Economic embeddedness and materiality in a financial market setting

Philip Roscoe

The School of Management

University of St Andrews

pjr10@st-andrews.ac.uk

01334 461973

Submission to The Sociological Review

October 2010

Revised August 2011, December 2011, January 2012

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Acknowledgements

An early version of this paper was presented at the 2008 Annual Meeting of the American

Sociological Association. The author thanks the reviewers, discussant Daniel Beunza, and the

audience for their constructive suggestions. Rene Algesheimer, Shiona Chillas and Paul

Hibbert read versions of this paper and provided invaluable advice. The author also thanks

three anonymous reviewers and the editor of the Sociological Review. Errors and omissions

remain the responsibility of the author alone.

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Abstract

The notion of embeddedness (Granovetter 1985) neglects of the material dimension of

economic relations. This paper contributes to the literature of market devices (Callon, et al.,

2007) with an exploration of the material dimensions of economic embeddedness in the case

of the everyday market activities of a group of non-professional investors in the UK. It

examines the attributes of a materially embedded market through the categories of socio-

economic embeddedness specified by Uzzi (1997) and draws attention to the superficial and

rhetorical nature of the face-to-face social relations encountered in this market. The paper

seeks to invigorate the notion of embeddedness by expanding the mechanisms through which

socio-economic relations are understood to arise. The paper offers support to the literature of

market devices’ assertion that a concept of materially embedded economic relations can

accommodate politics, culture, and regulation, and that it offers a nuanced perspective on

agency and identity in the marketplace.

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Introduction

In the three decades since Mark Granovetter’s (1985) paper gave a name to the network-

based analysis of economic relations, the concept of embeddedness has become pivotal to our

understanding of market operation. It claims instead that social relationships play a

significant role in the behaviour of market agents, that ‘the structure of our social

relationships, and not simply a transaction specific maximisation rule, determines our choices

of economic trading partners and how we interact with them’ (DiMaggio and Louch,

1998:620). Granovetter’s (1985) article drew together existing work in the area, and set out a

map for future research. Since then, the concept of embedded markets has been explored and

developed in reference to, for example, labour markets (Granovetter, 1973; Granovetter,

1983), production markets (White, 1981) and entrepreneurial firms (Uzzi, 1997), consumer

markets (DiMaggio and Louch, 1998), and financial markets (Sassen, 2005). The notion of

embeddedness became the conceptual core of the ‘New Economic Sociology’ (NES)

appearing in numerous general expositions, book chapters and discussion articles. The

concept has had a great impact in areas of the social sciences other than economic sociology;

in organisational studies, for example, the social network perspective has led to a huge and

varied literature, as reviewed by Kilduff and Brass (2010). Disciplinary bridges have been

built and researchers have been encouraged by institutional theory (Powell and diMaggio,

1991), for example, to take a broader perspective, and to consider regulation, politics and

culture. Sociology has been left with accounts of social (Uzzi, 1996), political (Fligstein,

1996) and cultural (Zelizer, 1994) embeddedness that sit one atop the other – to borrow

Çalışkan’s (2007:242) metaphor – like a Venn diagram, with the object of study somehow

located in central field; ‘embeddedness’ itself has become an ‘increasingly popular but

confusingly polyvalent concept’ (Jessop, 2001).

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Fligstein (1996; 2001) complained that networks are sparse social structures, unable to

convey the power dynamics and politics of markets. More recently, scholars working in the

social studies of finance have developed a critique over the unwillingness of social network

analysis to tackle the material devices (Muniesa, et al., 2007) through which economic

relations are enacted. For these writers, ‘social network analysis should not be limited to

studying ties among persons’ (Beunza & Stark, 2004). The present paper takes up this theme

and explores how a narrow notion of embeddedness – the understanding that economic

transactions are enmeshed in social relationships – may be reinvigorated by a focus on the

materiality of everyday market practices. It will argue that market participants still seek the

benefits of a Granovetterian embeddedness – improved information, trust, and shared labour

(Uzzi,1997) – yet do so through social spaces and relationships that are mediated and

constituted by market devices. In doing so, it contributes to the literature of material market

studies (Callon, 1998; MacKenzie, 2006; Callon, et al., 2007; MacKenzie, et al., 2007). It

offers a further development of this literature through a systematic consideration of the

characteristics of material embeddedness in the light of the detailed framework of socio-

economic embeddedness provided by Uzzi (1997).

The paper will proceed as follows. I will first of all summarise the key points of the literature

on socio-economic embeddedness and the social network perspective. The paper will then

introduce the sociological studies of financial markets, with particular reference to studies of

market devices and the material nature of market settings. The study methodology is then

presented. I continue with an analysis of the material embeddedness of the market activities

of non-professional investors, focusing on screens, screen-based interaction, and division of

5

labour. The paper then considers the role of the social in investors’ activities, and concludes

with a discussion of the theoretical implications of this study.

The social network perspective on economic relations

Kilduff and Brass (2010) characterise embeddedness as one of four core ideas that underpin

the social networks perspective. More fully, these are social relations; embeddedness, that

actors show a preference for transacting with network members; structural patterning; and the

utility of network connections, epitomised by the theory of ‘structural holes’ (Burt, 2005).

Network analysis has been successfully deployed at the inter-organizational level (Powell, et

al., 2005) and from structural perspectives (Pizarro, 2007). Embeddedness is an important

determinant in inefficient markets where information is scarce (Burt, 1992), but also in

perfect markets (Kilduff and Brass, 2010). Embeddedness, then, is set up in opposition to the

atomised, maximising rule of market transaction; ‘organisational networks operate on a logic

of exchange which differs from the logic of markets... ongoing social ties shape actors’

expectations and opportunities in ways that differ from the economic logic of market

behaviour’ (Uzzi, 1996:676).

Financial markets, perhaps because of their fluid nature as a second-order, exchange role

markets (Aspers, 2005) have already proven a fertile field for studies of the ongoing

performance of economic relationships. The social embeddedness of financial markets was

investigated (even before Granovetter’s paper) by Baker (1984), who examined social

interactions in trading pits, a subject returned to later by Zaloom (2006). Both documented

the clear relationship between social interactions and market prices. MacKenzie’s (2003)

study of hedge fund managers showed that a Granovettarian sociology could do much to

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explain the process of portfolio imitation that contributed to the downfall of Long Term

Capital Management in 1998. Abolafia (1998) examined the culturally embedded

characteristics of trading rooms and Sassen (2005) the global geo-politics of electronic

markets. Research has also considered the ways in which social infrastructures such as the

layout of large trading rooms (Beunza and Stark, 2004) or organisational infrastructures in

smaller hedge funds (Beunza, et al., 2006) influence the calculative strategies employed by

market agents.

