where do markets come from production markets have two sides producers are a fully connected clique transacting with buyers as a separate but aggregated clique each producer is a distinctive firm with a distinctive product each side continually monitors reactions of the other through the medium of a joint social construction the schedule of terms of trade each producer is guided in choice of volume by the tangible outcomes of other producers not by speculation on hypothetical reactions of buyers to its actions each producer acts purely on self interest based on observed actions of all others summarized through a feedback process the summary is the terms of trade schedule which reduces to constant price only in limiting cases the market emerges as a structure of roles with a differentiated niche for each firm explicit formulae both for firms and for market aggregates are obtained by comparative statics methods for one family of assumptions about cost structures and about buyers evaluations of differentiated products not just any set of firms can sustain terms of trade with any set of buyers there prove to be three main kinds of markets and three sorts of market failure within a parameter space that is specified in detail one sort of market paradox has a madison avenue flavor another is more conventional grind and a third crowded is a new form not included in any existing theory of markets current american industrial markets are drawn on for 20 illustrations of which three are presented in some detail inequality in firms market shares measured by gini coefficients is discussed

a tale of two regimes theory and empirical evidence for a markov modulated jump diffusion model of equity returns and derivative pricing implications abstract we provide closed form solutions for a continuous time markov modulated jump diffusion model in a general equilibrium framework for options prices under a variety of jump diffusion specifications we further demonstrate that the two state model provides the leptokurtic return features volatility smile and volatility clustering observed empirically for the dow jones industrial average djia and its component stocks using 10 years of stock return data we confirm the existence of jump intensity switching and clustering illustrate transition probabilities and verify superior empirical fit over competing poisson style models

the social structure of a national securities market in this article a national securities market the stock options market is characterized as a social structure represented by the networks of actors who traded options on the floor of a major securities exchange trading among actors exhibited distinct social structural patterns that dramatically affected the direction and magnitude of option price volatility the argument that this market is socially structured is constructed in four parts behavioral assumptions about the nature of economic actors models of micronetworks models of macronetworks and price consequences in the ideal typical model of the market actors are assumed to be hyperrational and never to act opportunistically with these behavioral assumptions the micronetworks of actors should be expansive a condition which would result in undifferentiated and homogeneous macronetworks such macronetworks would tend to reduce the volatility of option prices but in the empirical market studied here actors are subject to bounded rationality a

mass privatization state capacity and economic growth in post communist countries why did the transition from socialism to capitalism result in improved growth in some countries and significant economic decline in others scholars have advanced three main arguments 1 successful countries rapidly implemented neoliberal policies 2 failures were not due to poli cies but to poor institutional environments and 3 policies were counterproductive because they damaged the state we present a state centered theory and empirically demonstrate for the first time one of several possible mechanisms linking neoliberal policies to poor economic performance mass privatization programs where implemented created a massive fiscal shock for post communist governments thereby undermining the development of private sector gover nance institutions and severely exacerbating the transformational recession we performed cross national panel regressions for a sample of 25 post communist countries between 1990 and 2000 and found that mass privatization programs negatively affected economic growth state capacity and property rights protection we further tested these findings with firm level data from a rep resentative survey of managers in 3 550 companies operating in 24 post communist countries within countries that implemented mass privatized programs newly privatized firms were sub stantially less likely to engage in industrial restructuring but considerably more likely to use bar ter and accumulate tax arrears than their state owned counterparts

global microstructures the virtual societies of financial markets using participant observation data interviews and trading transcripts drawn from interbank currency trading in global investment banks this article examines regular patterns of integration that characterize the global social system embedded in economic transactions to interpret these patterns which are global in scope but microsocial in character this article uses the term global microstructures features of the interaction order loosely defined have become constitutive of and implanted in processes that have global breadth this study draws on schutz in the development of the concept of temporal coordination as the basis for the level of intersubjectivity discerned in global markets this article contributes to economic sociology through the analysis of cambist i e trading markets which are distinguished from producer markets and by positing a form of market coordination that supplements relational or network forms of coordination

