Organizational ecology
Encyclopedia
i
\--184.38.106.199 (talk) 22:59, 29 November 2011 (UTC)her Haveman]], Alessandro Lomi, Anand Swaminathan, Giacomo Negro, and Stanislav Dobrev.
Theories about inertia and change are fundamental to the research program of organizational ecology, which seeks a better understanding of the broader changes in the organizational landscape. Given the limits on firm-level adaptation, most of these broader changes thus come from the entry and selective replacement of organizations. Hence organizational ecology has spent considerable effort on understanding the founding and mortality rates of organizations.
Niche theory shows that specialisation is generally favoured in stable or certain environments. However, the main contribution of the niche theory is probably the finding that “generalism is not always optimal in uncertain environments” (Hannan and Freeman 1977: 958). The exception is produced by environments which “place very different demands on the organization, and the duration of environmental states is short relative to the life of the organization” (Hannan and Freeman 1977: 958).
Thus, the niche theory explains variations in industrial structure in different industries. The theory shows how different structures in different industries (generalist vs specialist organizations) are shaped by relevant environments.
.
The theory can be illustrated by describing two environments. Environment A stands for an unconcentrated mass market and environment B represents a concentrated mass market. In environment B, generalists will always attempt to address the center of the market where most resources peak. After all, in the center of the market these generalists can thrive by exploiting economies of scale
. Carroll (1985) claims however that “in environment B, despite the very concentrated generalists market, the resource space outside this market [i.e. in the periphery of the market] is larger than in environment A, where the generalist market is less concentrated” (Carroll 1985:1272). The abundance of resource in the periphery can then become hospitable to specialist organizations, and the market becomes effectively partitioned. Carroll concluded that “more available resources should translate into better chances of success for specialists when they operate in the more concentrated market” (Carroll 1985:1272).
. Legitimation generally increases (at a decreasing rate) with the number of organizations, but so does competition (at an increasing rate). The result is that legitimation processes will prevail at low numbers of organizations, while competition at high numbers.
The founding rate will therefore first increase with the number of organizations (due to an increase in legitimation) but will decrease at high numbers of organizations (due to competition). The reverse holds for mortality rates. Thus, the relationship of density to founding rates has an inverted U shape and the relationship of density to mortality rates follows a U-shaped pattern.
\--184.38.106.199 (talk) 22:59, 29 November 2011 (UTC)her Haveman]], Alessandro Lomi, Anand Swaminathan, Giacomo Negro, and Stanislav Dobrev.
Inertia and change
This theory fragment holds that organizations that are reliable and accountable are those that can survive (favored by selection). A negative by-product, however, of the need for reliability and accountability is a high degree of inertia and a resistance to change. A key prediction of organizational ecology is that the process of change itself is so disruptive that it will result in an elevated rate of mortality.Theories about inertia and change are fundamental to the research program of organizational ecology, which seeks a better understanding of the broader changes in the organizational landscape. Given the limits on firm-level adaptation, most of these broader changes thus come from the entry and selective replacement of organizations. Hence organizational ecology has spent considerable effort on understanding the founding and mortality rates of organizations.
Niche theory
The theory fragment on niche width distinguishes broadly between two types of organizations: generalists and specialists. Specialist organizations maximize their exploitation of the environment and accept the risk of experiencing a change in that environment. On the other hand, generalist organizations accept a lower level of exploitation in return for greater security (Hannan and Freeman 1977: 948).Niche theory shows that specialisation is generally favoured in stable or certain environments. However, the main contribution of the niche theory is probably the finding that “generalism is not always optimal in uncertain environments” (Hannan and Freeman 1977: 958). The exception is produced by environments which “place very different demands on the organization, and the duration of environmental states is short relative to the life of the organization” (Hannan and Freeman 1977: 958).
Thus, the niche theory explains variations in industrial structure in different industries. The theory shows how different structures in different industries (generalist vs specialist organizations) are shaped by relevant environments.
Resource partitioning
The relationship between generalists and specialist organizations is further developed in the resource-partitioning model which includes predictions about the founding and mortality rates of both specialists and generalists as a function of market concentrationMarket concentration
In economics, market concentration is a function of the number of firms and their respective shares of the total production in a market...
.
The theory can be illustrated by describing two environments. Environment A stands for an unconcentrated mass market and environment B represents a concentrated mass market. In environment B, generalists will always attempt to address the center of the market where most resources peak. After all, in the center of the market these generalists can thrive by exploiting economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
. Carroll (1985) claims however that “in environment B, despite the very concentrated generalists market, the resource space outside this market [i.e. in the periphery of the market] is larger than in environment A, where the generalist market is less concentrated” (Carroll 1985:1272). The abundance of resource in the periphery can then become hospitable to specialist organizations, and the market becomes effectively partitioned. Carroll concluded that “more available resources should translate into better chances of success for specialists when they operate in the more concentrated market” (Carroll 1985:1272).
Density dependence
Organizational ecology also predicts that the rates of founding and mortality are dependent on the number of organizations (density) in the market. The two central mechanisms here are legitimation (the recognition or taken-for-grantedness of that group of organizations) and competitionCompetition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...
. Legitimation generally increases (at a decreasing rate) with the number of organizations, but so does competition (at an increasing rate). The result is that legitimation processes will prevail at low numbers of organizations, while competition at high numbers.
The founding rate will therefore first increase with the number of organizations (due to an increase in legitimation) but will decrease at high numbers of organizations (due to competition). The reverse holds for mortality rates. Thus, the relationship of density to founding rates has an inverted U shape and the relationship of density to mortality rates follows a U-shaped pattern.
Age dependence
How an organization's risk of mortality relates to the age of that organization has also been extensively examined. Here, organizational ecologists have found a number of patterns:- Liability of newness. Here, the risk of failure is high initially but declines as the organization ages.
- Liability of adolescence. The risk of mortality will be low at first as the organization is buffered from failure due to support by external constituents and initial endowments. But when these initial resources become depleted, the mortality hazard shoots up and then declines following the liability of newness pattern.
- Liabilities of aging. Here, the risk of failure increases with organizational age. This could be due to a liability of senescence (internal inefficiences arising from the aging of the organization) or a liability of obsolescence (a growing external mismatch with the environment).
See also
- Biocultural evolutionBiocultural evolutionBiocultural evolution refers to historical evolutionary processes that occur as a result of culture's interaction with biology.-Cultural factors:...
- Organizational behavior
- Organizational Behavior ManagementOrganizational Behavior ManagementOrganizational behavior management is an important aspect of management studies the subject which is studied in first year of management studies is known as organizational behaviour . OBM is the result of applying the psychological principles of applied behavior analysis and the experimental...
- Organizational studiesOrganizational studiesOrganizational studies, sometimes known as organizational science, encompass the systematic study and careful application of knowledge about how people act within organizations...