University of Oulu

Frank, K. A., Lo, Y.-J., Booth, G. G., & Kallunki, J.-P. (2019). The market dynamics of socially embedded trading. Rationality and Society, 31(2), 152–181.

The market dynamics of socially embedded trading

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Author: Frank, Kenneth A1; Lo, Yun-Jia2; Booth, G Geoffrey3;
Organizations: 1College of Education, Michigan State University, USA
2Independent Scholar, USA
3Eli Broad College of Business Administration, Michigan State University, USA
4Oulu Business School, University of Oulu, FInland
5Stockholm School of Economics, Sweden
6School of Business, Aalto University, Finland
Format: article
Version: accepted version
Access: open
Online Access: PDF Full Text (PDF, 0.4 MB)
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Language: English
Published: SAGE Publications, 2019
Publish Date: 2021-09-01


Social embeddedness has provided a compelling challenge to neoclassical descriptions of markets. Nevertheless, without a corresponding description of the micro-social forces that counter embeddedness, the description of embeddedness is essentially static, and does not integrate the dual forces of embeddedness and markets. In this study, we identify a sociological force counter to embeddedness residing in third parties whose presence may interrupt socially embedded informal trading partnerships. Using data from the Helsinki Stock Exchange in 1996–1997, we confirm that stock trades are socially embedded in partnerships in which trading persists from week to week and in which prices deviate from immediate trading prices. Importantly, we find that trading partnerships are more likely to be interrupted when prices deviate from immediate trading prices and when third parties are present who trade with one or both members of the partnership. Thus, third parties are a critical sociological force in the embeddedness-market dynamic.

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Series: Rationality and society
ISSN: 1043-4631
ISSN-E: 1461-7358
ISSN-L: 1043-4631
Volume: 31
Issue: 2
Pages: 152 - 181
DOI: 10.1177/1043463118805168
Type of Publication: A1 Journal article – refereed
Field of Science: 512 Business and management
Copyright information: © 2018 SAGE Publications. The final authenticated version is available online at