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Innovation in Investment Banking: The Dynamics of Control Systems within the Chandlerian Firm

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  • Nightingale, Paul
  • Poll, Robert
Abstract
This paper extends the technological aspects of Chandler's "Scale and Scope" framework from 19th-century manufacturing firms that processed physical materials, to a modern service firm that processes information. The intangible nature of information-intensive service provision means that scale and scope economies in investment banking are constrained more by regulations on risk-exposure than developments in production technologies. Profitability and corporate dynamics are therefore dependent on innovation in risk-control systems. Drawing on a case study, the paper shows that risk control systems undergo qualitative changes as they increase in size and complexity. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Nightingale, Paul & Poll, Robert, 2000. "Innovation in Investment Banking: The Dynamics of Control Systems within the Chandlerian Firm," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 9(1), pages 113-141, March.
    • Handle: RePEc:oup:indcch:v:9:y:2000:i:1:p:113-41
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    Citations

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    Cited by:

    1. Bernardo Batiz-Lazo & Trevor Boyns, 2003. "Automation and Management Accounting in British Manufacturing and Retail Financial Services, 1945-1968," Economic History 0303001, University Library of Munich, Germany.
    2. Ben R. Martin, 2016. "Twenty challenges for innovation studies," Science and Public Policy, Oxford University Press, vol. 43(3), pages 432-450.
    3. Jan Ende & Wilfred Dolfsma, 2004. "Technology-push, demand-pull and the shaping of technological paradigms - Patterns in the development of computing technology," Journal of Evolutionary Economics, Springer, vol. 15(1), pages 83-99, January.
    4. Eugenio Caverzasi & Daniele Tori, 2018. "The Financial Innovation Hypothesis: Schumpeter, Minsky and the sub-prime mortgage crisis," Working Papers PKWP1815, Post Keynesian Economics Society (PKES).
    5. Daniele Tori & Eugenio Caverzasi & Mauro Gallegati, 2023. "Financial production and the subprime mortgage crisis," Journal of Evolutionary Economics, Springer, vol. 33(2), pages 573-603, April.
    6. Mustansar, Talreja, 2023. "Financial innovation, technological improvement and bank’ profitability," OSF Preprints 8wy95, Center for Open Science.
    7. Batiz-Lazo, Bernardo & Maixe-Altes, J. Carles, 2008. "Organisational change and the computerisation of British and Spanish savings banks, circa 1965-1985," MPRA Paper 14479, University Library of Munich, Germany.
    8. Batiz-Lazo, Bernardo & Noguchi, Masayoshi, 2011. "The disciplinary power of accounting-based regulation: the case of building societies, circa 1960," MPRA Paper 28374, University Library of Munich, Germany.
    9. Bernardo Batiz-Lazo & Masayoshi Noguchi, 2011. "Accounting for dominance and submission: Disciplining building societies with accounting-based regulation, circa 1960," Discussion Paper Series DP2011-34, Research Institute for Economics & Business Administration, Kobe University.
    10. Maixe-Altes, J. Carles, 2010. "Diverging Paths to a Network World: Computerizing Spanish and British Savings Banks, 1960-1990," MPRA Paper 25966, University Library of Munich, Germany.
    11. Davide Consoli, 2003. "The evolution of retail banking services in United Kingdom: a retrospective analysis," Industrial Organization 0310002, University Library of Munich, Germany.
    12. Consoli, Davide, 2005. "The dynamics of technological change in UK retail banking services: An evolutionary perspective," Research Policy, Elsevier, vol. 34(4), pages 461-480, May.
    13. Nightingale, Paul, 2004. "Technological capabilities, invisible infrastructure and the un-social construction of predictability: the overlooked fixed costs of useful research," Research Policy, Elsevier, vol. 33(9), pages 1259-1284, November.
    14. Keren Naa Abeka Arthur, 2017. "Financial innovation and its governance: Cases of two major innovations in the financial sector," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-12, December.
    15. Maixe-Altes, J. Carles, 2012. "Las cajas de ahorro y el cambio tecnológico antes de Internet, 1945-1995 [Technological change in Spanish Savings Banks before Internet, 1945-1995]," MPRA Paper 37726, University Library of Munich, Germany.
    16. Hopkins, Michael M. & Nightingale, Paul, 2006. "Strategic risk management using complementary assets: Organizational capabilities and the commercialization of human genetic testing in the UK," Research Policy, Elsevier, vol. 35(3), pages 355-374, April.
    17. Joakim Björkdahl & Magnus Holmén, 2019. "Exploiting the control revolution by means of digitalization: value creation, value capture, and downstream movements," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(3), pages 423-436.

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