Evolution of Organizational Forms in Ecological Perspective

The view that selection processes govern the dynamics of organizational diversity shades naturally into a Darwinian evolutionary position. Such a position claims that long-run changes in organizational diversity reflect the accumulated effects of short-run differences in net mortality rates of popu- lations facing limited resource environments. Moving from a population ecology of organizations to a theory of organizational evolution involves an extra step, linking long-term patterns of change to short-run variations or even to current cross-sectional patterns. In other words, it involves specifying how the various short-run processes combine to produce change in organizational characteristics over long periods of time.

Before discussing the possible advantages of developing evolutionary theories of organizations, it is necessary to clarify the meanings of evolution and evolutionary theory in this context. The term “‘evolution” is used in at least two ways in the biological sciences. Sewell Wright (1968, p. 1), one of the three great founders of population genetics, states one meaning as follows: “”[Evolution] is not used to indicate all kinds of change . . . There is ceaseless change on the surface of the ocean, but this is not an evolutionary process. Evolution always involves to some extent the opposite idea of persistence. It always refers, in short, to processes of cumulative change.” The term is also used frequently to refer to almost any kind of transformation, cumulative or not. The geneticist Richard Lewontin (1974, p. 6), who has written widely on the logical structure of evolutionary arguments, uses this broader conception, claiming that an evolutionary perspective ”mean[s] that we are interested in the change of state of some universe in time. Whether we look at the evolution of societies, languages, species, geological features or stars, there is a formal representation that is common to all.” The formal representation consists of laws of transformation that tell how to predict the later state of a system from knowledge of earlier states. Note that this definition excludes neither cyclical change nor random motion from the scope of evolutionary change. If evolutionary change is given this broad denotation, there can be little debate about the value of evolutionary analysis in organizational research. In this sense evolutionary analysis just means analysis of change. Even the narrower definition of evolution as cumulative change raises few problems in organi-zational applications since most researchers agree that change in organiza- tional populations is cumulative. The fact that evolutionary analysis is seen as so problematic in the kind of studies we consider must reflect some additional meanings and connotations of the term “evolutionary theory.”

In the specific context of Darwinism, evolutionary theory means at least three things. The founders of the so-called Modern Synthesis (of Darwinian evolutionary theory and Mendelian population genetics) often applied a very limited meaning to the term. They held that Darwin argued convincingly the fact of evolution and provided a compelling theoretical explanation-natural selection—for the fact (see, for example, Huxley 1944). In this interpretation, evolution refers to a set of empirical assertions about historical patterns of change in the biotic world. Natural selection provides a set of rules that link earlier and later distributions. In this sense, evolutionary theory is theory that tries to explain these empirical facts.

Darwin’s work also contained a theoretical claim about the timelessness of the underlying processes. Theodosius Dobzhansky (1951, pp. 7-8), who played a key role in forming the Modern Synthesis from the side of popula- tion genetics, summarizes the Darwinian position by claiming that the theory of evolution by natural selection posits that “(1) the beings now living have descended from different beings which have lived in the past; (2) the discontinuous variations observed at the present time . . . have arisen gradually … (3) all these changes have arisen from causes which now continue to be in operation and which therefore can be studied experi- mentally.” In this way, the program of evolutionary biology combines factual assertions about the origins and change of biotic forms with theoretical claims about the nature of the process. Thus a second definition of evolutionary theory is as a research program combining these factual statements and a particular view on the nature of change.

Finally, evolution is sometimes equated with natural selection. But natural selection is not the only rule of biotic change. In fact, R. A. Fisher (1930, p. 1) felt compelled to begin his Genetical Theory of Natural Selection with the statement, “Natural selection is not Evolution.” Natural selection is a process by which evolutionary change comes about, but it is only one such process. Evolutionary change in biotic populations also comes about through random genetic events such as genetic drift and founder effects. Thus organic evolution is broader than natural selection.

Nonetheless, when biologists assert that they are developing evolutionary theories (as when population ecology became infused with evolutionary theory during the 1960s), they often mean to signal that they are invoking specific transmission processes, usually Mendelian inheritance under random mating, and a natural selection process. The transmission mechanism accounts for the continuity or cumulative character of the process.

