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Due to non-linear transaction costs, the financial performance of a trading strategy decreaseswith portfolio size. Using a dynamic trading model a la Garleanu and Pedersen (2013), wederive closed-form formulas for the performance-to-scale frontier reached by competitive tradersendowed with a signal predicting stock returns. The decay with scale of the realized Sharperatio is slower for strategies that (1) trade more liquid stocks (2) are based on signals that donot fade away quickly and (3) have strong frictionless performance. We apply the framework tofour well-known strategies. The capacity of strategies has increased in the 2000s compared tothe 1990s due to increased liquidity. Because low volatility and past accounting profitability arepersistent characteristics, strategies based on them are highly scalable, including in the mid-caprange. When traders underestimate the number of competitors trading a similar signal, theirperformance is strongly negatively impacted.

The purpose of this article is to explore the role of instruments in the transformation of institutional logics and their associated practices at the micro level. Based on an ethnographic study, this article compares two working groups — one responsible for equity and the other for fixed-income investments — in an asset management company attempting to integrate new demands for socially responsible investment (SRI). These two working groups both sought to change their investment processes through the introduction of Electronic copy available at: http://ssrn.com/abstract=2434177 Electronic copy available at: http://ssrn.com/abstract=2434177 2 new calculative devices. The equity group was perceived to be more successful than the fixed-income group in introducing SRI because of its greater ability to fabricate calculative devices capable of mediating between financial returns and social responsibility. Elaborating on these findings, the article argues that instruments can effect institutional change when actors come to believe that available instruments are sufficiently flexible and incomplete to act as “mediating instruments” between practice and institutional change.