Ecological Approach to Organization Theory

7/29/2019 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

Documents

Ecological Approach to Organization Theory