In this paper I seek to systematically analyse the constitution of economic relations in a

financial market setting. To do so, I will make use of the taxonomy of embeddedness and its

effects provided by Uzzi (1997). Uzzi’s (1996; 1997) work is particularly useful in its

intention to advance a systematic account of the functioning of social ties that can move

beyond the programmatic and conceptually vague (1996:674) statement that social relations

may facilitate and/or derail economic exchange. Successful in this effort, Uzzi’s papers are

considered, alongside those of Granovetter (1973; 1983), as pivotal references for the

literature of embeddedness (Kilduff and Brass, 2010). Uzzi lists five preconditions, or social

structural antecedents, of embeddedness: voluntary contributions, reciprocity, face-to-face

interaction, the division of labour, an absence of the option to exit the marketplace. He also

identifies three components of an embedded relationship – trust, high-quality information,

and problem-solving arrangements – and various firm level effects. His taxonomy is

reproduced in table 1 below.

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insert table 1 about here

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This paper sets out to explore and develop the analytic categories established by Uzzi (1997)

through an actor-network (Latour, 2007) inspired approach, focusing on the embeddedness of

agents within heterogeneous (Law, 1999) agencements (Callon and Muniesa, 2005):

constellations of human agents, theoretically inscribed devices and performative scripts

organised by routines and proceduresi. As noted above, the social network perspective

remains mute on the role of devices in market function, surprisingly so, for ‘can a market

exist without a set of market devices?’ (Muniesa, et al., 2007:2). I will highlight the extent to

which material relations perform market operation, and will draw into question the value of

face to face social relationships in stabilising market relations. First of all, however, it is

necessary to review the existing literature on market devices and set out the theoretical

debates behind these studies.

Material markets: devices and agencements

The role of the material in the constitution of economic markets has been bought to

prominence by the theoretical innovations of sociologists who, following Callon (1998), have

sought to emphasise the embeddedness of economic markets in constellations of material

devices, termed agencements. Callon (1998) suggests that the economy is embedded in

economics through theoretically informed inscriptions of material devices. Callon’s

innovation provides a means of theorising embeddedness that can incorporate political

relationships (Callon and Muniesa, 2005), cultural mores (Çalışkan, 2007) and regulatory

frameworks (Millo and MacKenzie, 2009); it conceptualises markets as stabilised by their

material and linguistic arrangements (Çalışkan and Callon, 2009; Çalışkan and Callon, 2010),

which in turn frame the decisions of markets agents. For researchers using the notion of

agencement, the market (or more broadly the ‘social’) is not a thing-in-itself, but the product

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of an organizing and stabilizing of ‘heterogeneous’ (Law, 1999), material agents (Latour,

2007), a process Callon (1998) describes as ‘performative’. As Muniesa et al. note (2007:10),

this ‘pragmatic turn’ in economic sociology, focused on the market device embedded in

calculative agencements, is ‘of great help in tackling materiality and in pointing to the

distributed nature of economic actions’.

Such an approach has yielded rich empirical work on market formation. In a broader context,

the importance of market devices has been demonstrated, for example, in mass retail

(Cochoy, 2007; Kjelberg, 2007), the implementation of fishing quotas, educational practices

and disciplinary regimes (Hoskin and Macve, 1994; Walker, 2010); the eclectic nature of this

material highlights the broad reach of ‘device’, most usefully a thing that ‘holds together’

such that it may have objectified and singular characteristics (Callon and Muniesa, 2005). In

the case of financial markets, the pivotal role of devices has been explored with reference to

calculators (Beunza and Muniesa, 2005; Hardie and MacKenzie, 2007), and the equations

that they embody (MacKenzie, 2003), trading rooms (Beunza and Stark, 2004; Zaloom,

2006), and screens, whether seen as the ‘pipes’ and ‘scopes’ of the market (Knorr Cetina,

2005), or as a craftsman’s bench on which the trader works as tool builder and sense maker

(Beunza and Stark, 2004). Analysis of devices can be scaled up to speak to the coordination

of whole markets (MacKenzie and Millo, 2003) and global firms (Millo and MacKenzie,

2009). Even prices, the most fundamental of all market outcomes, are performed by social

and material interactions, be that in a small hedge fund in London (Beunza, et al., 2006;

Hardie and MacKenzie, 2007), or a cotton exchange in Turkey (Çalışkan, 2007).

Sociological research, then, has begun to understand financial markets as embedded in the

socio-material performances of a heterogeneous array of market actors. The present paper

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offers a further contribution to this literature by examining the everyday economic

embeddedness of one particular group of market actors: non-professional investors in the UK.

Studying non-professional investors

Non-professional investors – individuals who are neither salaried employees of investment

firms, nor self-employed traders within organised investment markets – represent an

interesting area for empirical research in financial markets. Their activities have received

limited attention within mainstream finance research, with the exception of de Bondt’s (1998;

2005) disparaging surveys; among sociological researchers in finance, these investors have

received increasing attention with empirical work focusing, for example, on their decision

making strategies (Roscoe and Howorth, 2009), their participation in investment clubs

(Harrington, 2007), and their solitary interactions with the screen (Preda, 2009).

The intention of this project was to develop a holistic and contextualised understanding of the

activities of non-professional investors. I therefore set out to generate a rich body of data with

a view to presenting a thick description (Lincoln and Guba, 1985) of investing activities. The

research did not strive to produce a comprehensive account of activity as applicable to all

non-professional investors – an impossible task across such a fragmented marketplace – but

to generate a plausible or trustworthy (Ahrens and Chapman, 2006) account of one group that

could speak to well specified research questions. The study strives to present a valid account

of investor activities (Dyer and Wilkins, 1991), with potential problems of observer bias and

data access limitations addressed through the use of comprehensive description, multiple

methods and observations (Lincoln and Guba, 1985; Ahrens and Chapman, 2006).

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The data comprise a case study of a particular group of investors, a group defined in part by

the chosen approach to data collection. Non-professional investors as a class are difficult to

access due to the isolated and often invisible nature of their occupation, and qualitative

studies have tended to recruit volunteers through social gatherings: public meetings (Mayall,

2006) and investment clubs (Harrington, 2007), for example. This project took a similar

approach. I visited investment seminars and shows and used a short questionnaire to generate

background data and as a means of facilitating interview requests. Interviews were still hard

to come by, as indeed were questionnaire responses: three full days and two evenings of

attendance at these events (with time equally divided between observation and questionnaire

administration) yielded 95 questionnaires, generating 21 potential interviewees. Of these 13

individuals were finally interviewed, others failing to return calls, agreeing to speak at a time

when they proved unavailable, and leaving false or out of date contact details. As a corrective

to the contingent nature of the recruiting process, advertisements were posted on bulletin

boards and interviewees were asked to recommend colleagues who were willing to be

interviewed (a snowballing method). The remaining six interviewees were contacted through

these methods. A total of 24 interviews were conducted with 19 non-professional investors.

Interviews lasted between 25 and 50 minutes. Due to the geographical dispersion of

investors, most interviews were conducted by telephone; with the exception of four

interviews; two conducted in person, and a two further two which took place at evening

seminars, and were shorter and recorded by notes. Five investors were interviewed twice,

with a gap of six months between interviews, in order to investigate emerging topics in

further detail. Interview transcripts also gave me access to spaces such as investment clubs

that remained, despite my efforts, unavailable. Table 2 gives details of the interviewees.

