Institutional interruption: A relational account of the growth and decline of product heterogeneity in the global hedge fund industry

Edward Bishop Smith*, Shelby L. Gai

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

A common belief across several streams of organizational research is that organizations typically conform to consumer-held expectations regarding their behavior. As a result, researchers often attribute instances of organizational nonconformity to shifts in consumer expectations. Acknowledging that many markets are best characterized as brokered markets whereby consumers and producers come together via a third party, this article explores an alternative, relational mechanism that can account for rapid market changes that occur in defiance of consumer expectations. In short, we suggest that consumer expectations may be applied differentially as a function of the way they travel through the market. We refer to this phenomenon as institutional interruption, and define it as the process whereby existing modes of institutional reproduction are temporarily disturbed via alterations to a market's relational structure. Central to the proposed framework is a distinction between two styles of network brokerage: transmission and transformation. Both modes contribute to markets by moving tangible resources, such as goods and capital, from one party to the other. Where they differ is in their capacity to actively transform or block the diffusion of various intangible things-here being consumer expectations-upon which markets are constructed. In an empirical section, we apply the transmission-transformation distinction to help explain growth and decline in product heterogeneity in the global hedge fund industry from 1994 to the present.

Original languageEnglish (US)
Pages (from-to)1039-1066
Number of pages28
JournalIndustrial and Corporate Change
Volume26
Issue number6
DOIs
StatePublished - Dec 1 2017

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Institutional interruption: A relational account of the growth and decline of product heterogeneity in the global hedge fund industry'. Together they form a unique fingerprint.

Cite this