tools of the trade the socio technology of arbitrage in a wall street trading room to analyze the organization of trading in the era of quantitative finance we conduct an ethnography of arbitrage the trading strategy that best exemplifies finance in the wake of the quantitative revolution in contrast to value and momentum investing we argue arbitrage involves an art of association the construction of comparability across different assets in place of essential or relational characteristics the peculiar valuation that takes place in arbitrage is based on an operation that makes something the measure of something else associating securities to each other the process of recognizing opportunities and the practices of making novel associations are shaped by the specific socio spatial and socio technical configurations of the trading room calculation is distributed across persons and instruments as the trading room organizes interaction among diverse principles of valuation

the spread of the multidivisional form among large firms 1919 1979 the multidivisional form is the favored form of organization for the large firms that dominate the american economy this study takes up the causes of the dissemination of that form among large firms from 1919 to 1979 five theories are initially proposed as possible explanations for the changes observed and these theories are operationalized and tested the model that seems most consistent with the data emphasizes the ability of key actors to alter structure under three circumstances when the firm has a product related or unrelated strategy which is consistent with chandler s 1962 theorizing when the corporate presidents have a background in sales or finance and when other firms in the industry alter their structures the implications of these results for theories of organizational change are discussed with special reference to the importance of conceiving how actors operate with varying rationalities in this process

emergent properties of a new financial market american venture capital syndication 1960 2005 the recorded transactions of venture capital investments permit a direct examination of the braudel hypothesis that regional markets evolve dynamically and interdependently in reference to a global system this hypothesis contradicts the popular belief that regional financial development is anchored in dense clusters using methods of complex graphs we analyze 159 561 transactions over nearly 45 years to demonstrate the rapid emergence of a national network of syndications a giant component emerges early in the history of the industry which subsumes the regional and sectoral subgraphs the results confirm the braudel hypothesis over the role of regional clusters rejects preferential attachment in favor of repeated ties among trusted partners and emphasizes the importance of dynamics and complex weighted graphs for the analysis of social and economic behavior

the transition according to cambridge mass this paper reviews the nber s the transition in eastern europe this book s 18 essays examine privatization stabilization fiscal policies the nascent private sector bankruptcy foreign trade and investment etc individual country performance occupies six studies these essays which are of high quality provide a cross section of the literature on transition however the book s stronger conclusions are not supported by strong evidence two conclusions unemphasized by contributors emerge expectations which reflect the theories used to design standard reforms are often unfulfilled during reforms a plausible explanation for the misplaced expectations is the ahistorical approach of those theories

exploring the interaction between stock price index and exchange rates an asymmetric threshold approach this article examines the impact of stock market news on the foreign exchange markets of usa canada and uk employing an innovative extension of the asymmetric threshold model of apergis and miller 2006 under this framework we can disentangle the reaction of foreign exchange market to bad or good news and small or large news of stock returns our comprehensive daily data set spans the period from january 1990 to june 2014 using a cointegration and error correction model we document the existence of a causal relationship between stock market and foreign exchange markets most interestingly our results derived from the asymmetric threshold model confirm that the relationship between stock and foreign exchange markets is sensitive to short term good or bad news and short term small or large news our findings entail significant implications for policymakers governments risk managers and international investors

the soviet transition from socialism to capitalism worker control and economic bargaining in the wood industry analyses oftlze transition from state socialisnz to capitalism pically focus on political impedimerlrs and underesritnate tlle economic obsracles to economic rransformatior1 based or1 a c ase srudy c f the soviet o o d indusrr y we argue tlzur there hill he no economic tr ansition so long as enterprises rerain two hisroric features nanzely anarchy in pr oduction and barqainit g in exrernal r elarions far jtom consrituting a re olution tlze witllerirlg away of the party srate has esaggerared rlle parhologies of rhe old econotnic order barrer has hecome nzo1 e inzpor tant conglonzerates ha1 e strengrhened their monopoly and wrkers 1la1 e greater conrr ol of tlze shop floor if there is a nzolbemenr to sar d a nzar ket economy at all it is to sar da jb1 m ofmerchant capitalisnz rlzut deepens economic under de elol nzet t and lz arts tlze rise of nzodern bourgeois capiralism

consumption asymmetry and the stock market empirical evidence abstract this paper examines whether u s stock market value affects consumption asymmetrically using cointegration and error correction methodology the results confirm that stock market value asymmetrically affects real per capita consumption negative news affects consumption more than positive news