---------------------------------

insert table 2 here

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Interview data were corroborated (Ahrens and Chapman, 2006) by the use of other methods:

observation, the analysis secondary material, and questionnaires which provided limited

quantitative data (age, trading frequency, portfolio size) and qualitative data (e.g. media

consumed) useful at a descriptive level across a large group of investorsii. Observation took

place at the investor events, and was recorded using field notes. Relevant brochures and

demonstration material were collected at these events. Online investor resources were visited

and other investment media were used where appropriate. Thus final data comprised

interview transcripts, field notes, responses to the survey questionnaire, media articles, online

materials, and marketing materials for investor products. Data were analysed from an early

stage in the research process through comparison and re-comparison (Boeije, 2002). Themes

were identified within interviews and across interviews; thematically clustered matrices

(Miles and Huberman, 1994) were built to incorporate themes from literature as well as

emerging themes in the data. Data saturation was considered to have been reached when

analysis of interview and observation data contributed no new themes (Eisenhardt, 1991;

Boeije, 2002); saturation was also evidenced by an increasing homogeneity of accounts, with

investors detailing similar methods and articulating similar discourses of investing, for

example with stock phrases of investment activity occurring frequently in interviews. The

accounts offered by investors recruited through advertisement on referral did not present any

additional or striking themes.

Materially embedded investing

The paper will now consider the role of devices in constituting the market agencements of

investors. I will argue that investors are embedded in material relations where devices are not

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simply instruments in a post-social appresentation (Knorr Cetina and Bruegger, 2002) of

others, but are active parts of a socio-technical arrangement. While the existence of devices

points, in theory, to the myriad possibilities of market arrangement (Callon and Muniesa,

2005), in practice, devices closely specify the options available to investors and the outcomes

of their calculations. Thus it is the material networks of investors that, echoing DiMaggio and

Louch (1998:620) ‘determine our choices of economic trading partners and how we interact

with them’. This section will consider first of all screens, or more properly, the sites, texts

and networks that the screens and access. It will show that these media give rise to, and

subvert, two core categories of embeddedness offered by Uzzi (1997): face-to-face

relationships, division of labour. These categories will be considered in turn.

The screens

Screens were an important means for the non-professional investors studied to see and

interact with the market, accessing via the open navigation of an internet browser a wide and

varied range of sites. It is, however, impossible to force the screens of the non-professionals

into the background; these screens were overtly performative in the sense that they presented

the market in a particular manner, constituting the user not only as a market participant in a

general sense, but as a particular kind of investor (for example a long-term investor, or a

chartist) of value as a customer of the service provider. Interviewees were consumers of

investment services, and the products and sites that they used were of a similar nature to the

other sites that might be associated with everyday browsing and consumption activities:

bright, dynamic, and enormously varied, but at the same time carefully arranged with tightly

specified functions and boundaries. Each space offered a different presentation of the market,

different tools and different interpretations of market data, tailored to particular target

audiences. Where the professionals use the screens as a workbench on which they can shape

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and enact the market (Beunza and Stark, 2004), non-professionals encounter pre-existent

market performances, organised and curated by others, through which they may interact with

the market in particular kind of way.

Some websites achieve more prominence and centrality than others, and establish themselves

as general gateways for non-professional investors. In doing so, they become simulacra of the

market, spaces in which an investor could pursue the whole of his or her investing activity;

they provide information, tools, context and meaning for the activity of investors. A

discussion of market devices can benefit greatly from providing an analysis of the spaces in

which they operate (Cochoy, 2007), and so it is useful to provide an example. One such

example, ADVFNiii, is an ‘investor portal’ and provides vast resources for non-professionals

wanting to access the market. It offers investors access to real-time price data from the

London Stock Exchange and Ofex (now Plus Markets), a news feed showing regulatory news

and press releases, extensive fundamental data on companies, charting facilities, data on

foreign exchange and futures prices, extensive bulletin boards and training. The only

conspicuous absence from its offering is trading facilities, although these are offered through

links to partner brokers. To give an idea of the popularity of this suite of online spaces, at the

time of writing the site has 300,000 registered users, while 125,000 individual monthly users

generate 30 million page impressions per monthiv. The overall impression of the website is of

extreme busyness, a visual assault on the senses that mimics the hurly-burly of the financial

markets; the homepage alone (figure i) presents a wall of brightly coloured, restless

information, including: index graphs, news and price feeds, the day’s biggest risers and

fallers, charting tools, as well as numerous advertisementsv.

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Insert figure i about here

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At the heart of ADVFN are the message boards: electronic fora where investors can interact,

swapping ideas and opinions. The boards are busy, boasting 50,000 comments a monthvi;

ADVFN’s bulletin boards are but one example of a pervasive feature of non-professional

investing. Bulletin boards are attached to portals, to stockbroker sites, represent specialist

users and special interest groups. For operators they represent an opportunity to stabilise the

community of users around a suite of revenue generating services, recalling Jessop’s (2001)

definition of embeddedness: the re-entangling of economic relations with social as a crucial

precondition for the stability of marketsvii. Many bulletin boards are designed and organised

in a way that fragments the universe of non-professional investors into groups defined by

interest. There is, therefore, a tension between specialised sites and those general portals

(such as ADFN) that seek to capture and represent the entire market. For users, however,

these boards have a different function: providing a site for the social interaction of market

participants.

Screen-based interactions

Studies of professional investors have viewed the activities of traders within the broader

context of the organization (Beunza and Stark, 2004), or the market as an institution

(MacKenzie and Millo, 2003). It is in these sites beyond the screens that politics of valuation,

for example, are enacted (Beunza and Garud, 2007). Using Uzzi’s (1997) taxonomy, these

organizational sites may be understood as the loci of face-to-face interaction, reciprocity, and

voluntary contribution, leading to trust and enhanced informationviii. Non-professionals lack

such infrastructures; for those interviewed in this study, it appeared that the bulletin boards

15

served as a substitute. Bulletin boards have different purposes for different investors. For

some, this may only be a means of combating what Nigel describes as their ‘isolated

occupation’, providing a social and institutional structure for solitary investors. For others,

the message boards provide a space where they can develop an online performance as a

market professional, emphasising investment dexterity or specialist expertise. More active

participants in these spaces, such as Nigel, got to know the online personae and were able to

distinguish good quality posters from bad, making no distinction between the post-social

presentation of a known other, and the entirely virtual phenomenon of the bulletin board

colleague:

Interviewer: ‘Do you trust some posters more than others?’

Nigel: ‘Yeah! [with emphasis] Absolutely!’ (Nigel: interview)

Karl used discussion boards as sources of investment strategies to test out in the market.

