Organizational ecology

1、organizational ecology joel a.c. baum and terry l. amburgey rotman school of management university of toronto 105 st. george street toronto, ontario m5s 3e6 phone: (416) 978-4914 (416) 978-4063 fax: (416) 978-4629 e-mail: baummgmt.utoronto.ca amburgeymgmt.utoronto.ca version 2.0 october 19, 2000 7,4

2、00 words introduction organizational ecology aims to explain how social, economic and political conditions affect the relative abundance and diversity of organizations and to account for their changing composition over time. research in organizational ecology is grounded in three observations. first

3、, aggregates of organizations exhibit diversity. second organizations have difficulty devising and executing changes fast enough to meet the demands of uncertain, changing environments. and, third, organizations arise and disappear continually. given these observations, ecological analyses formulate

4、 organizational change and variability at the population level, highlighting differential creation of new and demise of old organizations and populations with heterogeneous attributes. this formulation contrasts adaptation approaches, which explain organizational diversity in terms of ongoing organi

5、zations leaders cumulative strategic choices. changes in organizational populations reflect the operation of four basic processes: variation, selection, retention, and competition (aldrich 1979; campbell 1965; mckelvey 1982). variations result from human behavior. any kind of change, intentional or

6、blind, is a variation. individuals produce variations continuously in their efforts to adjust their behavior to others in the organization and to adjust the organizations relationship to the environment. the centrality of issues of coordination and control in organization theory is a testament to th

7、e commonness of variation inside organizations. organizational variations provide the raw material for selection processes. some variations prove more beneficial to organizations than others in acquiring resources in a competitive environment and are thus selected positively by managers inside organ

8、izations. similarly, investors, customers, and government regulators in the resource environment select among the variations in place among organizations competing for resources. when successful variations are known, or when environmental trends are identifiable, individuals can attempt to copy and

9、implement these successful variations in their own organization, or they can attempt to forecast, anticipate, plan, and implement policies in the context of the predictable trends. but when successful variations are unknown, because, for example, the behavior of consumers and competitors is unpredic

10、table, the probability of choosing the correct variation and implementing it successfully is low. even when effective variations are identifiable, ambiguity in the causes of success may frustrate attempts at implementation and imitation. under such conditions, variations can be viewed as experimenta

11、l trials, some of which are consciously planned and some of which are accidental, some of which succeed and some of which fail. whether or not they are known, over time, successful variations are retained as surviving organizations come to be characterized by them. if the survival odds are low for o

12、rganizations with a particular variant, it does not mean that these organizations are destined to fail. rather, it means the capacity of individuals to change their organizations successfully is of great importance. ecological approaches do not remove individuals from responsibility for or influence

13、 over their organizations success and survival individuals do matter. why have there been so many claims to the contrary? one important part of the confusion is that determinism is mistakenly contrasted with voluntarism rather than with probabilism. leaving aside whether their actions are intelligen

14、t or foolish, planned or improvised, individuals can clearly influence their organizations futures. under conditions of uncertainty and ambiguity, however, there are severe constraints on the ability of boundedly rational individuals to consistently conceive and implement changes that improve organi

15、zational success and survival chances in the face of competition. thus, “in a world of high uncertainty, adaptive efforts . turn out to be essentially random with respect to future value” (hannan barron et al. 1994; ranger-moore 1997) identifies processes affecting older organizations and predicts t

16、hat failure increases with aging. the liability of aging begins with another insight from stinchcombes essay: “. the organizational inventions that can be made at a time in history depend on the social technology available at that time” (1965:153). organizations reflect their founding environment. a

17、s environments change, however, bounded rationality and structural inertia make it difficult for individuals to keep their organizations aligned with environmental demands. encountering a series of environmental changes may thus expose aging organizations to a risk of obsolescence. aging may also br

18、ing about senescence: an accumulation of internal friction, precedent and political pacts that impede action and reliable performance, lowering organizational performance - and survival chances - even in a stable environment. obsolescence and senescence pose separate risks: senescence is a direct ef

19、fect of aging; obsolescence a result of environmental change. ranger-moore (1997) recently examined age dependence in an archival, event history study of 154 new york life insurance companies during 1813-1985. first, he attempted to show the sensitivity of age dependence in organizational failure to

20、 the inclusion of time-varying measures of organizational size. second, he examined patterns of age dependence of life insurance companies for evidence of senescence and obsolescence. based on the conceptual distinction between these processes, he suggested that positive age dependence in failure ra