probing theoretically into central and eastern europe transactions resources and institutions since the 1990s central and eastern europe cee has provided unique societal quasi experiments which represent opportunities to test the applicability of existing theories in international business and management studies and to develop new ones specifically three lines of theorising have been advanced 1 organisational economics theories 2 resource based theories and 3 institutional theories for each of these theories we discuss how they contribute to the understanding of key issues such as entry strategies of foreign investors restructuring strategies of local incumbents and entry and growth strategies of entrepreneurs on this basis we assess how cee research has influenced the overall trajectories of theory development cee research has in particular highlighted the importance of contextual influences such as institutions thus scholars have aimed at incorporating institutions into theories such as organisational economics theories and resource based theories and advancing an institution based view of business strategy as a complementary perspective we outline how future research in cee and other emerging economies may advance this research agenda further

a theory of market transition from redistribution to markets in state socialism state socialist redistributive economies are characterized by the allocation and distribution of goods through central planning this paper develops a theory of market transition which argues that in reforming socialist economies the transition from redistributive to market coordination shifts sources of power and privilege to favor direct producers relative to redistributors the shit improves incentives for direct producers stimulates the growth of private markets and provides to entrepreneurs an alternative path for socioeconomic mobility a set of hypotheses test the market transition theory with householdand village level data

too close for comfort geographic propinquity to political power and stock returns abstract we show that firm headquarters geographic proximity to political power centers state capitals is associated with higher abnormal returns consistent with the notion that this effect is rooted in social network links we find it is more pronounced in communities with high levels of sociability and political values homophily and that it dissipates when firms move their headquarters to another state finally in line with the view that investors perceive such networks to be associated with political risk we find that this effect is particularly strong when there are substantial levels of corruption dependency on government spending and politicians turnover

market networks and corporate behavior data on market relations between a large population of corporations and investment banks are used to study the organization market interforce the pattern of direct market ties between a firm and its banks forms of interfaces range from a long term exclusive tie the relationship interface to many short lived episodic ties the transaction interface with hybrid forms between the two poles contrary to widespread belief the article finds that strong relationships still exist transactions interfaces are rare most firms use hybrid interfaces a firm s interface is conceptualized as the intentional result of its efforts to reduce dependence and exploit power advantages observed interfaces are shown to be related systematically to various power dependence concepts including resource intensity number of transactions and dollar amounts raised criticality the availability of resource alternatives power asymmetry between a firm and its main bank organization size standardization of exchange and

conditional correlated jump dynamics in foreign exchange abstract this paper studies conditional correlated jump dynamics in foreign exchange returns using a new bivariate jump model with autoregressive jump intensities using daily data of german mark against british pound and japanese yen against the us dollar we find currency return correlations are driven not only by the normal disturbances but also by the characteristics of simultaneous jumps

the stock market and exchange rate dynamics abstract this paper articulates a model of the open economy in which as in tobin 1978 the price of shares in the stock market subtitutes for the real interest rate in the determination of aggregate demand the stock market reduces the impact of monetary policy on the real exchange rate indeed if the link between stock prices and aggregate demand is important enough the impact of monetary policy on the real exchange rate can be reversed in contrast with standard dynamic mundell flemming models anticipated fiscal policy can be expansionary rather than contradictionary as in for example burgstaller 1983 blanchard 1984 and branson et al 1985

the stability of american markets much of the evidence of coordination between corporations and their markets comes from cross sectional conducted within portions of the american economy during the past two decades we know especially for manufacturing during the late 1960s that certain structural qualities of markets predict profits and the organization of large firms but this evidence is open to an uncomfortable empirical question to what extent did the social structural qualities determining resource dependence in american markets change during the 1960s and 1970s so as to limit the generalizability of cross sectional evidence the analysis here shows that markets were dramatically stable in he social structure of production relations known to predict the structure of large firms relying principally on department of commerce data the article traces the american economy through the 1960s and 1970s in terms of 77 broadly defined markets describing the stability of market boundaries and patterns of transactions with suppliers and c

on the social structure of markets economic theorists have seldom discussed the social structures behind markets even though market trading relies heavily on seller buyer roles and personal relations among traders this paper considers the structural basis of markets and proposes a layered approach which accommodates a wide range of competitive and relational trade within a definition of markets that distinguishes them from non market exchange giving due regard to social structures lays bare the institutional character of markets and provides a rationale for case studies of how particular markets function

