ORGANIZATIONAL ECOLOGY

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ORGANIZATIONAL ECOLOGY
Organizational ecology theory provides
macro-level explanations for rates of
organizational population change. In common with
evolution, variation-selection-retention dynamics
result in growth of a new orgl form adapted to a
specific environmental niche.
Michael Hannan and John Freeman launched their
program by in 1970s, based on human ecology
principles developed by Amos Hawley, a UNC
sociologist. Carroll Hannan (2000) manifesto
called for creation of corporate demography as a
discipline.
As it gained academic legitimacy through numerous
publications, OET grew to a high density of
scholars, courses, and students. Its an example
of how an aggressively pursued theory
construction agenda can ultimately achieve
successful institutionalization.
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Forms of Organizations
Population comprised of all the orgs with an
identical form
FORMdf A blueprint for action rules or
procedures for acting upon inputs in order to
produce an orgl product or response.
Altho four attributes are mission, authority
structure, technology, market strategy,
empirically org forms are equivalent to an
industry EX Newspapers, unions, semiconductors,
banks, day-care centers, restaurants, HMOs,
automakers

• CH (2000) reformulated form as a socially
  constructed identity based on institutional
  codes (rules signals) specifying the features
  are legitimated by other population members
• College program accreditation by peer
  institutions
• Brewpubs microbreweries are new identities
  distinct from traditional mass-produced beer
  makers

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Core Concepts
OETs core concepts drawn from bioecology (niche,
carrying capacity, competition), with
institutional additions (legitimation)
FOUNDING of orgs de novo, merger, spin-off,
in-migration MORTALITY thru disbanding, merger,
out-migration INERTIA Inflexibility means most
orgs unable to change form by adapting to new
environmental conditions Wright Bros bike shop
into airplane factory was exceptional DENSITY
total N of orgs in the population at time t
LEGITIMATION org form becomes institutionalized,
socially taken-for-granted (constitutive
legitimation) COMPETITION rivalry within an
industry for resources
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Growth Dynamics
OET explains org population growth dynamics by
the nonlinear impact of changing population size
on subsequent new-form founding and mortality
rates. The density-dependence model involves
interaction between opposing legitimation and
competition processes.

• Population change occurs via selective
  replacement of existing organizations by a newly
  founded orgl form, not by adaptive changes of
  existing orgs
• At low population density, the new orgl form
  struggles to acquire legitimacy
• Once sufficiently legitimated, form expands
  rapidly in its niche as plentiful resources
  (capital, skilled workers) attract entrants to
  exploit those opportunities
• With higher population density, rising resource
  competition slows the founding rate, and resource
  scarcity increases the new forms mortality rate
• After overshooting its niches carrying
  capacity, the population density crashes, then
  recovers to stabilize at a density sustainable by
  the environment

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Growth Graphs
Density dependence equations yield curvilinear
rate patterns
Founding rate
Mortality rate
Time
Time
Combine these founding-mortality rates for
population growth trend
Carrying capacity
Population N
Time
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Logical Coherence
Peli et al. (1994) used first-order logic to
uncover an inferential flaw in Hannan Freeman
theory linking three propositions to the first
theorem
Inertia
Assumption 1 Selection in populations of orgs
favors forms with high reliability of performance
high levels of accountability. (hi_rel n hi_acc
? hi_survival chance) Assumption 2 Reliability
and accountability require that organizational
structures be highly reproducible. (hi_rel n
hi_acc ? hi_reproducibility) Assumption 3 High
levels of reproducibility of structures generate
strong inertial pressures. (hi_reprod ?
hi_inertia) Theorem 1 Selection within
populations of orgs favors organizations whose
structures have high inertia. (hi_inertia ?
hi_survival chance)
(A3)
Reproducibility
(A2)
Reliab/Account.
(A1)
Survival Chance
To enable the transitive deduction A3 ? A2 ? A1 ?
T1, two propositions must reverse causal
directions A3 A2 (or else A1 T1). Instead,
Peli et al. save T1 by restating bi-directional
implications for A2 (the more reliable/
accountable an org, the more reproducible it is
and vice versa) A3 (high reproducibility is
always accompanied by high inertia and vice
versa).
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Liabilities
Rates of founding, growth, and mortality vary
with orgl age size. Several liabilities affect
these vital rates, forms environmental fit
NEWNESS - younger orgs fail more, due to internal
lack of trust, selection processes favoring
reliable orgl structures
SMALLNESS - smaller orgs fail more, due absence
of slack resources, poor economies of scale in
production
Adolescence peak mortality follows honeymoon,
exhaustion of initial capital and participant
enthusiasm Obsolescence older orgs more
susceptible to external shocks as inertia
prevents adapting to changed environment Senesence
persistence of routines structures reduces
older orgs efficiency even in stable environments
Research findings are mixed, often lacking size
data newness liability may occur because most
young orgs are also very small
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Theory Critiques
OET criticized for simplification, ambiguity of
density as proxy for both unobserved legitimacy
and competition effects

• Legitimacy may matter most at beginning of a
  new form, not later
• Within population, some orgs are less
  vulnerable to competition
• Older, larger orgs may be more adaptable, less
  inertial than believed
• Density may hide effects of other influences on
  population dynamics, e.g., institutional
  interdependencies, social networks, learning
  opportunities, entrepreneurial activities