Natural selection, as it is actually used in evolutionary population biology serves mainly as an optimization process. In fact, the reasoning that underlies much evolutionary biology often strikes social scientists as strongly reminiscent of neoclassical economics. Evolutionary population biologists wish to provide a theoretical explanation for observed cross- sectional patterns in terms of some underlying mechanism. They invoke natural selection as an optimizing principle that selects one, or perhaps a few outcomes from the broad range of outcomes that might be consistent with the genetic transmission mechanism. The work of sociobiologists depends heavily on such optimization procedures. (See Oster and Wilson 1978 for a penetrating discussion of the limitations of such analysis for population biology.) Thus a third possible definition of evolutionary theory is a theory of change that depends on the maximization of fitness under some specified transmission mechanism, such as Mendelian inheritance. Fitness means the rate at which genotypes produce copies of themselves across generations. Because of the simplicity of the transmission mechanism in the biotic case, fitness for any population defined in terms of phenotypes can be defined as the net mortality rate: the ratio of birth rates to death rates.

In which of these meanings is our work evolutionary? With regard to the first meaning of the term—evolution as a factual statement about chains of descent— we do describe organizational change as evolutionary. In particular we reject the view that the diversity of organizational structures at any time reflects only recent adaptations of these organizations in favor of the view that diversity reflects a long history of foundings and disbandings of organizations with fairly unchanging structures. In this narrow sense, our accounts are decidedly Darwinian.

We also accept the broad theoretical claim of the Darwinian evolutionary program. We argue that current qualitative differences between forms and the historical succession of forms can be explained by the same principles or processes. In particular, we think that the processes of change are general. Insofar as these processes are involved, organizational change has a timeless, ahistorical quality that permits analysts to work either forward or backward in time, to conduct both retrospective and prospective studies in seeking to understand the processes that govern organizational diversity.

Our views on the third aspect of evolutionary argument, that natural selection is an optimization process and that cross-sectional patterns can be explained as the outcomes of such a process, are more complicated. In fact we do think that selection in organizational populations is systematic, that various kinds of organizations differ in their survival chances, and that selection capitalizes on such differences. To argue otherwise implies that there is no disciplined way to relate environmental events to changes in organizational populations. However, we are not comfortable simply invoking optimization arguments. These arguments depend on an equilibrium assumption, the assumption that the selection processes have worked themselves out. We think that this assumption is rarely plausible for populations of organizations in societies exposed to continuing social changes.2 Instead of trying to explain patterns in cross sections using optimization arguments, we look directly at dynamics. That is, we examine the structure of selection processes directly. It is only when we try to draw broader sociological implications from patterns of selection that we approach this optimizing style of reasoning.

To summarize the argument to this point, our work approximates a Malthusian-Darwinian position on the nature of change in organizational populations over time. We think that the current diversity of organizational forms reflects the cumulative effect of a long history of variation and selection, including the consequences of founding processes, mortality processes, and merger processes. We also think that organizational selection processes have general properties that hold across historical periods.

However, we do not have anything resembling a fully developed evolutionary theory of organizational change. Although we have learned a good deal about selection processes, we still know very little about the other side of the evolutionary process, the structures of inheritance and transmission. Sociology does not have a simple, well-understood transmission process analogous to Mendelian genetics. It is clear that transmission processes in the organizational world are much more complex than those in the biotic world. Processes of transmission of cultural information are not unitary (see Cavalli-Sforza and Feldman 1981; Boyd and Richardson 1985). Social and cultural information passes in many different directions among generations, and it is not nearly as invariant across transmissions as genetic information. It is not possible to specify a simple transmission mechanism by which the ability to construct organizations of a given type is passed along among individuals and social groups. Thus our evolutionary treatment of organizational change is partial at best, it attends mainly to selection in organizational populations.

So far we have emphasized the effects of selection on diversity. Darwinian theory tries to do more than explain variations in biotic diversity. The second major concern of Darwinian theories of evolution by natural selection is adaptation, the processes by which biotic forms come to be finely tuned to their environments. Darwin sought a naturalistic explanation for the apparent perfection of so much biotic adaptation, which had been invoked for centuries as a prime proof of the existence of divine intervention in spéciation. Part of the genius of Darwin s theory concerns the way in which it links diversity and adaptation: the Malthusian notion of struggle for finite resources implies that selection operates on existing diversity to provide continually better solutions to problems of biotic adaptation.