stitched on the edge rule evasion embedded regulators and the evolution of markets while the role of laws and regulations in structuring markets is well established it is less understood how rule evasion affects the evolution of markets or how the interaction between regulators and the regulated about the meaning of compliance influences this effect the authors study this issue by looking at the development of the asset backed commercial paper abcp market in france germany and the netherlands from 1999 to 2009 in all three countries this market involved financial innovations designed to evade regulations the authors identify diverging trends in the abcp market that are a result of whether and how regulators were embedded in the different interpretive communities that defined regulatory compliance such embeddedness being dependent on their discretionary and sanctioning power as well as their expertise focusing on these regulatory networks that embed institutions in markets they propose a synthesis of relational and institutional accounts of the embeddedness of markets

social capital structural holes and the formation of an industry network the formation of a network is determined by the opposition of two forces the first is the reproduction of network structure as a general social resource for network members the second is the alteration of network structure by entrepreneurs for their own benefit the idea of reproduction is a conventional one in organizational sociology but has taken on increased importance due to the work of bourdieu and coleman in contrast burt stresses the entrepreneurship of individual agents in exploiting structural holes that lie between constrained positions though complementary the theories of social capital and structural holes have fundamentally different implications for network formation this paper investigates these theories by examining empirically the formation of the interorganizational network among biotechnology firms we propose that network structure determines the frequency with which a new biotechnology firm or startup establishes new relationships network structure indicates both where soci

cooperation in microcredit borrowing groups identity sanctions and reciprocity in the production of collective goods cooperation to produce collective goods is widespread in society and yet so is its failure theorists have identified competing mechanisms for facilitating group cooperation including group identity sanctions and reciprocity here i use empirical data to explore how these mechanisms influence cooperation in the natural laboratory of microcredit borrowing groups microcredit makes loans to high risk borrowers through borrowing groups in which individuals access to credit is dependent on the behavior of other members of the group thereby creating a social dilemma for members and an opportunity to observe cooperation in real world groups by analyzing both collective goods production loans and compliance repayment i find that the competing mechanisms have differential effects group identity sanctions and reciprocity are all associated with more borrowing in the group only reciprocity however limits loan delinquency and is associated with group longevity suggesting both that collective goods p

persistent parochialism trust and exclusion in ethnic networks decentralized groups such as close knit residential neighborhoods and ethnically linked businesses often achieve high levels of cooperation while engaging in exclusionary practices that we call parochialism we investigate the contribution of within group cultural affinity to the ability of parochial groups to cooperate in social dilemmas we analyze parochial networks in which the losses incurred by not trading with outsiders are offset by an enhanced ability to enforce informal contracts by fostering trust among insiders we show that there is a range of degrees of parochialism for which parochial networks can coexist with an anonymous market offering unrestricted trading opportunities

insider ownership human resource strategies and performance in a transition economy researchers and potential investors in transition economies need to understand the human resource management hrm strategies of target firms since human resources are arguably their most valuable assets understanding is difficult however because hrm strategies help to determine firms performance but are in turn influenced by corporate governance particularly insider ownership this paper employs a structural equation modeling methodology to examine the relations between governance hrm strategies and performance in the context of a novel dataset of ukrainian industrial firms it is found that insider ownership is positively associated with high commitment hrm strategies and negatively with low commitment cost cutting hrm strategies cost cutting hrm strategies are in turn associated with weaker firm performance these outcomes correspond broadly with theoretical expectations

paying the professor sources of salary variation in academic labor markets using a set of 58 academic fields as distinct labor markets we examined the extent of wage variation within markets the degree to which wages vary is an indicator of market efficiency and of whether a market wage exists holding constant differences in human capital we found that the degree of wage variation in an academic labor market is negatively related to mobility within that market and positively related to the oversupply of labor we also found that as wage variation increases male female wage differentials also increase

the economics of organization the transaction cost approach the transaction cost approach to the study of economic organization regards the transaction as the basic unit of analysis and holds that an understanding of transaction cost economizing is central to the study of organizations applications of this approach require that transactions be dimensionalized and that alternative governance structures be described economizing is accomplished by assigning transactions to governance structures in a discriminating way the approach applies both to the determination of efficient boundaries as between firms and markets and to the organization of internal transactions including the design of employment relations the approach is compared and contrasted with selected parts of the organization theory literature