Robert has often invested on the basis of a bulletin board recommendation, and others, such

as Simon and Nigel, used the boards as a source of first ideas for investment research. But

electronic interactions remain first and foremost performances, in which true actions and

intentions are not necessarily disclosed. For this reason, a minority of interviewees argued

that the boards are of little value. Stewart said that he had ‘never found any comment of any

use on a bulletin board’, while Mickey agreed: ‘I never use bulletin boards. There is generally

such a load of crap on them whenever I’ve looked at them that I never bother.’ (Stewart and

Mickey: interviews). These investors regarded bulletin boards as contentious sites, of dubious

value, characterized by individuals with particular agendas acting anonymously, for example

to ‘ramp’ stock by creating a false appearance of demand for the shares. But despite their

reservations investors found it impossible to ignore these sites. Even Stewart and Mickey

have enough experience of bulletin boards to pass judgment on their quality. Peter summed

up the non-professional’s troubled relationship with the message boards: ‘I get drawn into the

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bulletin boards, I do read them, I find them spectacularly dangerous.’ (Peter: interview)

The division of labour: devices and assemblages

Traditional notions of socio-economic embeddedness understand network relationships as

existing between human agents: Uzzi (1997) lists face-to-face interaction as one of his five

social structural antecedents of embeddedness. The bulletin boards illustrate the way in which

distinctions between social and virtual are blurred as actors interact with virtual others in an

electronic simulacrum of the market; actors on the bulletin boards were aware that electronic

Others may be other than post-social mediations of trusted colleagues. The tidy categories of

socio-economic embeddedness may be further eroded by examining a secondary

phenomenon, the expert division of labour; another of Uzzi’s (1997) preconditions for the

development of embeddedness, as economic agents seek to achieve efficiencies by

specialisation. In a materially embedded market expert labour will be divided not only

between human agents, but also between humans and devices, instruments inscribed with a

variety of performative scripts. This is the very nature of an agencement: a distribution of

agency and calculative activity. Moreover, in an investment service consumption market,

these scripts will be calibrated for the configuration and retention of customers. Thus, online

investment spaces are complemented by suites of tools offered by investment service firms,

and these tools may actively shape the market productions that investors undertake. There is a

dialectic relationship between tools and the sites that host them, with commentary and

opinion on the message boards serving educate investors in the use of tools, or to provide the

particular world view or understanding that a device needs order to function. The complex

tools of technical analysts, for example, require not only a certain proficiency in their use, but

also depend on a given understanding of market function and organisation (Roscoe and

Howorth, 2009). Both may be easily learnt through the commentary offered on bulletin

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boards. Where investment service firms offer tools for use, they will form part of the process

of customer differentiation achieved by the appropriate processing of market data: an

execution-only broker targeting small-scale investors might offer recommendations for major

shares, weekly or monthly tips, and some form of stock selection tool. Again, it is useful to

offer an example. The ‘Share Picker’, provided by one such execution only broker, produces

a short-list of suitable companies on the basis of an investor’s selection of key metrics; the

broker hopes for a clientele of long-term clients with stable portfolios, and the metrics offered

are staples of security analysis, such as dividend yield, P/E ratio, and earnings growth. Users

of the device share labour with an expert in the shape of a screening tool, configured along

the lines of the broker’s requirements and integrated with the tips, articles, and advice

provided by the broker’s own staff.

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insert figure ii about here

Figure ii. The Share Picker offered by The Share Centre [accessed 9 July 2007]. Categories

such as dividend yield and p/e ratio can be ranked in order of importance to generate a short-

list of stocks.

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Uzzi’s (1996; 1997) analysis shows that economic agents spend much time in establishing

themselves in social relationships in order to improve costs, information, and access to

resources. An analytic perspective that stresses the material nature of embeddedness accepts

the role of virtual others, calculative devices, and others actors represented by scripts such as

newspaper articles. In this agencement, agency slips to even imaginary others: like Zaloom’s

(2003) ‘spoofer’, the spectre of the professionals’ ‘muddy footprints’ haunted one

interviewees’ account:

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‘The financial markets are actually set up to benefit the minority at the expense of the

majority, ...they are manipulated quite cynically …you can actually see their [the big

players’] muddy footprints all over the market as they trade, it’s really uncanny.’

(Chris: interview)

Here we see another kind of performance, the solitary production of the market in the

investors’ own homes as individuals dramatically create relationships with real and imagined

others (Preda, 2009). Remote, never met, even imagined others become counterparties in

long-term relationships across the financial marketplace: the materiality of screen-based

performance, analytic technology and performative text forms the basis of the embeddedness

of these market agents. From these solitary performances interviewees slowly built their own

representations of the market: Anne literally cut and pasted newsprint and magazine copy

into her scrapbook, while Robert built up his computerised database with facts and figures on

firms of interest.

At the same time, investors must interact with providers of financial services in order, for

example, to gain advice and execute trades. Providers of advice and services to non-

professionals position themselves explicitly against the monolithic financial sector. The

investment writer Tom Bulford – who Simon follows closely – promotes himself thus:

‘I love banking big stock market gains – especially if it’s on the blindside of other

investors. Seven years ago I quit my high-flying career in the Square Mile to join a

newsletter called...’ix

Operators of these services are frequently or owners of small firms who can develop social

ties with their clients. But these relationships too can be dramatised interactions with others

experienced in the form of text or screen. Simon referred to ‘my friend Mr Bulford’ (Simon:

interview) while Albert says of the designer of his analytic software:

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‘He is a wonderful man, he’s so generous and kind and clever. Amazing man, I could

follow him to the ends of the Earth.’(Albert: interview)

Unlike their professional peers, non-professionals must build their own infrastructures using

online services, tools, and meeting places. Perhaps this may account for the sustained use of

message boards, despite frequently expressed misgivings over the quality and intention of

performances made there. It appears that, in their role as the online public places of the

community, the boards were not representations of what is going on in the market. Rather, the

performances they host are the market, at least as experienced by certain groups of investors,

of whom these interviewees were one. The commercial segmentation of investing activities

locks investors into particular sites, each with its own set of language, devices and investing

folk wisdom, resulting in a proliferation of markets that reflects Law and Urry’s account of

the social sciences, where ‘different research practices might [make] multiple worlds, and

that such worlds might be equally valid, equally true, but simply unlike one another’ (Law

and Urry, 2004:397). For interviewees it appeared that the message boards performed a

similar function to the open outcry pits of pre-digital markets, as a site of performance of

prices, where social interactions, non-verbal cues, and factors such as the overall noise level

could be taken as indicators of the state of the market (Zaloom, 2006; Çalışkan, 2007). Non-

professional investors can follow market activity by watching the interactions on the

discussion boards. In place of a straightforward social embeddedness we find these investors

building relationships of trust and shared expertise with heterogeneous and often material

actors. Reciprocity and exchange emerge, even in the partnership of the advisory device and

investment service customer. Recognising that markets are embedded in material artefacts as

well as social relationships – understanding, in other words, the agencements of these non-

professionals – allows us to make sense of these relations.