The portion of Darwin’s theoretical structure pertaining to adaptation has been the most troublesome when the ideas are applied to social science problems. It has been tempting for evolutionists to assume that the forms of life that exist or persist in a system are well adapted simply by virtue of their persistence. But such arguments affirm the consequent in Darwin s argument. Selection processes can only work on available diversity; if no good designs are tried, selection cannot cause good designs to proliferate. As Lewontin (1978, p. 222) put it, “The relation between adaptation and natural selection does not go both ways. Whereas greater relative adaptation leads to natural selection, natural selection does not necessarily lead to greater adaptation.” Just as adaptation is relative, so too is fitness. If a set of forms facing a particular environment differ in the efficiency with which they can extract resources, prey on other forms, resist predation, or spin off copies of themselves, natural selection processes favor such forms. Such processes lead to numerical domination of the relatively more fit forms over time if the environment does not change. However, an observable population may be very far from ideal in the sense of adaptation, either because good designs have not yet been exposed to selection or because the environment keeps changing faster than the set of organizations can change. Therefore, it is extremely important to avoid the pan-glossian assumption that selection processes somehow magically produce high levels of adaptation.

One of the chief objections to the use of Darwinian theories in the organizational world turns on the limited nature of the adaptation process. This objection concerns the limited role that conscious adaptation plays in neo-Darwinian theories. Most organizational theorists assume that change is Lamarckian, that major changes in the forms of organizations come about through learning and imitation. Many kinds of organizations commit resources to learning; organizations often seek to copy the forms of their more successful competitors. In a rough sense, organizations make copies of themselves either by setting up new organizations, by losing or expelling personnel with the requisite knowledge to copy the form, or by invoking imitation. Nelson and Winter (1982, p. 11) in describing their theory of evolutionary change in organizational populations note that: “Our theory is unabashedly Lamarckian: it contemplates both the ‘inheritance’ of acquired characteristics and the timely appearance of variation under the stimulus of adversity.”

The line of theory we develop builds on the assumption that change in core features of organizational populations is more Darwinian than La- marckian. It argues that inertial pressures prevent most organizations from radically changing strategies and structures. Only the most concrete features of technique can be easily copied and inserted into ongoing organizations. Moreover, there are density-dependent constraints on adaptation by individual organizations: although it may be in the interests of the leaders of many organizations to adopt a certain strategy, the carrying capacity for organizations with that strategy is often quite limited. Only a few can succeed in exploiting such a strategy, and those in the vanguard (and perhaps those who follow the vanguard closely) have decided advantages.

Even when actors strive to cope with their environments, action may be random with respect to adaptation as long as the environments are highly uncertain or the connections between means and ends are not well under- stood. It is the match between action and environmental outcomes that must be random on the average for selection models to apply. In a world of high uncertainty, adaptive efforts by individuals may turn out to be essentially random with respect to future value.

The realism of Darwinian mechanisms for explaining change in organiza- tional populations also turns on the degree to which change in organizational structures can be controlled. Suppose that leaders of organizations learn to anticipate the future and adapt organizational strategies accordingly. Suppose further that organizations passively act out the intentions of their leaders. Then organizational adaptations would be largely nonrandom with respect to future states of the environment; the Lamarckian image applies.

A growing number of organizational theorists and researchers argue that much organizational change is largely uncontrolled and that the consequences of designed structural changes are difficult to anticipate. If this is so, organizations staffed by rational planners may behave essentially randomly with respect to adaptation. In other words, organizational outcomes are often decoupled from individual intentions. Therefore, it is not enough to ask whether individual humans learn and plan rationally for an uncertain future. One must ask whether organizations as collective actors display the same capacities.

The applicability of Darwinian arguments to changes in organizational populations thus depends partly on  the tightness of coupling between indi- vidual intentions and organizational outcomes. At least two well-known situations generate weak relations between intentions and outcomes: diversity of interest among members and uncertainty about means-ends connections. When members of an organization have diverse interests, organizational outcomes depend heavily on internal politics, on the balance of power among the constituencies. When such an organization faces an external problem, which action will be taken, if any, depends as much on the coalition structure of the organization as on the contributions of alternative actions to organizational survival or growth. In such situations outcomes cannot easily be matched rationally to changing environments. When the connections between means and ends are uncertain, carefully designed adaptations may have completely unexpected consequences. Moreover, short-run consequences may often differ greatly from long-run consequences. In such cases, it does not seem realistic to assume a high degree of congruence between designs and outcomes. Thus it may be useful in analyzing patterns of long-term change in orga- nizational forms to employ models that incorporate Darwinian mechanisms rather than Lamarckian ones. The facts that members of organizations plan rationally for change and that organizations often develop structures designed to plan and implement change do not necessarily undercut the value of this view. As long as organizations are political coalitions and environmental change tends to be highly uncertain, the Darwinian theories we propose may clarify the relationships between organizational diversity and environmental change.

Source: Hannan Michael T., Freeman John (1993), Organizational Ecology, Harvard University Press; Reprint edition.

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