Environment Effects in Organizational Form Emergence: The Origin of Two For-Profit Stock Exchanges

This study sets out to advance our understanding on how organization environments induce highly embedded actors to take up new organizational forms. We conduct comparative historical study of two stock exchanges, Stockholm and Helsinki stock exchange, that became first and second in the world to take up the for-profit organizational model in 1993 and 1995 respectively. We use a large set of digitized archival data from the two settings to analyse organization environment incidents that developed in the two local settings and the organizational activities of the two stock exchanges. We found that external effects were moderated by local effects inducing organizational misfit to accumulate. Most interestingly we found that these environment-organization effects were exacerbated by peer interaction, joint exploratory work for a joint Nordic exchange, cross listings by firms, brokers starting operating at both stock exchanges, and regulatory harmonization work. This peer interaction induced analog competition and convergent guidelines for the new organizational form. Our contribution is to provide a nested model of environment effects on organization emergence and expose peer effects as previously unrecognized organization environment effects.