Search

The purpose of this review is to assess the adequacy of various economic and sociological explanations in accounting for certain key features of change in large-scale corporations, including vertical integration, product related and unrelated diversification, and the implementation of the multidivisional form. We first review the various economic theories that purport to explain these phenomena, including the structure-conduct-performance perspective, the literature on managerial discretion, transaction cost analysis, contingency theory, and the evolutionary theory of economic change. All of these literatures have efficiency mechanisms that drive their explanations although they work in different ways. We then consider sociological approaches including the literatures in organizational theory on institutionalization and power. Our review of the empirical work provides little support for the economic view of vertical integration and unrelated product diversification, and only modest support for the economic view of product-related diversification and the multidivisional form. The sociological views aid in understanding all of these phenomena to some extent. We conclude by suggesting that the concept of organizational fields may be useful in understanding these structural changes.

The financial crisis of 2007 to 2009 was marked by widespread fraud in the mortgage securitization industry. Most of the largest mortgage originators and mortgage-backed securities issuers and underwriters have been implicated in regulatory settlements, and many have paid multibillion-dollar penalties. This article seeks to explain why this behavior became so pervasive. We evaluate predominant theories of white-collar crime, finding that theories emphasizing deregulation or technical opacity identify only necessary, not sufficient, conditions. Our argument focuses instead on changes in competitive conditions and firms’ positions within and across markets. As the supply of mortgages began to decline around 2003, mortgage originators lowered credit standards and engaged in predatory lending to shore up profits. In turn, vertically integrated mortgage-backed securities issuers and underwriters committed securities fraud to conceal this malfeasance and enhance the value of other financial products. Our results challenge several existing accounts of how widespread the fraud should have been and, given the systemic crimes that occurred, which financial institutions were the most likely to commit fraud. We consider the implications of our results for regulations that were based on some of these models. We also discuss the overlooked importance of illegal behavior for the sociology of markets. [ABSTRACT FROM AUTHOR]

The European Union's (EU) political and economic integration project has grown dramatically since its inception in 1952. While the ultimate goal of the EU is unclear, one of its aspirations has been to attempt to create European citizens. The idea is that over time, citizens would look towards Europe as their main national identity. While the political and economic integration projects are quite far along, the national identity project has lagged far behind. The number of people who have primarily a European identity is quite small and has not increased much in the past 20 years. There is a far larger number of citizens for whom their national identity is paramount, but a European identity also exists. Since 2005, this group has grown smaller and the number of citizens with only a national identity has grown larger. This article argues that the EU integration project has pushed citizens to value their national identities more and to look to their national governments to protect them. We examine the evidence for this in the context of the 2007–9 financial crisis. We show that in countries most seriously hit by the crisis, national identities have increased dramatically and citizens with some European identity have decreased. [ABSTRACT FROM AUTHOR]

The 2007-2009 financial crisis initially appeared to have destroyed a huge amount of wealth in the United States. Housing prices dropped about 21% across the country and as much as 50% in some places, and the stock market dropped by nearly 50% as well. This chapter examines how the financial crisis differentially affected households at different parts of the income and wealth distributions. Our results show that all households lost about the same percentage of their wealth in that period. But because households in the top 10% of the wealth distribution owned many different kinds of assets, their wealth soon recovered. The bottom 80% of the wealth distribution had more of their wealth tied up in housing. We show that financial distress, indexed by foreclosures, being behind in mortgage payments, and changes in house prices were particularly concentrated in households in the bottom 80% of the wealth distribution. These households lost a large part of their wealth and have not yet recovered. Households that were most deeply affected were those who entered the housing market late and took out subprime loans. African American and Hispanic households were particularly susceptible as they bought houses late in the price bubble often with subprime loans. [ABSTRACT FROM AUTHOR]

My goal here is twofold. First, I want to introduce the theory of strategic action fields to the law audience. The main idea in field theory in sociology is that most social action occurs in social arenas where actors know one another and take one another into account in their action. Scholars use the field construct to make sense of how and why social orders emerge, reproduce, and transform. Underlying this formulation is the idea that a field is an ongoing game where actors have to understand what others are doing in order to frame their actions. Second, I want to argue that there is a great deal of theoretical leverage to be gained by considering law as a field. To make all of this more concrete, I use field theory to offer a stylized account of the rise of the "shareholder value" movement of the 1980s and the use of agency theory as the dominant theory of corporate governance to justify the shareholder value revolt. I end by considering whether or not field theory has normative implications useful for the law. [ABSTRACT FROM AUTHOR]