Peer Interaction and Pioneering Organizational Form Adoption: A tale of the first two for-profit stock exchanges

Zeerim Cheung,Rasmus Nykvist,Robin Gustafsson

doi:10.1177/01708406211024570

Zeerim Cheung, Rasmus Nykvist + Show 1 more

Open Access

https://doi.org/10.1177/01708406211024570

Copy DOI

Abstract

Building on a historical case study on the first two stock exchanges to adopt the now globally dominant for-profit organizational form, the Stockholm Stock Exchange in 1993 and the Helsinki Stock Exchange in 1995, we argue that interaction among socially proximate peers contributes to pioneering organizational form adoption within an industry, particularly when such forms are introduced by established organizations. Peer interaction can induce a search for technically efficient organizational forms through the sharing of collective experiences, the establishment of collective assumptions, and a joint search for solutions. Together, these factors contribute to the legitimization of novel organizational forms in the local setting before the adoption of the first instantiation of those forms. We propose a context-sensitive multilevel model of peer-interaction-induced pioneering organizational form adoption that considers shared macro environmental drivers, idiosyncratic local environmental drivers, and peer interaction as central social mediators between the two.

Highlights

Which organizations are more likely to be first, i.e. pioneers, in adopting an organizational form within an industry? Extant research tends to emphasize institutional entrepreneurs (e.g. Greenwood & Suddaby, 2006; Tracey, Phillips, & Jarvis, 2011) or actors from the periphery (e.g. Leblebici, Salancik, Copay, & King, 1991) as pioneers of new ways of organizing
We argue that peer interaction—established interaction practices and processes among geographically and socially proximate peers that are similar in size, have existing ties with each other, and have similar positions in the industry—is a previously unidentified contributor to pioneering organizational form adoption, when new forms are introduced to an industry by established organizations
The main contribution of our study is to expose peer interaction as a previously unidentified factor of renewal and legitimation that contributes to pioneering organizational form adoption, when new-to-the-industry organizational forms are introduced by established organizations

Summary

Introduction

Which organizations are more likely to be first, i.e. pioneers, in adopting an organizational form within an industry? Extant research tends to emphasize institutional entrepreneurs (e.g. Greenwood & Suddaby, 2006; Tracey, Phillips, & Jarvis, 2011) or actors from the periphery (e.g. Leblebici, Salancik, Copay, & King, 1991) as pioneers of new ways of organizing. Which organizations are more likely to be first, i.e. pioneers, in adopting an organizational form within an industry? While there are empirical studies on interaction mechanisms within national institutional settings (e.g. Bridwell-Mitchell, 2016), there have been few empirical studies on interaction mechanisms between organizations located in distinct institutional environments. This is surprising, as interaction among organizations across markets is common, and such interaction can be an important source of institutional change (Lawrence, Hardy, & Phillips, 2002). We study pioneering organizational form adoption within an industry globally. We focus on organizational renewal by established organizations in the highly institutionalized industry of stock exchanges by studying the world’s first two for-profit stock exchanges

Methods

Results

Conclusion