the global configuration of a speculative trading operation an empirical study of foreign exchange trading this paper proposes a theory of firm boundaries based on fore knowledge development and exploitation in speculative or informed trading foreign exchange trading provides this study s empirical context from research on information economics we suggest optimal speculative trading operations are multiunit and globally dispersed alternatively transaction cost economics suggests atomistic actors prevail in the market for fungible commodities like currencies we also develop competing hypotheses about information technology s effects on foreign exchange trading operations speculation arguments predict that the global scope of trading operations will expand after the introduction of generic information technologies transaction cost economics proposes that when atomistic actors do not prevail trading operations will contract after this introduction we test competing predictions with models of the expansion contraction and net change in a firm s global dispersion we estimate these models with data from the population of banks worldwide engaged in interbank foreign exchange currency fx trading from 1974 to 1993 our results uncover two types of firms those that approach the atomistic actor of transaction cost economics and those that resemble the globally dispersed multiunit configuration from our speculation discussion these results encourage reflection on how the theory of the firm differs when firms trade to produce versus speculate

on the predictive power of arji volatility forecasts for bitcoin motivated by the recent literature on cryptocurrency volatility dynamics this paper adopts the arji garch egarch and cgarch models to explore their capabilities to make out of sample volatility

conditional jump dynamics in stock market returns this article develops a new conditional jump model to study jump dynamics in stock market returns we propose a simple filter to infer ex post the distribution of jumps this permits construction of the shock affecting the time t conditional jump intensity and is the main input into an autoregressive conditional jump intensity model the model allows the conditional jump intensity to be time varying and follows an approximate autoregressive moving average arma form the time series characteristics of 72 years of daily stock returns are analyzed using the jump model coupled with a generalized autoregressive conditional heteroscedasticity garch specification of volatility we find significant time variation in the conditional jump intensity and evidence of time variation in the jump size distribution the conditional jump dynamics contribute to good in sample and out of sample fits to stock market volatility and capture the rally often observed in equity markets following a significant downturn

network location and learning the influence of network resources and firm capabilities on alliance formation this paper presents a dynamic firm level study of the role of network resources in determining alliance formation such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners such resources are an important catalyst for new alliances especially because alliances entail considerable hazards this study also assesses the importance of firms capabilities with alliance formation and material resources as determinants of their alliance decisions i test this dynamic framework and its hypotheses about the role of time varying network resources and firm capabilities with comprehensive longitudinal multi industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989 the results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms decisions to enter into new alliances this study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior copyright 1999 john wiley sons ltd

the rise and fall of small worlds exploring the dynamics of social structure this paper explores the interplay between social structure and economic action by examining some of the evolutionary dynamics of an emergent network that coalesces into a small world system the study highlights the small world system s evolutionary dynamics at both the macro level of the network and the micro level of an individual actor this dual analytical lens helps establish that in competitive and information intensive settings a small world system could be a highly dynamic structure that follows an inverted u shaped evolutionary pattern wherein an increase in the small worldliness of the system is followed by its later decline as a result of three factors 1 the recursive relationship between the evolving social structure and individual actors formation of bridging ties which eventually homogenizes the information space and decreases actors propensity to form bridging ties creating a globally separated network 2 self containment of the small world network or increasing homogenization of the social system which makes the small world less accepting of and less attractive to new actors thereby limiting formation of bridging ties to outside clusters and 3 fragmentation of the small world network or the small world system s inability to retain current clusters the study uses data on interorganizational tie formation in the global computer industry in the period from 1996 to 2005 to test the hypothesized relationships

on jump processes in the foreign exchange and stock markets exchange rates exhibit systematic discontinuities even after allowingfor conditional heteroskedasticity in the diffusion process the results are much more significant in theforeign exchange market than in the stock market which suggests differences in the structure of these markets finally this jump component is shown to explain some of the empirically observed mispricings in the currency options market the objective of this article is to analyze and compare the empirical distribution of returns in the stock market and in the foreign exchange market there are a number of reasons why a better understanding of the stochastic processes driving prices in these markets would be useful many financial models rely heavily on the assumption of a particular stochastic process while relatively little attention is paid to the empirical fit of the postulated distribution as a result models like option pricing models are applied indiscriminately to various markets such as the stock market and the foreign exchange market when the underlying processes may be fundamentally different the foreign exchange market for instance is characterized by active exchange rate man