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The role of the social: spectacle and self-identity

It would, however, be untrue to suppose that the non-professionals’ market is constituted

solely by solitary interactions with devices and imagined others, for investors took part in a

market that also enjoyed a rich social dimension. Interviewees visited training seminars and

exhibitions, where they met expert traders, company directors, and promoters of investing

and trading materials. They also formed investment clubs and other social groupings to

discuss investment ideas, strategies and techniques, combining the business of investment

with a pleasurable social excursion. Yet, as the nature of these venues implies, the social

interactions of non-professionals at shows, seminars and clubs does not much resemble the

long term, needs-driven socio-economic embeddedness envisaged by Granovetter (1985) and

Uzzi (1996). Instead, as the present section makes clear, the social slides into spectacle

(Debord, 1983), becoming a performance of the most overt kind. I will argue that the

concrete, physical presentations of markets fail to deliver the benefits of embedded economic

relations as set out by Uzzi’s (1997) categories. Instead, market performances appear to be

closely linked to the presentation of identity and more appropriately theorized as a

consumption activity (Harrington, 2007).

Investment shows and market spectacle

Large-scale investment shows epitomise the tension between society and spectacle in the

activities of the non-professionals interviewed. These shows appear to be a particularly

important aspect of the physical production of the markets for non-professional investors,

giving them a rare opportunity to interact with an investing world on a larger scale. The show

is part bazaar, part spectacle, and part learning experience; investors attend to browse, to

21

learn, and to be part of a public performance of the financial market. It is worth analyzing one

show in more detail to illustrate this pointx. The very layout of the show underwrote its

intention as a performance. The venue, a hall in London’s Olympia, offered space for

approximately 45 stalls as well as two substantial auditoriums. It was configured in a large

‘U’ shape, with auditoriums on the left hand side (from the entrance) and the majority of

stands on the right. These stands were occupied by exhibitors, investment services companies

ranging from the stock-broking arms of major financial institutions to small independent

financial publishers and software providers. Stands were brightly coloured, illuminated, and

in many cases furnished with armchairs and sofas, where attractive, young sales-people

extracted signatures on account opening forms. In addition to the auditoriums, there was a

further open seminar area beyond the stalls, seating approximately 50 and equipped with

projector, screen and PA system. Two of the larger stands also had their own mini-seminar

areas, seating roughly 30, and similarly equipped. These were located at the corners of the

‘U’. A delegate, standing anywhere in the halls, was within aural range of one seminar at any

given time. Those stands lacking their own seminar space were likely to have a large-screen

television displaying the latest financial news. The rolling programme of seminars, backed by

Bloomberg TV or CNBC, produced a wall-to-wall carpeting of market talk. The combination

of name badges suspended on trader-style neck fobs (distributed at the entrance), the bustle,

the barrage of computer screens displaying charts and market data, the ever-present noise

from the seminars, the steady ebbs and flows of preoccupied people, all served to lend the

show an air of authenticity, something of the flavour of the genuine trading room.

Despite the exhibitors’ emphasis on sales, it was clear that investors had attended the

exhibition primarily to learn, and considered exhibitor’s stands to be of secondary importance

to the exhibition’s seminars. The seminar programme was substantial, and conference

22

sessions and seminars dominated proceedings at the show. They represented a clear priority

for the attendees; on numerous occasions the attendees were unwilling to complete a

questionnaire because of an imminent seminar, or checked their watch before agreeing to do

so. Where it was possible to observe seminars in progress I saw that they were full to capacity

and often had a standing audience. There was, of course, a commercial aspect to many of

these seminars. The representatives of investment service firms extolled the virtues of

particular practices or techniques, and manufacturers of software explained how one aspect of

market function (easily detectable through their proprietary algorithm) might be harnessed to

deliver endless profits. On the other hand there was a sense, manifested particularly in the

panel debates that took place each lunchtime, that the nature of the market itself was still

open to discussion; a keynote panel that explored the merits of technical analysis as against

‘fundamental’ investing sought an understanding of market operation, seemingly considering

that operation to be malleable, one that could be contested and settled through a democratic

process of analysis and debate. In these spaces investors did more than produce a pantomime

of the market. Instead they took ownership of it, seeking to define and articulate it through

their performances. As is the case with professional investors, the market becomes seen as an

epistemic project (Knorr Cetina and Bruegger, 2000), a common object to be worked on and

defined by the community of investors.

The investor show, therefore, becomes an arena for debates over the politics of valuation and

market organisation. Yet given the size and market power of professional investors as against

the non-professionals, it is hard to see such politics being enacted. The debate becomes

instead the venue for another spectacle, the rhetorical resistance to professional finance.

Moreover, while the theory of embeddedness stresses the improved information available

through social relationships (Granovetter, 1973; Uzzi, 1996), investors still had reservations

23

about the quality of information gathered at these commercially hosted investment events. As

Karl explained,

‘I like to go because you pick up some good things from fellow investors… in this

one I didn’t really pick up anything personally anyway, but sometimes although it

seems like I didn’t pick up anything now, in the future something might arise.’ (Karl:

interview)

As do the bulletin boards, investor events offer individuals an opportunity to take part in

public performances of the market, eruptions of a virtual, second-order market into the real

world; like the bulletin boards, exhibitions are noisy, overwhelming, and often of dubious

value in terms of information, and yet un-missable.

Investment clubs and self-identity

Another category of social event is the investment club. Investment clubs allow participants

to meet and talk, and have been identified as a means for individual investors to access the

capital markets (Harrington, 2007). Harrington’s characterisation of non-professional

investment as a form of consumption activity recognises the link between investment activity

and identity:

More often, it was a matter of taste, or what Bourdieu would call ‘distinction,’ as in

the case of the group that refused to buy stock in La-Z-Boy – a manufacturer of

reclining chairs and sofas associated with middle-brow American décor – because,

despite the firm’s excellent economic prospects, it came with class-linked

connotations that the investors thought would reflect poorly on them (Harrington,

2007:22).

24

Investment clubs allow investors to display expertise and serious intent, exemplified by

Mickey’s dismissal of less serious clubs is operating on a ‘Here’s my fifty quid, now let’s go

and have a pint’ model. Yet is the stated intention of these sites is social, and sociality. Albert

describes formation of one such club:

‘A gentleman called [ ] who lived in Essex, had retired, had a lump sum, had been in

business and clever with money, took his lump sum and started doing a pension

scheme and was absolutely appalled how badly he was doing on the stock market,

when he thought that he was good at it because he’d been doing figures all his life. So

he wrote an open letter in the Investors Chronicle, and said: I’m retired, I’m doing

this and it’s a very lonely business and I’m very, very dismayed at how badly I’m

doing. If there are any fellow travellers out there who’d like to meet for lunch once a

month and commiserate and chat over the stock market, please write.’ (Albert:

interview)

Investment clubs fill the need for an institutional and social framing of investment activity.

Club members do develop genuine social relationships, and do divide labour, culminating in

joint problem-solving and learning. But most of all, investors talk. At Mickey’s club,

members talk:

‘About shares, individual shares, how individuals arrive at particular shares, what

trading they’ve done during the month…[or we] discuss particular sectors....one of the

guys has just done a presentation on the transport industry, he actually works in it as a

logistics adviser.’ (Mickey: interview)

George attended a club where individuals run a dummy portfolio throughout the year based

on their own investment preferences, such as high dividend yield, the ‘Zulu principle’, or

George’s favourite, small-cap technology stocks. At Albert’s club members chatted over

25

anything remotely related to investing, ‘what Tate & Lyle are doing, what Morgan Sindell

has been doing, as builders what about the building sector...about politics and Gordon Brown

and taxation and the world, the Green ecology system’ (Albert: interview); while in other

venues they explore sophisticated strategies of charting and options trading. Social sites are

spaces where investors can enhance their skills and abilities, learning new things and

absorbing new information. More than this, they are a place for performance, enabling

individuals to present themselves as investors, as experts, and as participants in a market that

remains largely invisible to others.

