Download - Ecological Approach to Organization Theory
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Ecological Approaches
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Pre-1977: focus on adaptive change Hannan and Freeman (1977) emphasized selection processes, asking Why
are there so many kinds of organizations?
Origins in natural selection and biology theories of Darwin Main dependent variables: organization birth, change, death
Challenges assumptions of contingency and TCE that organizations canchange their structural features
Change viewed as hard and rare - not the result of adaptation in existingorganizations but of the replacement of one type with another
Shift in unit of analysis from organization to population of organizations
Organizational Ecology
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Main Question: How are organizational environments organized?
Unit of Analysis: Organizational population
What is a population of organizations?
Analogous to species of organisms (biology)
A set of organizations engaged in a set of similar activities and withsimilar patterns of resource utilization
"...consists of all the organizations within a particular boundary that havea common form"
Some organizations fail and are selected out, some survive, new orgs enter thepopulation
Populations are formed as a result of processes that isolate or segregate one
organizational form from another:
Demographic, Ecological, and Environmental Processes
Population Ecology
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Liability of Newness (Stinchcombe, 1965): younger firms have a higher
likelihood of failure due to lack of: routinization, legitimacy, stable
relationship with external environment
Liability of Obsolescence (Baum, 1989): failure rates increase with age as fit
with environment erodes
Liability of Smallness (Aldrich and Auster, 1986 ): small firms more likely to
fail due to a greater inability to raise capital, recruit and train, handle high
costs - taxes, government compliance
Age is often confounded with size
Demographic Processes
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Niche width theory 2 Strategies of survival: specialist vs. generalist
Excess capacity and environmental change Niches vary along 2 dimensions: variability over time and frequency
(grain)
Ecological Processes
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Density Dependence/Competition Theory
The number of prior foundings and failures in a population is an important
factor affecting future population dynamics.
Growth Model:
where K is the carrying capacity of the population's environment, r is the
natural growth rate of the population, N is population density, and t is atime interval.
Environmental resources can only support a limited number of organizations
Ecological Processes
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Technological incompatibilities Punctuated equilibrium - periods of rapid, discontinuous change Destructive innovations
Societal processes/changes also shape the varying types of organizations Political / Institutional
Wagner Act (1935) increased density of industrial unions Public capitalization increased founding rates of railroads Antitrust policies decreased founding rates of railroads
Social / Private Membership in associations decreased failure rates for Israeli
worker co-ops Ties to hotel chains increased survival chances
Imprinting effect Cohorts formed at same time in similar circumstances have similar
structure
Original structure likely to be retained because of inertia
Environmental Processes
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Structural Inertia Theory
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Individuals cannot always determine which variations will succeed Populations already exist No species analog - how to consistently define a population or a niche Niche in one study can be different in another Reliability and accountability require reproducible structures
Difficult to observe competition for a niche Concentrates on phyletic change: gradual one-by-one selection Emphasizes forces that maintain population stability - selection reduces
diversity
Assumptions & Limitations
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Populations are parts of a broader system of community evolution Explains evolution as the joint product of forces that homogenize and
stabilize populations and diversify between them
Unit of change: rise and fall of populations Unit of analysis: community
Astley (1985) The role of technology in linking multiple populations Convergence of technology leads to homogeneity within populations,
but increased difficulty in transferring technology outside population
boundaries differentiates between populations
Community Ecology
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Henderson, A. D. (1999). Firm strategy and age dependence: A contingent view ofthe liabilities of newness, adolescence, and obsolescence.Administrative Science
Quarterly, 44(2), 281-314.
Multiple patterns of age dependence may simultaneously exist within a singlepopulation, depending on standards or proprietary technology strategy
CATTANI, G., FERRIANI, S., NEGRO, G., & PERRITTI, F. (2006).INTEGRATING ECOLOGIES: POPULATION DYNAMICS AND
INTERORGANIZATIONAL NETWORKS IN THE U.S. MOTION PICTURE
INDUSTRY, 1912-1970.Academy Of Management Annual Meeting Proceedings,
N1-N6.
Integrates network and ecology theories How do network properties affect survival? Finds relational and structural embeddedness good for survival Increases integration within and between populations and communities
Ecology in Strategy
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Baum, J. A., & Mezias, S. J. (1992). Localized Competition and
Organizational Failure in the Manhattan Hotel Industry, 1898-1990.
Administrative Science Quarterly, 580-604.
Examines the impact of localized competition on rates of failure in the
Manhattan hotel industry from 1898 to 1990 (Hotel Redbook) Builds on existing density-based models of interorganizational
competition by including variation at the organizational level
Findings
Hotels located in densely populated regions of the distributions of
organizational size, geographic location, and price experiencedsignificantly higher failure rates.
Shows how an ecological approach to competition that incorporatesintrapopulation variation can provide a more detailed understanding of the
competitive dynamics and evolution of organizational populations.
Ecology in Hospitality & Tourism
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Hjalager, A. M. (1999). The Ecology of Organizations in Danish Tourism: A
Regional Labour Perspective. Tourism Geographies, 1(2), 164-182.
Examines the establishment, survival, and mortality rates of tourismenterprises (restaurants and accommodations) in Denmark (1981-1994)
Data from the IDA data bank (Statistics Denmark) - labor statistics
Findings
More tourism organizations established in urban areas More turbulence (establishment and closure) in rural areas
Annual survival rates of 76% (restaurants) and 82% (accommodations) compared to 92% (banks) and 98% (health care) Other regional factors influence ecology:
Labor force - unqualified leads to instability Franchises - increase knowledge base as leads to stability
Ecology in Hospitality & Tourism