Institutionalists (Zucker 1989 Baum Powell
1995) demanded direct measures of socio-political
legitimation, e.g., events which may be unrelated
to new form population density EX Road races
gained wide acceptance for 1900s
automobiles Hannan Carroll terse reply that (a)
OE does include some measures of institutional
environments (b) stronger theory is created when
analysts use concepts that are generalizable
across diverse populations
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Empirical Evidence
OE researchers generated an exceptional volume of
empirical studies by applying event history
methods to data on diverse orgl populations.
Although results usually supportive, much remains
to be learned about ecological demographic
processes of organizational change.
After initial discovery of density dependence,
many other analyses were conducted. on a highly
diverse set of populations, the overwhelming
majority of these tests yield the non-monotonic
patterns described above. The disconfirming
tests have apparently come from analyses of data
produced by flawed research designs, notably
left-truncated observation schemes that exclude
the early history of a population. (Carroll
Hannan 2000218-19)
Baum Amburgey (2002322) concluded that OE
researchers sacrificed precision realism to
gain broader generality in density dependence and
inertia studies. Accumulated empirical
estimates for such variables as orgl age, size,
and density reveal little about theoretical
explanations underlying the empirical
regularities. This fosters skepticism regarding
the inferred processes because supportive
findings cannot be interpreted precisely, and
contradictory findings are difficult to account
for on theoretical grounds.
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Theory Comparisons
Evolution and OE theories are very similar at
population level
OET structural inertia principle assumes little
adaptability by individual orgs to survive by
changing an MBAs nightmare! But evolutionists
see potential for restructuring (by changing
routines), enabling orgs to survive by adaptive
transformation
Institutional isomorphism originally contrasted
with OET diversification now they borrow one
anothers concepts Instead of orgl forms
converging around one common type, quex is Why
are there so many kinds of organizations?
(Hannan and Freeman 1976936)
Communities of orgs rarely remain in long run
equilibrium because high rates of vital processes
? great population turnover Uncertain rapidly
changing orgl environments steadily generate new
resource niches entered and colonized by new org
forms
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An Ecological Theory of Association
Organizational ecology theory is premised on an
atomistic actor model that ignores the
interorganizational networks linking competitor
firms.
J. Miller McPhersons multilevel ecological
theory of association explains temporal changes
in membership composition -- of voluntary assns,
social movements, religious cults by the
interplay between organizational characteristics
individuals joining-departure behaviors.

• Organizations compete ecologically within a
  niche space defined by the social attributes of
  people living in a community. They seek to
  acquire control over the resources
  (participation, money, time, political support,
  legitimation) held by potential members
  possessing the assns target demographics.
• Interpersonal connections through social
  networks of kin, friends, acquaintances are
  mechanisms to recruit replacements new assn
  members.

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Homophily ? Homogeneity
Homophily principle people prefer to associate
with others with similar sociodemographic
attributes (gender, age, race, religion, class).
H0 Probability of a tie between two persons
decreases with social dissimilarity, i.e.,
greater distance in a multidimensional space

• Via network recruitment, most new members
  attributes replicate older ones
• Although assn recruits members within a niche,
  boundaries should spread outward as peoples
  contacts span niche edges to recruit diverse new
  persons
• Yet most assns remain highly homogeneous in
  their social characteristics

• McPherson Assn homogeneity is reinforced by
  network-mediated selective attrition
• Longer membership durations at niche centers,
  where denser ties occur among assn members
• Higher departure rates at niche edges where
  intra-assn ties are sparser assns compete
  fiercely recruit new members

YUPPIE ASSN
S E S
YOUNG ADULT CLUB
HIGH SCHOOL GROUP
AGES OF TARGET MEMBERS
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Competitive Dynamics

• Assns are hyperboxes in K-dimensional spaces as
  defined by member attributes. Competition
  produces a push-pull dynamic equilibrium
• Assns are pushed away from highly overlapped
  regions where competition creates difficulties to
  recruit new members hold old ones
• Assns are pulled into under-abundant regions by
  better opportunities to recruit more members than
  they lose through competition

Data to support social ecology hypotheses came
from McPhersons 10-town Nebraska study in 1980s
he proposes to replicate using 2004 GSS
hypernetwork.
Hypernetwork a two-mode matrix linking row
persons to column assns. Respondents identify
their associations, whose informants are then
surveyed. Assns are weighted by member-size to
estimate organizational population parameters.
EX Both 1991 National Organizations Study 1998
National Congregations Study used GSS respondents
to generate org lists, thus selected proportional
to their size.
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References
Baum, Joel A. C. and Terry L. Amburgey. 2002.
Organizational Ecology. Pp. 304-326 in
Blackwell Companion to Organizations, edited by
Joel Baum. Malden, MA Blackwell. Baum, Joel A.C.
and Walter W. Powell. 1995. Cultivating an
Institutional Ecology of Organizations. American
Sociological Review 60529-538. Carroll, Glenn
and Michael T. Hannan. 2000. The Demography of
Corporations and Industries. Princeton, NJ
Princeton University Press. Hannan, Michael T.
and John Freeman. 1977. The Population Ecology
of Organizations. American Journal of Sociology
82929-964. Hannan, Michael T. and John Freeman.
1984. Structural Inertia and Organizational
Change. American Sociological Review
49149-164. Hannan, Michael T. and John Freeman.
1988. The Ecology of Organizational Mortality
American Labor Unions, 1836-1985. American
Journal of Sociology 9425-52. Hannan, Michael T.
and John Freeman. 1989. Organizational Ecology.
Cambridge, MA Harvard University Press. Peli,
Gabor, Jeroen Bruggeman, Michael Masuch and
Breanndan O. Nuallain. 1994. A Logical Approach
to Formalizing Organizational Ecology. American
Sociological Review 59571-593. Zucker, Lynne G.
1989. Combining Institutional Theory and
Population Ecology No Legitimacy, No History.
American Sociological Review 54542-545.