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Technology, regulation and disruption in the financial sector: Understanding the future through digital methodologies.

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The financial sector is rapidly changing through the adoption of financial technology. Seen from a longer perspective however, this is nothing new. In fact, the foundation for the change in the Fintech sector was laid in the 1980’s when several globally unprecedented changes swept through the Swedish financial sector.

The project looks into the foundation and regulatory legitimation of Optionsmäklarna (OM) as the first privately owned for-profit options exchange that was also the first born digital exchange. Furthermore, it explores the dynamic around the move from traditional outcry to a fully digital trading system at Stockholm Stock Exchange and the dynamics of resistance from the floor traders who became redundant following this change. The project develops a unique method that uses a relational (digitalized) database in the analysis of historical archives. With this method it is possible to capture actors and activities and the links between these as antecedents, indicators, and trends throughout the radical development of the financial sector during the 1980s and 1990s. The rich archival material allows the researcher to “get inside” the focal organizations as well as field actors such as interest groups, regulators and supervision. While historically based, the findings from the project will help to create an improved understanding of the complex interaction of various actors and activities leading up to the current financial sector from both an organizational and technological-development point of view. The database developed as part of the project comprises 2,632 documents (totaling 4,454,340 words) coded to capture links between the actors and activities in a multiple-actor perspective.

From a methodology contribution point of view, the project is grounded in a call for more comparative historical case studies with a base in rich historical data that aim towards developing theories of strategic processes (Kipping and Üsdiken 2014; Ingram, Rao, and Silverman 2012; Vaara and Lamberg 2015). Within the field of business history few comparative studies use history as part of their theorizing (Chandler 1984; Colli and Larsson 2014). By collecting and analyzing the data through the digital database, it is possible to use it for comparative studies with other researchers will use a similar approach. In addition, contemporary research on institutional work/ entrepreneurship that do use historical research designs (Alvarez, Young, and Woolley 2015; Garud, Jain, and Kumaraswamy 2002; Greenwood and Suddaby 2006; David, Sine, and Haveman 2013) have struggled to account for the field level interaction with “external” actors (Hargrave and Van De Ven 2006; Van de Ven and Poole 2005).

Theoretically, the combination of the rich archival data with new digital methods for collecting, structuring and analyzing data (McFarland, Lewis, and Goldberg 2015; Wagner-Pacifici, Mohr, and Breiger 2015) enables the development of theory by being able to distinguish between publicly accessible “frontstage” sources from the internal “backstage”. In strategy theory (Vaara and Lamberg 2015) as well as in sociological and institutional theory this is something that has been acknowledged in many of the seminal articles (see for example Schneiberg and Clemens 2006). In particular, the project contributes to the discussion of how research aiming to contribute to institutional theory can account for the “inter-situational variation” of how micro-level actions and interactions vary between different contexts (Trouille and Tavory 2016). By combining sociologically oriented theory from management and strategy research with archival ethnography (Decker 2013; Welch 2000) it tests and proposes theories on how technology affect and is affected by radical institutional change. In particular, historical methods of abduction extracting the intention of actors (Shogimen 2016) attempts to answer to the challenge of analyzing and reading the documents “forward” rather than from our contemporary understanding of them thus further enlighten us on the contexts in which radical field transforming events occur (Mason and Harvey 2013; Forbes and Kirsch 2011). Of central concern, is to integrate this method with that being used by scholars adopting a process study methodology (Tsoukas 2016).