Theory of Organizational Ecology

Organizational ecology theory examines how organizational populations change and develop over time through stages of founding, growth, transformation, decline, and death (Hannan & Freeman, 1977, 1989). The theory addresses the forces of social, political, and economic systems that (1) increase organizational diversity, for example, creating new organizational forms, and (2) decrease organizational diversity, for example, driving away certain organizational forms via competition. The theory also looks at the dynamics within organizational populations (Hannan & Freeman, 1989).

Organizational Ecology Theory (also organizational demography and the population ecology of organizations) is a theoretical and empirical approach in the social sciences that is considered a sub-field of organizational studies. Organizational ecology utilizes insights from biology, economics, and sociology, and employs statistical analysis to try to understand the conditions under which organizations emerge, grow, and die.

The Theory of Organizational Ecology is divided into three levels, the community, the population, and the organization. The community level is the functionally integrated system of interacting populations. The population level is the set of organizations engaged in similar activities. The organization level focuses on the individual organizations (some research further divides organizations into individual member and sub-unit levels).

Wharton School researcher William Evan called the population level the organization-set, and focused on the interrelations of individual organizations within the population as early as 1966. However, prior to the mid-1970s, the majority of organizational studies research focused on adaptive change in organizations (See also adaptive management and adaptive performance). The ecological approach moved focus to the environmental selection processes that affect organizations.

In 1976, Eric Trist defined population ecology as “the study of the organizational field created by a number of organizations whose interrelations compose a system at the level of the whole field”. He also advocated for organizational studies research to focus on populations and individual organizations as part of open rather than closed systems that have both bureaucratic (internal) regulation and ecological (community environment) regulation (see also Open and closed systems in social science).

Dynamics of Selection of Firms in Organizational Populations

As we have noted in previous chapters, evolutionary selection refers to processes of differential replacement in populations. A characteristic conveys a selective advantage if it increases

Rate Dependence and Diversity Dependence of Firms in Organizational Populations

Delacroix and Carroll (1983) argue that the founding rate for a particular kind of organization depends on the flow of recent foundings (the crude founding rate)

Carrying Capacities and Density Dependence of Firms in Organizational Populations

In developing the LV model in the previous chapter, we noted that carrying capacities are simple functions of parameters expressing density dependence in rates of birth

Designs of Empirical Studies in ecological perspective: Semiconductor Merchant Producers

Our second major empirical study concerns the population of firms that manufactured and sold semiconductor electronics devices in the United States between 1946 and 1984. The

Designs of Empirical Studies in ecological perspective: National Labor Unions

It may seem ironic that we studied unions at a time when labor historians have largely abandoned the subject, preferring to study noninstitution- alized forms of

Designs of Empirical Studies in ecological perspective: Defining Events

We collected information about the life histories of all (or most) members of the organizational populations under study. In concrete terms, this means obtaining information on

Analysis in ecological perspective: Describing Organizational Histories

An event-history (or sample-path) observation plan records information on all changes in state within some observation period. Let Y(t) denote the random variable indicating an organizations’s

Designs of Empirical Studies in ecological perspective: Comparison of Data Sets

The labor union, semiconductor, and newspaper data sets cover their re- spective organizational populations over their full histories. However, the histories of unions and newspapers are

Designs of Empirical Studies in ecological perspective: Newspaper Publishers in San Francisco

The most fruitful empirical studies of organizational ecology to date have used data on populations of firms producing newspapers. Studies by Car- roll and Delacroix (1982)

Designs of Empirical Studies in ecological perspective: Semiconductor Merchant Producers

Our second major empirical study concerns the population of firms that manufactured and sold semiconductor electronics devices in the United States between 1946 and 1984. The

Designs of Empirical Studies in ecological perspective: National Labor Unions

It may seem ironic that we studied unions at a time when labor historians have largely abandoned the subject, preferring to study noninstitution- alized forms of

Designs of Empirical Studies in ecological perspective: Defining Events

We collected information about the life histories of all (or most) members of the organizational populations under study. In concrete terms, this means obtaining information on

Entry Rates of Semiconductor Manufacturing Firms in the Population Ecology

We next consider the same set of issues for a very different kind of organi- zational population: semiconductor manufacturing firms. Since there are many obvious technical,

Founding Rates of Labor Unions in the Population Ecology

Our study of national labor unions recorded 479 foundings over the 1836— 1985 period. Figure 9.1 shows how the events were distributed over time. A surge

The Population Ecology of Founding and Entry: Core Questions

In Part I we argued that rates of founding and entry in organizational populations are much more complicated than birth rates in biotic popula-tions. In particular,

Analysis in ecological perspective: Estimation and Testing

Our empirical analysis is done with maximum likelihood (ML) and partial likelihood (PL) estimation. This section gives a brief overview of how these two kinds of

Analysis in ecological perspective: Counting Process Models

In developing stochastic process models of organizational foundings, the conceptual unit of analysis is obviously not the individual organization whose appearance is observed. Rather, the unit

Analysis in ecological perspective: Models for Transition Rates

A major goal in our research is to explore the effects of population hetero- geneity on transition rates. This means analyzing how measured character- istics of

Organizational Mortality: Disbanding Rates of Labor Unions

We begin with national labor unions. As we have noted in earlier chapters, ecological analysis of unions has special sociological interest because unions have combined elements

Age Dependence in Failure Rates: Exits of Semiconductor Manufacturing Firms

Next we consider the lengths of “careers’’ in the semiconductor industry, the length of time between entry and exit of firms. Limitations on the data preclude

Age Dependence in Failure Rates of Firms: National Labor Unions

We analyze the questions about the liability of newness in terms of effects on the mortality rate. To begin with the simplest possible model as a

Age Dependence in Failure Rates of Firms: The Liability of Newness

Stinchcombe (1965, pp. 148-150) claimed that organizations face a liability of newness: new organizations fail at higher rates than old ones. His argu- ments supporting this

The Population Ecology of Founding and Entry: Comparisons and Contrasts

Have entries into populations of labor unions, semiconductor firms, and newspaper publishers been subject to similar processes of density depen- dence? In a general sense the

Founding Rates of Newspaper Firms in the Population Ecology

Finally we consider the result of fitting the same basic models to data on founding rates of organizations that published local newspapers in the San Francisco