The new book Organizing and Reorganizing Markets brings organization theory to the study of markets.
The difference between markets and organizations is often exaggerated. Organizing exists in addition to other processes and phenomena that form markets: the mutual adaption among sellers and buyers as described in mainstream economics, and the institutions described in institutional economics and economic sociology. Market organization can be analysed with the same type of theories used for analysing organization within formal organizations.
Through the use of many empirical examples, the book demonstrates how this can be done. The authors argue that the way a certain market is organized can be understood as the (intermediate) result of previous organizing processes. Questions discussed include: 'What drives market organizing and reorganizing processes? What makes various organizations intervene as market organizers? And, how are the specific contents of market organization determined?' The answers to these questions help to analyse similarities and differences among organizing processes in formal organizations and those in markets.
Arguments are illustrated by in-depth studies of many types of markets. The book will open up markets as a field of study for scholars of organization.
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Overview of the Book ”Organizing and Reorganizing markets”
In Chapter 2, Göran Ahrne, Patrik Aspers and Nils Brunsson describe the concept of organization and how it applies to markets both within and outside formal organizations. They describe why and how organization matters—how an organized order differs from orders produced by mutual adjustment or institutions. They argue that organization is likely to have a significant effect on the dynamics of markets. Many of the concepts presented in this chapter are used in the analyses throughout the book.
In Chapter 3, ‘Creating a Market Bureaucracy: The Case of a Railway Market’, Daniel Castillo illustrates the complexity of market organization through the organizing of a market for railway traffic in Sweden. It was a process that took almost two decades and involved the creation of a large number of sellers and several side markets. All in all, it resulted in a ‘market bureaucracy’
involving more organization than the former state monopoly. The sharp distinction often made between markets and organizations typically refers to simple ideal types.
In Chapter 4, ‘Primary Healthcare: What Type of Market and What Type of Organization?’, Anders Forssell and Lars Norén show that the distinction may be more difficult to uphold when analysing practical situations. They use established theory from the field of marketing to analyse a case of outsourcing that can be seen as the creation of both a new market and a new organization.
In Chapter 5, ‘Experience-Based Learning andMarket Change’, Mats Jutterström illustrates how the content of market organization may change significantly over time and discusses why such change occurs. He argues that the shifts from relatively little to much organization, eventually adopting more unorthodox forms in relation to the hegemonic ‘perfect’ market ideal, is an effect of levels of experience-based learning. The chapter is based on the study of a market for snow clearance.
When sellers try to launch a product that they define as new, they face the task of creating and organizing a new market. In Chapter 6, ‘When Sellers Create Markets: Dilemmas in Markets for Professional Services’, Nils Brunsson and Anna Tyllström analyse a number of dilemmas and challenges that sellers of professional services face, using markets for public relations and coaching services as illustrations.
Markets are intertwined. If a certain market is organized in a way that is inappropriate for adjacent markets, sellers or buyers in these markets may intervene. In Chapter 7, ‘“The Most Regulated Deregulated Market in the World”?: Sellers Organizing across Markets’, Susanna Alexius describes how the taxi market in large Swedish cities has been organized by sellers in other markets, and how they have been able to enforce strong rules, monitoring, and sanctions directed at sellers of taxi services.
In Chapter 8, ‘Markets as Open Systems: Organizing and Reorganizing a Financial Market’, Mats Jutterström analyses contextual drivers of market reorganization. The chapter highlights three generic drivers of reorganization that made the lives of the organizers both unpredictable and difficult: intrusive side markets, general market ideas diverging from practice, and new ideas of appropriate market characteristics. Moreover, the question of market reform frequency is addressed; the study illustrates how it may be propelled by contextual dynamics and unrealistic ideas still hoped for.
