The role of context in the development of organizational routines is under-theorized. Specifically, it is unclear how ostenstive aspects of routines relate to the broader social structures and how such relationships affect their formation, development, and internal dynamics. In this paper, we draw on an in-depth historical case study of the global financial Crash of 2007-2008 as a field-wide crisis which was partly driven by the malfunctioning evaluation routine of rating agencies, and examine how the ostensive dimension of the routine evolved in the run up to the crisis. We discuss the role of two discourses which subsequently led into paradoxical inconsistencies in the routine functionality: market discourse and professionalism discourse. The findings show that, in the immediate years preceding the financial crisis, a market discourse increasingly dominated the finance market as there was unprecendented demand level for financial products. As a result, the rating agencies were facing high volume rating of the packages, while, at the same time, struggled to retain their staff. Hence, the routine was robbed from its resources in the finance sector (e.g., by investment banks); a vicious cycle that eventually reshaped the ostensive routine and undermined its functionality. The professionalism discourse, as the official stance of the rating agencies in their conduct of the routine throughout, however, was weakened in the run up to the crisis, but regained its strengths afterwards as rating agencies started to reposition the routine as robust and objective.
|Publication status||Published - 2017|
|Event||33rd EGOS Colloquium - Copenhagen Business School, Copenhagen, Denmark|
Duration: 6 Jul 2017 → 8 Jul 2017
|Conference||33rd EGOS Colloquium|
|Period||6/07/17 → 8/07/17|
- evaluation routines
- financial crisis