Understanding the Emergence of Practices in Financial Markets: The Role of Legitimacy

Drawing on a rich longitudinal ethnographic fieldwork focused on how European brokers act as strategic actors within their companies integrated in international financial market, the aim of this paper is to present a generic model offering ways on how social structures and human agency link together in the explanation of action. This model based on Boltanski and Thevenot (1991 trad. 2006) Economies of Worth, which enables the integration of elements stemming from three different levels (micro, meso and macro), allows a recursive, multi-level grasp of the dynamics of a complex system and enriches our understanding of the formation of practices on financial markets. This model helps us to perceive the important role brokers play in the functioning and the evolution of financial markets. It brings out the core role that the quest for legitimacy plays in brokers' acting: legitimacy is both a purpose and a dynamic resource. It contributes to create sense for all actors involved in the brokerage companies' strategy (namely brokers, institutional investors, regulating agencies, and so on) and it connects them to their fellow men. In this model, strategy in financial market is perceived to be both integrative and integrated in Society. This model is also innovative in showing that what is at the heart of brokerage strategic complexity is both brokers' strategizing and the justification of this strategizing activity. This justification could be survival, or at least co-evolution via a search for adaptation guided by a quest for not only individual, but also collective legitimacy since brokers usually participate in several meso and macro systems. For them, it is a question of being able to and of knowing how ti keep on by justifying the reason for their existence participating in the evolutions of financial organizations and their broader context - including Society. Explicitly considering financial actors as embedded in a company, in markets and in Society allows us to take into account actors' creativity when facing criticism and in their development of new compromises. This allows new outlooks to solve financial crisis or to build a renewed finance.