21、tes reflects a liability of senescence in a stable environment, whereas in a turbulent environment positive age-dependence greater than that in stable environments reflects combined liabilities of senescence and obsolescence. to test these ideas, ranger-moore compared estimates of age dependence acr

22、oss several, more or less stable, historical periods. results supported global hypotheses for size and age, showing age dependence to be sensitive to inclusion of time-varying size and in particular that a spurious liability of newness appeared without size controlled. however, the liability of agin

23、g exhibited by life insurance companies (after controlling for size) suggested only a liability of obsolescence; there was no liability of aging during stable historical periods. more generally, divergent age dependence results might reflect variation in age dependence across populations or subpopul

24、ations (baum 1996). in this view, newness, adolescence and obsolescence are complementary rather than competing models, only one of which is correct. to address this possibility research must test alternative age dependence models mediating variables directly rather than using age as a surrogate for

25、 all underlying constructs. henderson (1999) recently conducted such a study in which he hypothesized contingent age dependence effects dependent on an organizations technology strategy. proprietary strategists explore new technologies by engaging in search, variation and experimentation; the growth

26、 potential is large but so is the risk of failure. standards strategists emphasize the refinement of existing technologies, forgoing future growth opportunities for risk reduction. proprietary strategists take longer to develop a stable and reproducible set of organizational routines and capabilitie

27、s and may also experience lower legitimacy than standards strategists. this, coupled with lower initial growth, should produce more initial failure of proprietary strategists. moreover, proprietary strategists reliance on internal technology makes adaptation to external changes difficult. standards

28、strategists, in contrast, should readily absorb external innovations, particularly from other standards strategists. hendersons partial adjustment models of sales growth and event history models of failure among 649 u.s. personal computer manufacturers during 1975-92 provided strong support for his

29、contingency view. one exception was that proprietary strategists did not exhibit a liability of newness. hendersons results demonstrate how multiple patterns of age dependence can operate simultaneously in a single population. his study also reveals important tradeoffs between growth and the risk of

30、 failure resulting from the joint effects of age and strategy. organizational change most research on organizational change concentrates on content: a change to a more (less) advantageous configuration is considered adaptive (detrimental) (amburgey et al. 1993). complementing this focus, structural

31、inertia theory (hannan ginsberg noda stuart gulati chang 1995). other tests of age and size dependence in rates of organizational change have yielded mixed results, however, and taken together provide little systematic support for structural inertia theorys key predictions (see baum 1996). overall,

32、research indicates that, while momentum and sometimes inertia constrains organizations, they do initiate substantial change in response to environmental shifts (baum 1996). of course, inertia and momentum are not necessarily harmful: in addition to promoting performance reliability and accountabilit

33、y, they can keep organizations from responding too quickly and frequently to uncertain environmental change. ultimately, whether inertia and momentum are adaptive depends on the hazardousness of change. is organizational change beneficial? when viewed dynamically, organizational change can be both a

34、daptive and disruptive. according to structural inertia theory, core change destroys or renders obsolete established routines, disrupts exchange relations and undermines organizational legitimacy by impairing performance reliability and accountability. if organizations stakeholders favor reliability

35、 and accountability, then organizations may often fail precisely as a result of their attempts to survive even attempts that might, ultimately, have proved adaptive. because their structures, routines and linkages are more institutionalized, older organizations are especially likely to experience di

36、sruption following core change. in contrast, large organizations may be buffered from core change disruption by, for example, maintaining both old and new routines during transition or overcoming deprivations and competitive challenges accompanying the change. if an organization survives the short-r

37、un hazard, its failure rate is predicted to decline over time as its reliability, exchange relations, and legitimacy are re-established. only if the rate of decline is faster than before the change, however, will the organization ultimately benefit from taking the short-term risk. baum and singh (19

38、96) examined the interaction of adaptation and selection in a population of 789 daycare centers in toronto during 1971-89. adaptation was defined as alteration of the organizations niche in response to competition, selection as differential failure. they focused on organizational niche changes, core

39、 changes that involve alterations (both expansion and contraction) in the ages of children daycares are licensed to enroll. they measured competition for each daycare as overlap density, the sum of the overlaps between each centers niche and those of all others. they proposed that greater overlap de

40、nsity leads to more change and that changes that increase (decrease) an organizations overlap density raises (lowers) its risk of failure. their event analysis revealed that competition increased rates of organizational niche expansion but not contraction. support for the disruptive effects was mixe

