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Strategic risk positioning as sensemaking in crisis: the adoption of electronic trading at the London International Financial Futures and Options Exchange

Scott, Susan V and Barrett, Michael I. (2005) Strategic risk positioning as sensemaking in crisis: the adoption of electronic trading at the London International Financial Futures and Options Exchange. The Journal of Strategic Information Systems, 14 (1). pp. 45-68. ISSN 0963-8687

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Abstract

In this paper we describe a period of strategic crisis (1997–2000) at the London International Financial Futures and Options Exchange (LIFFE) precipitated by the loss of a key benchmark product from their manual trading environment to an electronic trading platform (DTB/Eurex). Using Bower and Christensen's (1995a) notion of disruptive technology, our analysis starts by examining the response of major international financial futures exchanges and considers why the industry incumbents ignored the potential threat from electronic trading for so long. Widening our focus to examine responses from the broader financial market community to these events, we then embed LIFFE's story in the organizational literature on sensemaking. This provides the theory of disruptive technology with an analysis of the meaning-making processes surrounding it and provides evidence for an empirically grounded form of sensemaking, which we call strategic risk positioning. Our findings are of interest both to practitioners in incumbent organizations responsible for managing potential threats from new entrants and academics attempting to develop theoretical tools to provide support during strategic crises associated with new technology adoption.

Item Type: Article
Official URL: http://www.elsevier.com/locate/jsis
Additional Information: © 2005 Elsevier B V
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Q Science > QA Mathematics > QA76 Computer software
Journal of Economic Literature Classification System: G - Financial Economics > G1 - General Financial Markets
D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D53 - Financial Markets
Sets: Research centres and groups > Information Systems and Innovation Group
Departments > Management
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > Centre for Analysis of Risk and Regulation (CARR)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 16 Sep 2008 13:08
URL: http://eprints.lse.ac.uk/16237/

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