capital market development and mass privatization are logical contradictions lessons from russia and the czech republic the introduction of mass privatization policies in russia and the czech republic depended on the creation of impersonal capital markets to finance the needs of privatized companies and to provide a secondary market for the trading of securities yet mass privatization created the contradictory conditions of generating millions of poorly informed shareholders with no efficient markets for the sale of the shares the absence of financial markets created systematic pressures to move assets by illegal or non transparent means to users who value them more privatization created the incentives to destroy the financial markets critical to its success a comparative case analysis of post privatization market formation in both these countries demonstrates that the functional necessity for these markets does not engender their own creation in the absence of institutional mechanisms of state regulation and trust markets become arenas for political contests and economic manipulation the irony of these policies is that a principal lesson has been that market reforms cannot create viable markets only institutional formation can copyright 2002 oxford university press

the exchange rate exposure of u s multinationals this article examines the exposure of u s multinationals to foreign currency risk evidence is presented that the relationship between stock returns and exchange rates differs systematically across multinationals given these results the study focuses on the determinants of exchange rate exposure the comovements between stock returns and the value of the dollar is found to be positively related to the percentage of foreign operations of u s multinationals copyright 1990 by the university of chicago

limits to alternative forms of capitalization the case of anatolian holding companies summary since the late 1960s alternative forms of capitalization have emerged in the absence of an effective capital markets regime in turkey we can see these alternative forms in the failed attempts to create anatolian holding companies through the direct investment of small savings this article shows how anatolian holding companies became victims of poor institutional and regulatory regimes and how the lack of institutions to promote impersonal trust in the economy in turn permitted widespread abuses we identify populist politics lax oversight and social norms that incorporated gambling as three interlinked reasons which hindered the genesis and development of viable capital market reform and regulatory institutions in turkey 2003 elsevier ltd all rights reserved

effects of social capital and power on surviving transformational change the case of initial public offerings we examined how social capital and the power of venture capitalists and founderceos affect ipo firm survival using data from 218 u s initial public offerings conducted in 1992 we found that average management team tenure and an ipo deal s network embeddedness decreased the likelihood of failure during a firm s first five years as a public entity founder ceo presence at the time of an ipo interacted with ceo ownership to decrease the likelihood of failure and ceo ownership and venture capitalist ownership concentration also decreased that likelihood evolutionary perspectives on organizations are often accompanied by the presumption that organizations face an increased risk of failure early in their lives owing to liabilities of newness aldrich 1999 stinchcombe 1965 as organizational goals and patterns of activity become routinized over time increased reliability in performance and accountability for actions taken enhance a firm s survival chances hannan freeman 1984 this process however also generates strong inertial pressures that not only discourage organizational change but also because of the potential for disruption to existing internal and external routines make change hazardous research findings suggest that even in older better established firms significant transformational events during their life cycles can effectively reset the clock and reintroduce risks associated with the liability of newness as firms struggle to adapt strategies internal operational and administrative processes and or external ties and relationships amburgey kelly barnett 1993 thus transformational change in organizational operations decreases efficiency and increases failure rates at least in the short term as resources and attention are diverted from normal routinized operating functions to processes involving adaptation and reorientation haveman 1992

a characterization of oil price behavior evidence from jump models abstract this paper is concerned with the statistical behavior of oil prices in two ways it firstly applies a combined jump garch model in order to characterize the behavior of daily weekly as well as monthly oil prices secondly it relates its empirical results to implications of hotelling type resource extraction models the empirical analysis shows that oil prices are characterized by garch as well as conditional jump behavior and that a considerable portion of the total variance is triggered by sudden extreme price movements this finding implies that first oil price signals are not reliable and as a consequence both finding optimal extraction paths and decisions regarding the transmission to alternative technologies are likely to be compromised second this behavior is in stark contrast to the notion of deterministic trends in the price of oil

knowledge and competitive advantage the coevolution of firms technology and national institutions this issue of jibs offers reviews of two books that analyse the dynamic interaction between the business environments and business strategies in very different ways the institutional underpinnings for business strategies are a major research topic for comparative management aiming to explain why in different contexts firms pursue different strategies and with different implications for performance j peter murman in knowledge and competitive advantage takes a historical perspective focusing on the co evolutionary processes between national innovation systems business strategies and performance this books thus adds to the industry level longitudinal research reviewed in jibs no 4 2003 tom murtha et al s managing new industry creation and david mckendrick et al s from silicon valley to singapore

