Transcending Home Bias: Institutional Innovation through Cooperation and Collaboration in the Context of Financial Instability

18 Pages Posted: 14 Nov 2013 Last revised: 3 Jan 2014

See all articles by Gordon L. Clark

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment

Ashby Monk

Stanford University - Global Projects Center

Date Written: November 12, 2013

Abstract

This paper sets out an analytical framework for understanding the nature and significance of cooperation and collaboration in beneficial financial institutions like pension funds and sovereign wealth funds. Recognising that these types of institutions rarely face competition for the flow of funds, it is also noted that these institutions and other types of financial institutions compete with one another to realise target rates of return in global financial markets. At one level, these institutions can be quite parochial, even if there is a premium on institutional innovation. It is argued that in-sourcing and/or outsourcing the production of target rates of return may not provide senior managers sufficient flexibility to respond to changing market conditions. In this respect, cooperation and collaboration between financial institutions can be seen as a way of opening-up an ‘action space’ for innovation otherwise denied by the norms and conventions of the sector. In the penultimate section of the paper, examples of cooperation and collaboration are described noting the ways in which they enable senior managers to transcend home bias (the hegemony of local practice). Implications are drawn as to the limits of cooperation and collaboration, especially as regards the authority of senior managers.

Keywords: collaboration, cooperation, financial institutions, investment management

JEL Classification: G23, J33, L24, R51

Suggested Citation

Clark, Gordon L. and Monk, Ashby, Transcending Home Bias: Institutional Innovation through Cooperation and Collaboration in the Context of Financial Instability (November 12, 2013). Available at SSRN: https://ssrn.com/abstract=2353364 or http://dx.doi.org/10.2139/ssrn.2353364

Gordon L. Clark (Contact Author)

Oxford University - Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44 1865 285197 (Phone)
+44 1865 285073 (Fax)

HOME PAGE: http://www.geog.ox.ac.uk/staff/glclark.html

Ashby Monk

Stanford University - Global Projects Center ( email )

United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
265
Abstract Views
2,089
rank
144,592
PlumX Metrics