Research Summary

Market Triads: A Theoretical and Empirical Analysis of Market Intermediation (Journal for the Theory of Social Behavior, June 2002)

by Rakesh Khurana


This paper examines the role of executive search firms in CEO search. The paper argues that the numerical shift from two party market transactions (e.g. buyers and sellers) to three party transactions (e.g. buyers, sellers, and third party) transforms market exchanges and the roles of the various participants in these exchanges in ways not anticipated by existing theories. At the heart of my findings is a perspective that describes ESFs as intermediaries to a complex labor market exchange. As intermediaries, the role of the third-party is not to broker relationships between two parties that are disconnected from each other; rather the role is to create a working relationship between two parties that are quite well aware of each other’s existence. The identification of the intermediary role in markets presents a theoretical challenge to the existing brokerage literature in sociology, which characterizes the third party as an opportunistic actor bringing together two unconnected actors. One implication of the existing theoretical research is that if the two other actors could communicate directly with each other, the third would not be needed. Yet this is clearly not the case in the CEO labor market, where directors and candidates are often acutely aware of each other's existence, but where their relationship is defined largely through an intermediary.