In summary, social spaces formed an important part of the activities of these non-professional

investors. Yet their purpose was as much that of performance, spectacle and entertainment, as

it was a constituting aspect of economic relations. It seemed as if the social spaces presented

an escape from the mundane and solitary activities of the individual investor (Preda, 2009), as

much as they contribute to the quality of investment information and skills. An analysis of

this one sector of the market must be most cautious in asserting the purely instrumental and

economic value of social relationships.

Discussion

This paper has set out to consider the nature of embedded economic relations among one

group of non-professional investors in the UK. It has explored their everyday interactions

seen, for a group that trades relatively infrequently (see table 2), largely in terms of gathering

information and forging networks. I have argued that the category of material, largely

neglected in social network research (c.f. Kilduff and Brass, 2010), is vital in understanding

the embedded economic relationships of these investors. I have made use of the concept of

26

agencement (Callon and Muniesa, 2005), popular in the science and technology studies

inspired literature of financial markets, to describe the complex, agency-filled networks of

device, theory, and place that surround these investors. I contribute to the literature’s

understanding of agencement by theorising these network forms in terms of the analytic

categories of embeddedness proposed by Uzzi (1997). In short, I demonstrate that material

agencements may give rise to the components and effects associated with a social analysis of

network embeddedness.

Uzzi (1997) lists five structural antecedents of embeddedness: voluntary contributions,

reciprocity, face-to-face interaction, expert division of labour, and the impossibility of exit.

Together these lead to embedded relationships epitomised by trust, better information, and

joint problem-solving arrangements. Table 3 sets out these categories and considers some of

the investors’ everyday actions which correspond to these categories. Voluntary

contributions, for example, are manifested by shared research, often posted online, and online

comments. Once it is recognised that artefacts such as scrapbooks and databases enjoy a

status equivalent to the human agents in interviewees’ production of financial markets,

solitary activities such as the compilation of investing databases can be included here.

Reciprocity is present in a generalised form in public postings and the debates of investment

shows, and more specifically in the bilateral exchanges of investment clubs, for example.

Face-to-face interaction is found in numerous categories: mediated through screen and print,

through interaction with others known electronically and in the real world; through solitary

performances and imagined others, whether the amiable Mr Bulford or the muddy footprints

of the city traders. Labour is divided among individuals – career experts offering

presentations in investment clubs – and between commentators and analytic programs.

Though not discussed explicitly in my analysis, the absence of an exit option is evident, with

27

investors making long-term commitment to earn a living or manage a pension (Albert,

Mickey, Chris, terry: interviews). The table also details the components of an embedded

relationship developed: i) trust, which is generated through bilateral social relationships,

bilateral mediated relationships or materially embedded relationships (i.e. with text or

inscribed devices) ; ii) fine grained information, manifested by the detailed production of

markets in shared spaces; iii) and joint problem-solving arrangements in the form of

investment clubs, investment search networks, online debate and criticism, and the

development and sharing of more powerful kinds of investment decision making.

------------------------------

Insert table 3 here

-------------------------------

On a broader level, the insight of Uzzi’s (1997) study – that economic pressure and the search

for improved performance among participants in a confined market arena leads to the

development of mutually helpful social relationships – can be seen to be true of the non-

professional investors interviewed. Trust, for example, a cornerstone of social embeddedness

theorising since Granovetter’s papers (1973; 1985) is manifested across agencements (in

devices, algorithms, and scripts) to a far greater degree than it appears in social relationships.

At times, the human agent is invoked as a synecdoche for the device: Albert claims to trust

his software program because he trusts its original designer, now the chief executive of a

small firm selling financial analytics. Pundits such as Jim Slater, and ‘Mr Bulford’ though

not known in person, are rich in symbolic capital (Bordieu, 2005) which becomes the basis

for use of their books and trust of their advice.

28

Fligstein (1996; 2001) noted the sparse nature of social networks. The literature of market

devices also finds networks sparse; while it sets out from the shared assumption that markets

are inherently social, researchers have repeatedly argued for the inclusion of tools,

instruments and material settings within the analytical framework of social embeddedness.

The focus of these investigations has been the distributed nature of calculation (Callon &

Muniesa, 2005): ‘What counts? Tools count. Instrumentation must be brought into the

accounts of economic sociologists’ (Beunza & Stark 2004:370). For Beunza and Stark,

calculation is distributed across persons and instruments, not simply embedded in social

relations. Yet at the same time, studies of professional investors have incorporated

conservative accounts of the role of the social. MacKenzie (2004) discusses the

Granovetterian sociology of hedge fund managers; Beunza and Stark (2004:378) see the

trading room as a ‘space of sociability’, and Hardie and Mackenzie (2007) present an account

of socially-structured mechanisms of a hedge fund. Calculation stretches out of instruments,

across desks, and into social relationships. Muniesa (2008)argues that research should pay

attention to the way in which the technical features of devices shaped action in particular

ways; yet the device in question, the telephone, serves primarily to allow identification of

counterpart and the construction of interpersonal networks of trust and recognition at a

distance. As one trader says, ‘It’s good to see who does what. It’s important to be able to call

the person’ (Muniesa 2008: 9).

The present paper also sets out from the position that markets are social, and that social

relationships have much to offer market participants (Uzzi, 1997). It asks how market

participants construct sociability in the absence of institutional structures, and often in the

absence of genuine social interaction, whether direct or technologically mediated. Investing,

for many, was a lonely occupation (Nigel: interview). The non-professional investors

29

examined in this paper exhibited the characteristics of a Granovetterian sociology: they

sought to stabilise economic relationships, to guarantee market information, and to build

relationships of trust. Yet the vehicles for doing so were the devices and spaces made

available to them by the Internet and by investment media. Existing studies of market devices

offers evidence of traders and analysts trusting the calculative power of their tools and

instruments (Beunza & Muniesa, 2005); in my analysis of non-professionals this trust is

developed further as devices take on the role of the social structures that surround

professional traders. In an ironic turn, the analysis has shown that face-to-face relationships

may even offer less to investors in terms of fine-grained information, shared labour, and trust;

it appears that is the value of investment shows and clubs is as primarily in their spectacle

and enjoyment value.

