which include of the like kind widely recognized companies as Merrill Lynch Shearson Lehman, Salomon, Inc., Goldman Sachs, and Morgan Stanley. The data exhibit to that there are substantial differences in the number of legal proceedings in which the firms are involved, the number of employee involved in disciplinary actions, the number of regulatory sanctions the firms face, and the amount of fines and penalties imposed. McCaffrey and Hart argue that these differences scion from the different ways that firms in this industry manage the fundamental tension that they face. onward the one hand, firms in this industry have incentives to push to the limit the authoritys governing their operations. On the other hand, they have incentives to operate closely within the jumps of the law. Each firm manages this tension somewhat differently.

What explains the difference between firms that miss warnings and operate choke to the brink (see Marcus and Nichols, 1999) and firms that pay attention and avoid inordinate fines, sanctions, and embarrassment? McCaffrey and Hart maintain that it is not just the technical and political skills of the legal and compliance personnel This factor is a necessary further not sufficient cause for differences among firms. The greatest in number important reason for firm differences is to what degree strongly top management communicates that complying with the masterys is a critical task (p 174) They repeat an executive as saying, "There's a world of difference between firms where senior management really doesn't want to read their names in the papers, and . . firms where management is more willing to take a risk of a lawsuit. . . There's no question it varies from firm to firm" (p 15) The chief executives in firms with better records "communicate clearly that going athwart the edge is bad for the firm and that those doing in such a manner will suffer for it" (p 174) These findings are similar to those reached by the agency of Weaver, Trevino, and Cochran (1999) in their attempt to explain differences in corporate ethics programs. Factors impinging forward firm behavior from the environment, as it is as government, self-regulation, and media attention, alone go so far in explaining these differences. The single most numerous important factor is top management commitment.

The conclusion united draws from these studies is that the normative embeddedness of an organization within its institutional connected thought [i]or[/i] thoughts does not fully explain its replications Individual organizational autonomy continues to play an important part In similar institutional fields, idiosyncratic interpretations by the agency of top executives of the directions based on moral frames and values play a part They introduce substantial variation. granting institutional theory primarily emphasizes coercive, normative, and mimetic factors coming from the external environment, which force conformity, it always has left about room for interpretive latitude and discretion. The reflection of this latitude and discretion, when it is exercised and with what intent should become an increasingly important topic. on what account do some chief executives present the appearance to care more than others, and wherefore are they more effective in communicating this affect to their employees? The concatenations as well as the motivations for the exercise of this image of latitude need to be better understood.