the approach of institutional economics this paper assesses the old institutional economics it emphasizes the importance of key old institutionalist themes concerning the necessity of habits and rules and the role of institutions a problem in the alternative theoretical program of the new institutionalism is the untenability of its assumption of an original institution free market or state of nature even optimizing behavior requires the prior existence of habits and rules although it still lacks a complete and systematic theory the evolutionary approach of the old institutionalists tackles the problem of the interactive relationship of actor to structure without analytical reduction to one or the other

constructing a market performing theory the historical sociology of a financial derivatives exchange this analysis of the history of the chicago board options exchange explores the performativity of economics a theme in economic sociology recently developed by callon economics was crucial to the creation of financial derivatives exchanges it helped remedy the drastic loss of legitimacy suffered by derivatives in the first half of the 20th century option pricing theory a crown jewel of neoclassical economics succeeded empirically not because it discovered preexisting price patterns but because markets changed in ways that made its assumptions more accurate and because the theory was used in arbitrage the performativity of economics however has limits and an emphasis on it needs to be combined with classic themes in economic sociology such as granovetterian embedding and the way in which exchanges can be cultures and moral communities in which collective action problems can be solved

exchange rates change asset denominated currency difference and stock price fluctuation this paper examines differences in the connectedness between exchange rates and stock prices for companies with different asset currencies on the hong kong stock market and it seeks to explain tho

embeddedness and price formation in the corporate law market the determination of prices is a key function of markets yet sociologists are just beginning to study it most theorists view prices as a consequence of economic processes by contrast we consider how social structure shapes prices building on embeddedness arguments and original fieldwork at large law firms we propose that a firm s embedded relationships influence prices by prompting private information flows and informal governance arrangements that add unique value to goods and services we test our arguments with a separate longitudinal dataset on the pricing of legal services by law firms that represent corporate america we find that embeddedness can significantly increase and decrease prices net of standard variables and in markets for both complex and routine legal services moreover results show that three forms of embeddedness embedded ties board memberships and status affect prices in different directions and have different magnitudes of effects that depend on the complexity of the legal

short term projects and emergent careers evidence from hollywood the hollywood film industry is considered as a system of recurrent ties among the various major participants who usually work under short term contracts for single films this form of project based organization in seen as a response to uncertainty and risk in the film industry the paper examines the ways in which independent contractors producers directors cinematographers and actors organize and operate to reduce uncertainty and risk and to increase profits the analysis of data from 2 430 films made in the period 1965 80 establishes patterns of recurrent ties among participants who are at comparable levels of cumulative productivity with respect to earnings oscars oscar nominations and number of previous films the paper also considers the degree to which film earnings are influenced by the past productivity of the major participants

coase versus the coasians who should enforce laws or contracts judges or regulators many coasians though not coase himself advocate judicial enforcement we show that the incentives facing judges and regulators crucially shape this choice we then compare the regulation of e nancial markets in poland and the czech republic in the 1990s in poland strict enforcement of the securities law by a highly motivated regulator was associated with a rapidly developing stock market in the czech republic hands off regulation was associated with a moribund stock market i introduction at the heart of economists traditional skepticism about government regulation is the coase theorem coase 1960 the theorem states that when property rights are well dee ned and transaction costs are zero market participants will organize their transactions in ways that achieve efe cient outcomes when they can do so it is not necessary for the government to engage in corrective actions through taxes regulations or even legal rules financial markets are often used to demonstrate the coase theorem s case against regulation advocates of the regulation of these markets point to a variety of potential failures such as the ability of security issuers to expropriate both potential and existing investors through misrepresentation or proe t diversion investors fear of such expropriation prevents e rms from raising external funds and keeps efe cient projects from being undertaken not so reply the coasians they point out that most securities transactions take place between sophisticated adults and that both the buyers and the issuers of securities have available to them a vast range of private arrangements to achieve efe ciency including contracts such as corporate charters certie cation by intermediaries and various forms of bonding such contracts render most laws and regulations unnecessary stigler 1964 easterbrook and fischel 1991