Exploiting Equivocality for Financial Innovation. The Cases of Credit Default Swaps and Blockchain
Sprache des Vortragstitels:
34th EGOS Colloquium 2018
Sprache des Tagungstitel:
Building on previous sociological studies and sensemaking processes in the financial industry and through analyzing tow cases of financial innovations the paper shows how sociological explanations of coordination and sensemaking phenomena among largely isolated actors in the financial field not only supplement or even replace economic models of financial markets, but to represent mechanisms which are purposefully used by actors in their strategic behavior. For the case of CDS, those holding knowledge about the technology as a derivative where able to generate rents superior above those interpreting CDS as hedging instruments. For the case of the Blockchain-Technology and its application in the financial industry the still ongoing development suggests that those using the technology for exploiting network externalities appear to exploit the effect that others are interpreting the technology as a facilitator for financial transactions, the latter providing the source for rents. Opposed to the traditional view of sensemaking reducing equivocality, diverging sensemaking processes maintain equivocality over an extent time period, which provides the source for economic rents for an exclusive group of actors.