I offer a brief comparison with the contributions of three analysts who have pursued other

relationship-based perspectives: Baker (1984), Abolafia (1998) and Zuckerman (2004). These

contributors privilege, respectively, physical proximity, cultural norms and scripts, and

classificatory regimes. Baker’s (1984) pioneering study drew attention to the power of social

structure in facilitating market operation. Bounded rationality and opportunism, major

preoccupations for traders in the pits, could be most effectively overcome by micro-networks

offering trust and social policing; these persisted whatever the size of the crowd. Baker

determines an optimum crowd size for stable pricing, and shows in one sense that the

physical matters. Yet his analysis neglects the sheer physicality of the trading pits as

documented by Zaloom (2003:263): ‘The tone of voice, the body language of the trader, who

may be steadily and confidently holding his hands forward in engagement with the market or

yelling his bids, spittle flying and eyes wide, in desperation to get out of the trade, are crucial

inflections that traders draw on to form market judgments.’ While Baker’s account omits this

30

aspect of market physicality and its impact on traders’ calculation, Zaloom has persuasively

argued that a richer account of market cognition is offered by its inclusion. Similarly, the

relative abstraction of his approach neglects the impact of trading tools and mechanisms:

trading cards and stamps are mentioned in his methodology, yet do not feature in the analysis

offered. Zaloom’s (2006) account of the evolution of Chicago’s trading rooms makes clear

the importance of acoustics, pillars and telephones in constructing a functioning market.

Abolafia’s (1998) study of ‘markets as cultures’ understands markets as held together by

regulative and normative rules and behavioural scripts. These govern the pursuit of self-

interest and stabilise everyday trading: customers’ orders must always be executed first, and

all transactions go ‘on the tape’ as soon as possible (p.71). Market efficiency and the

competitive atomisation of participants are guaranteed by a ‘caricature of the spirit of

capitalism’ (p.72). As with Baker’s study, material structures and artefacts lurk in the

background: the understanding among market-makers that all trade should be brought to a

particular spot, that orders must be placed ‘in the book’ and transactions ‘on the tape’.

Abolafia’s traders use ‘toolkits’ (p. 72 and 77) and develop routinized procedures of sorting

(p.75) , yet these comprise linguistic and behavioural scripts, rather than actual devices. For

Abolafia, as Baker, it is sufficient to abstract rules and scripts from the physical location in

which they take place. For both, social processes are considered to organise the use of

material artefacts, which appear as props in their account; a market-devices approach, on the

other hand, recognises the contribution of tools and artefacts to the development of social

routines, which arise not merely as solutions to problems but through repeated use of market

equipment.

31

Baker (1984) and Abolafia (1998) study infrastructures of pre-electronic markets that are

robustly physical. A more recent contribution comes from Zuckerman’s (2004) analysis of

security pricing. Zuckerman follows Baker in his understanding that the social structure is the

network of trade underlying markets, and that it emerges via attempts to solve market

problems. He understands classificatory structures as ‘socio-cognitive processes by which

market participants make sense of stocks even in the face of severe interpretative challenges’

(p.410). For Zuckerman, these processes are part of a ‘crude functionalism’ (p.428) that

allows markets to function. An alternative approach would be to consider the impact of

analysts’ tools on these classificatory structures, viewing them as ‘socio-material-cognitive’

processes; as Muniesa (2008:309) points out, market actors are complex arrangements, and

the absence, presence and variety of material devices constitute ‘economic actors that are

different and act differently’.

My analysis pursues Muniesa’s line of questioning further. The embeddedness of social

relationships in screens (Knorr Cetina & Bruegger, 2002) and telephones (Muniesa, 2008) is

well established. In my account, technology becomes more than a mediating device for well-

known and identifiable counterparts. The relationships of non-professional investors with

electronic others, with others instantiated in text, or with analytic programs alone emphasise

the importance of material devices in relationships. As Preda (2009) shows, solitary investors

conduct negotiations with others imagined in their computer screens: what kind of

embeddedness is this? My analysis is intended to develop, rather than to dismiss, the notion

of the embeddedness of economic transactions. It is quite clear that the investors studied

valued the consequences of socially-based economic relations as identified in social network

research: stability, trust, and better information. In this paper I show that the (largely

beneficial) properties and effects of social embeddedness, as set out by Uzzi (1997) can be

32

achieved by material relationships embedded into heterogeneous agencements, at times in the

absence of any social relationship – technologically mediated or otherwise. I suggest that,

while analysis of social structures remains a powerful tool for the analysis of markets, in

order to provide convincing accounts of economic embeddedness, a broader understanding of

‘social’ must be introduced; that a broadening of scope to include material categories can do

much to invigorate social network approaches.

A second implication stems from the potential for generalisation on the basis of a systematic

and plausible case study (Eisenhardt, 1989; Eisenhardt, 1991). In presenting a case relating to

one niche within a broad market of non-professional, retail or even leisure (Harrington, 2007)

investing – a group of time-rich UK investors who structure their activities around the face-

to-face meetings where they were recruited – I cannot claim that my conclusions are

representative of the entire marketplace. I suggest, however, that the effects detailed in this

paper, and corroborated by existing literature on the professional marketplace, will occur in

other sectors of the financial market as experienced by non-professional investors, and that

this assumption may form a useful basis for future research. Moreover, where consumer

facing economic markets (markets for financial products such as insurance and mortgages,

for example) are increasingly served by electronic apparatus that resembles the agencements

discussed in the paper, I would suggest that there is considerable potential for extension of

the research topic into these areas.

As such, the argument has ramifications for approaches in economic sociology that

persistently view economic relations as comprising social relationships built on face-to-face

contact, or at the least technologically mediated relations between identifiable counterparts.

Micro-level approaches using, for example, a concept of structural holes to account for

33

entrepreneurial opportunity (Burt, 2005), might be more usefully served by following a

theoretical model informed by the notion of material networks and agencements (Roscoe, et

al., 2012). Macro-level theorising, wishing to take into account the claims of politics and

regulation on the embeddedness of global electronic financial markets (Sassen, 2005) may

also benefit from pursuing an analytic framework that is alive to the political, cultural, and

regulatory aspects of markets (Muniesa, et al., 2007; Çalışkan and Callon, 2009). As Latour

notes, macro-level social structures may usefully be understood as the product of a

‘summing up of interactions through various kinds of devices, inscriptions, forms and

formulae’ (Latour, 1999:17). My case study sees these concerns as inscribed in the devices

through which investors encounter the market. The heavy regulation of financial services in

the UK limits the scope and advice of products offered, and is evident in the disclaimers and

guidelines provided alongside tools and products and in promotional material. Cultural

practices may be seen in the understanding of market function, played out in debate and then

inscribed into devices; the debate of ‘technical versus fundamental’ becomes crystallised into

the choice between charting engine and Share Picker. Politics, both of resistance to

professional finance, and of the simultaneous exploitation of investors as investment service

consumers, likewise becomes enacted through the agencements of the non-professional

investors.

Politics suggests another avenue for future research: a critical (Alvesson and Deetz, 2000)

analysis of the relationship between non-professional investors and the investment service

firms. These firms have been present throughout my account, shadowy figures in the

background, yet instrumental in the production of the market for non-professionals. Carefully

distinguishing themselves from the underperforming and disliked fund managers and the

despised professional traders, these service firms provide the fundamental architecture of the

34

financial markets as encountered by non-professional investors; customers may come and go,

but the infrastructures of investor portal, investment road-show and brokerage site endure.

