Document Type
Article
Publication Date
5-27-2001
Abstract
The New York Stock Exchange founded in 1792 is the largest and busiest market the world has ever seen. More than 3,000 companies with a capitalization of more than $12 trillion dollars are represented by the New York Stock Exchange. Half, or nearly $6 trillion dollars, represent 400 foreign companies from around the globe. On average more than one billion - shares worth over $40 billion dollars - change hands everyday (NYSE, handout). Investments in the U.S. stock markets have grown significantly over the past decade. Along with this growth has come a diversification of investors, investment tools and corresponding regulations. Decisions made by large brokers and institutional investors can have a wide-ranging impact on a broad range of investors. The impact is felt through pension funds, 401(k), IRA, mutual funds and a range of individual investment tools. The dynamic nature of the stock exchange as well as the effect on everyday Americans makes for a fascinating and relevant target for research. The research target is the stock market community, in particular, the New York Stock Exchange in New York City. Investors large and small take for granted the integrity of the New York Stock Exchange. The New York Stock Exchange goes to great lengths to ensure there is integrity in the market because it makes good business sense. This paper will look at how trust plays a pivotal role in both the daily work process and market efficiencies and how this institution, motivated for commercial purposes, reinforces integrity to the benefit of society. My personal interest in this issue is generated from my position as a business leader who has experienced the declining emphasis placed on business integrity. In particular, I have noticed trends in patterns between companies and suppliers. Increasingly, companies in search of higher profit margins cast aside long-term relationships as well as established formal or informal agreements. The result is that suppliers build a financial hedge in business proposals to guard against similar actions which may be taken in future contracts. Generally, the declining trust between individuals and institutions forces an increase in transaction costs and a lowering of productivity. The increase costs comes in the form of verification requirements or the excessive development of systems for litigation. Ultimately, the cost to both the purchaser and the supplier in this business-to-business arrangement pay a higher cost due to the lack of trusts between the businesses. I believe the observations that I have made concerning business-to-business procurement are valid in most business settings. The effect of strong ties in operational efficiency can be readily seen in action at the New York Stock Exchange, due to the scale and scope of the institution. The primary method of research comes in the form of observations during daily routines at the exchange. In addition, I have performed an in-depth evaluation of published materials. By examining the life way of the stock market, I hope to contribute to the understanding of the role of integrity in business management, in particular, how it promotes greater efficiency.
Keywords
small business -- management
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Milzcik, Gregory, "The Strength of Strong Ties: The Role of Integrity in Efficiency" (2001). Student Scholarship. 497.
https://commons.case.edu/studentworks/497