41、d for expansion, but strong for contraction, which proved hazardous, particularly immediately after thye change, and for smaller and older daycares. niche expansion and contraction were both, however, significantly more (less) life threatening if they increased (decreased) the level of competition a

42、 center faced. notably, while baum and singh found that daycare centers could change their niches in survival enhancing ways, on average, it turns out, they did not. in another innovative study, greve (1999) modeled effects of changes in organizations market positions on their market share to study

43、performance consequences of core change, and also to clarify the moderating role of organizational size in structural inertia theory. if larger size leads to greater structural inertia, larger organizations should suffer more severe declines in performance. if, however, larger organizations have gre

44、ater resource endowments that buffer them from disruptive effects of change they should experience performance decline after change but not an increased risk of failure. since branches of multiunit organizations should experience the inertial effects of large size combined with benefits of market po

45、wer, they offer an ideal arena for separating inertia and resource endowment effects. for branches of large multiunits, performance decline after a core change should be greater (or lesser) than for unitary organizations. because regression to the mean tends to produce improvement after poor perform

46、ance, a pattern of making changes when performance is low can make changes appear successful. only by comparing organizations that change, with poor performers that do not, can increased performance due to regression and change be distinguished. greve analyzed data on 2490 radio stations in 160 u.s.

47、 radio markets during 1984-92. market positions are defined as the format of the radio station, and changes in format are taken as core changes. nonlinear least-squares estimates indicated that large and high-performing organizations experienced greater audience share losses following changes. these

48、 and other empirical studies indicate that while core change is not necessarily disruptive in the short run, organizations do not necessarily improve their survival chances in the long run either (baum, 1996). two research design problems seem likely to produce systematic underestimates of the hazar

49、dousness of change, however. first, annual data typically available may not detect the deadliest changes those proving fatal within a year. second, because organizations founded before a study period are not observed when they are youngest, smallest, and most likely and vulnerable to change their in

50、clusion likely biases downward estimates of the risk of change. ecological processes niche width dynamics niche width theory (hannan generalists are unable to respond quickly enough to operate efficiently. thus, niche-width theory challenges the classical contingency theory prediction that uncertain

51、 environments always favor generalists that spread their risk. in contrast to niche width theory, which predicts that for a given population one optimal strategy exists, carroll (1985) proposes that, in environments characterized by economies of scale, competition among generalists to occupy the cen

52、ter of the market frees peripheral resources that are most likely to be used by specialists. he refers to the process generating this outcome as resource partitioning. his model implies that in concentrated markets with a few generalists, specialists can exploit more of the available resources witho

53、ut engaging in direct competition with generalists. this yields the prediction that increasing market concentration increases the failure rate of generalists and lowers the failure rate of specialists. resource-partitioning theory is supported in studies of newspaper organization failure (carroll 19

54、85, 1987) as well as several more recent studies of founding and failure of american breweries (carroll but see delacroix et al. 1989). one explanation for the dominance of density dependence over population dynamics is the more systematic character of density relative to the changes in density prod

55、uced by founding and failure. a related explanation is the greater sensitivity of rate dependence estimates to outliers. these issues need to be examined more thoroughly before population dynamics is abandoned, which has been the trend in recent research. contemporary issues and debates respecifying

56、 density dependence although support for density dependence is quite strong, it has received critical attention for its proposed integration of ecological and institutional perspectives, assumption that each organization influences and is influenced by competition equally, and inability to explain t

57、he concentration common to older populations. several innovative respecifications of the original formulation have been advanced to address these limitations (see table 2). although hannan and carroll frequently challenge such efforts (e.g., 1992; 1995), they nevertheless promise to improve substant

58、ive interpretation and realism of the original model. we briefly consider three of these respecifications. insert table 2 about here. density and institutional processes organizational ecologists distinguish between cognitive and sociopolitical legitimacy. an organizational form is cognitively legit

59、imated when there is little question in the minds of actors that it serves as the natural way to effect some kind of collective action. embeddedness in relational and normative contexts influences an organizational forms sociopolitical legitimacy by signaling conformity to social and institutional e

60、xpectations. institutionalist theorists consider these two facets fundamentally interrelated while cognitive legitimacy may be achieved without sociopolitical approval, sociopolitical legitimacy is a vital source of, or impediment to, cognitive legitimacy. density dependence theory emphasizes only c