Academic research in finance provides much evidence that individual investors damage their

investment returns by taking unnecessary risks and trading too aggressively (Barber and

Odean, 2000; Barber, et al., 2009). Interviewees ascribed their lack of success to a lack of

discipline, or a problem with their method which further efforts would iron out; they

employed strategies of self-deception and mental accounting (Thaler, 1999) in order to

bolster their investment performance and stay in the game. Being an investor and staying in

the market requires considerable efforts in constructing and disciplining the self, a project

that may be best understood, as Harrington (2007) suggests, in terms of consumer aspiration

and self-identity (Schouten, 1991; Belk, et al., 1996). A critical, emancipatory position may

have much to offer investors as well as researchers.

In conclusion, let us reconsider the intention of this paper – to invigorate the notion of

economic embeddedness through an exploration of its material aspects. The paper has argued

that allowing the concept to include the material (understood as an agencement comprising

agency-filled, performative devices and texts) provides a rich and nuanced account of market

function that sits well in the context of global electronic financial markets. The paper has

illustrated its claims with a study of one group of stock market participants, and in doing so

has highlighted further peculiarity of material embeddedness – that the realm of physical

presentation and personal contact becomes of less value in terms of information, and more

important as a venue for political drama and the rhetorical construction of identity. The

material, on the other hand, displayed the characteristics most associated with socially-

embedded economic relations. A materially informed account of embeddedness can,

therefore, accommodate not only information, not only culture, regulation and politics but

35

also rhetoric and self-identity. By relaxing the notion that only the social matters (surely not

an overly contentious assertion in contemporary sociology) embeddedness becomes a

powerful analytic framework and one that holds much promise for future work in the

sociology of markets.

36

Table 1: Antecedents and consequences of embeddedness and network structure (adapted from Uzzi 1997)

Social Structural Antecedents

Components of an Embedded Relationship

Investor (Uzzi: firm) Level Effects

Voluntary, noncontractual contributions

Trust Haggling and monitoring costs

Reciprocity Privileged access to resourcesExchange of difficult to price resources

Face-to-face interaction Fine grained information Information processing speed and problem recognitionKnowledge of preferences and better forecasts

Expert division of labour Joint problem-solving arrangements

Learning and performance feedback

Absence of pure exit option Invention of new solutions

37

Table 2: Interviewees

Pseudonym Gender # of interviews Age Number of

trades annually

Portfolio size

Albert M 1 60 or over 40 £101k-£150k

Anne F 2 60 or over 5 £201k+

Chris M 1 50-59 Daily £151k-£200k

George M 2 40-49 * £201k+

James M 1 60 or over 12 £101k-£150k

Karl M 1 30-39 12 £51k-£100k

Max M 1 40-49 Daily £50k or less

Mickey M 2 60 or over Daily *

Mike M 1 60 or over 6 £101k-£150k

Nigel M 2 30-39 * £201k+

Peter M 1 30-39 * £101k-£150k

Robert M 2 60 or over Daily £51k-£100k

Simon M 2 40-49 20 *

Stewart M 2 60 or over 4 £201k+

Sunil M † 40-49 * *

Terry M 1 30-39 50 £50k or less

Tony M 1 40-49 Daily £151k-£200k

Trevor M 1 60 or over 2 £201k+

William M † 50-59 * *

* Not known †Interviews not recorded

38

Table 3: Antecedents and components of social embeddedness: examples

Social Structural Antecedents

Materially embeddedness in financial markets

Voluntary, non-contractual contributions:

Online comment, shared researchSolitary productions of markets: databases and scrapbooks

Reciprocity Generalized reciprocity i.e. public postings; investment club sociality

Face-to-face interaction Mediated through screen and print: interaction with others known electronically.Online market performances; real-world market performancesSolitary performances, imagined others ‘ my friend Mr Bulford’, the ‘muddy footprints’ of professionals

Expert division of labour Reliance on material expertise: commentators, analytic programsIndividual expertise (e.g. career background) shared

Absence of pure exit option Long-term commitments e.g. pension fund management, day-trading for a living, long-term contractual obligations with suppliers

Components of an embedded relationshipTrust Generated through mediated relationships (through

print, online comment). Through direct relationships: investor friends, trusted advisers and suppliersUnilateral: reliance on heterogeneous others.

Fine grained information Detailed production of markets in shared spacesJoint problem-solving arrangements

Investment clubs, investment search networks

-

39

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Figure i: The homepage of the ADVFN portal, www.advfn.com [accessed 9 July 2007]

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i The term agencement, approximately translated as ‘assemblage’, stems from studies of distributed cognition Hutchins, E., (1995), Cognition in the Wild, Cambridge, Mass.: The MIT Press., from actor network theory Latour, B., (2007), Reassembling the Social: An Introduction to Actor-Network-Theory (New Edition): Oxford University Press., and more recent work in economic anthropology Çalışkan, K. and Callon, M., (2009), ‘Economization, Part 1: Shifting Attention from the Economy Towards Processes of Economization’, Economy and Society, 38 (3): 369 - 98, Çalışkan, K. and Callon, M., (2010), ‘Economization, Part 2: A Research Programme for the Study of Markets’, Economy and Society, 39 (1): 1 - 32.. Agencement is a more useful term than its English translation as it denotes the unity of agency and arrangement.ii 86% of respondents were over 30 years of age with the modal category being 50 to 59 years. 84% of questionnaire respondents were male. Despite my best efforts, I was only able to interview one female investor, and noted that her opinions, phrases and even descriptive metaphors were very different from those of her male peers.iii www.advfn.comiv Source, www.advfn.com [http://www.advfn.com/p.php?pid=advert_op, accessed 25 October 2010]v an observer might be struck by the prevalence of ‘spread betting’ advertisements on this page. At the time that this research was carried out (2006-2007), spread betting is being aggressively promoted to investors as a tax-free means of emulating the margin trading available to professionals. Interviewees spoke in excitement of the possibilities afforded to them, although one (Uno) remarks that he had lost £5000 almost immediately on joining a spread bet cite. While research notes that the epiphenomena of gambling are evident among non-professional investors Kumar, A., (2009), ‘Who Gambles in the Stock Market?’, The Journal of Finance, 64 (4): 1889-933., my interviewees actively rejected the notion that they gambled, and the theme is not pursued in this paper. A similar rejection of gambling was encountered by Mayall Mayall, M., (2010), ‘A Feeling for Finance: Motivations for Trading on the Stock Exchange’, Emotion, Space and Society, 3 (2): 103-10. in her study of Australian non-professional investors.vi Source, www.advfn.com [http://www.advfn.com/p.php?pid=advert_op, accessed 25 October 2010]vii This author was, from 2001 to 2002, director of a company that operated investment bulletin boards. viii Beunza and Garud’s account of dot-com era stock valuations provides an ironic echo of Uzzi’s (1997) ‘paradox’ of embeddedness – that inward looking networks may suffer through ignoring important information held by outsiders.ix http://info.redhotpennyshares.co.uk/ [accessed 11 August 2011]x IX 06, held in London’s Olympia in October 2006. The researcher gained permission from the organizer to administer questionnaires and observe the exhibition.