How Organizational Fields Evolve: The Case of Subprime Mortgage Finance, 1998-2008

• In Event: 382 - Theory Section Paper Session. Directions in Relational Sociology: Theory, Method and Practice

Abstract

How organizational fields emerge, become stable, and change is a central concern within the sociology of organizations, yet our methodological tools for modeling field structures remain quite limited. This paper advocates a spatial approach to visualizing and modeling the structure of organizational fields. It begins by showing how predictions based on position in a field may differ from those expressed in terms of aggregate associations between variables. I then build on these insights by developing statistical models to predict the positions of actors in a space defined by a set of outcome variables, using the evolution of the U.S. subprime mortgage finance industry as an example. I find that in the years between the deregulation of mortgage-backed securities trading and the onset of the 2007-9 financial crisis, the positions taken by firms in the subprime mortgage finance industry changed considerably. The movement of foreign and domestic investment banks and commercial banks into subprime mortgage lending disrupted the original division of labor within the market and led firms to converge on a strategy of vertical integration. Major investment banks aligned their tactics with other large, vertically integrated firms, expanding their subprime mortgage origination activities even as the market began to unravel.

Author

• Jacob Habinek, University of California - Berkeley