In Chapter 9, ‘Markets, Trust, and the Construction of Macro-Organizations’, Nils Brunsson, Ingrid Gustafsson, and Kristina Tamm Hallström use an empirical case to describe how the problemof trust in markets has led to the creation of a ‘macro-organization’, an extremely complex system of interrelated new markets and new interrelated organizations organizing these markets and each other. The attempts to create trust by organization produced distrust that stimulated further organization. The complexity of the system makes it highly questionable whether it can fulfil its purpose.
There is a long tradition of trying to influence markets via consumers, who have been the targets of education and information campaigns bymany types of organizations. In Chapter 10, ‘Shaping the Consumer: A Century of Consumer Guidance’, Susanna Alexius and Leina Löwenberg illustrate how various goals and methods have been used in various periods—from attempts to reduce ‘unnecessary’ consumption at the end of the 19th century to the publishing of guides about guides: which guides to use when making purchase decisions.
In Chapter 11, ‘When Market Organization Does Not Help: High Ambitions and Challenges in the Market for Eldercare’, Eva Hagbjer and Anna Krohwinkel discuss the limits for market organization. They draw from empirical cases of attempts to organize markets in a way that would make it possible for elderly people to make informed choices about care providers. Although this possibility was seen as a prerequisite for the market to function as planned, it turned out to be very difficult to achieve.
In many markets, sellers want to know as much as possible about buyers, whereas buyers are far less inclined to share that information with sellers—not least for privacy reasons.
In Chapter 12, ‘Dealingwith Asymmetric Information: Organizing and Reorganizing a Market for Child Insurance’, Martin Gustavsson deals with the dilemma of buyer privacy versus seller information, and describes how market organization was used and changed in the processes of conflicting interests.
International government organizations play a key role in the organization of markets in many countries. In Chapter 13, ‘Reform and Rescue: International Organizations and the Organization of Markets’, Matilda Dahl describes how the Baltic states were the object of much intervention by international organizations, both when they moved from socialism to capitalism and when the 2008 financial crisis struck them. International organizations not only offered advice, but also used membership in their organizations as a promise, and the lack of membership as a threat.
In Chapter 14, ‘Organizing Marketplaces: The Constitution of Trade Shows in a Cutting-Edge Industry’, Patrik Aspers and Asaf Darr turn to the problem of potential buyers not knowing that a market exists. The solution they describe is a seller-organized travelling marketplace for computer software in the USA, nicknamed the ‘Travelling Circus’. Outcomes of this organization other than the intended ones surfaced, however, including seller collaboration and industrial espionage.
In Chapter 15, ‘Handling Opposing Market Logics: Public Procurement in Practice’, Staffan Furusten describes the subtle ways in which buyers can avoid complying with market organization, using the case of the public procurement of management consulting services. Buyers and sellers generally favoured a market logic in conflict with the one inherent in the public procurement rules, and various forms of avoidance constituted a common way of dealing with the clash.
In Chapter 16, ‘From a Free to a Pure Market: The History of Organizing the Swedish Pipe and Tube Market’, Kristoffer Strandqvist provides an historical analysis of the changing organization of a market. He describes how the market around 1900 was organized by sellers forming cartels as a way of avoiding the chaos of a ‘free’ market. Over time, representatives of the state looked upon these cartels with more and more suspicion and wanted to intervene with their own ideas about proper market organization. But the sellers and their cartels did not give in easily.
In Chapter 17, ‘Multiplicity, Complexity, and Recurrent Change’, we use the studies presented in this book to characterize the various organizations involved in market organization and report on the elements and amount of organization used. We describe how organization was sometimes supported with information or artefacts. Moreover, the processes of market organization are analysed, highlighting both the causes and effects of organization. We describe how the content of market organization often changed significantly and discuss the reasons.
Finally, in Chapter 18, ‘Organizing and Reorganizing Markets and Formal Organizations: A Comparison’, we return to the question of similarities and differences in the organization of markets and the organization of formal organizations. We argue that the similarities are great enough to usefully apply the same concepts for analysing the organizational aspects of both forms. Yet systematic research on the differences is promising for the development of a more general theory of organization than that based merely on the study of formal organizations.