Organizational ecology

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. The first explicit formulation of a theory of population ecology, by Michael T. Hannan and the late John H. Freeman in their 1977 American Journal of Sociology piece "The population ecology of organizations" and later refined in their 1989 book Organizational Ecology, examines the environment in which organizations compete and how a process like natural selection occurs. This theory looks at the death of organizations (firm mortality), the birth of new organizations (organizational founding), as well as organizational growth and change. Organizational ecology has over the years become one of the central fields in organizational studies, and is known for its empirical, quantitative character. Ecological studies usually have a large-scale, longitudinal focus (datasets often span several decades, sometimes even centuries). The books The Demography of Corporations and Industries by Glenn Carroll and Michael T. Hannan (2000) and Logics of Organization Theory: Audiences, Codes, and Ecologies by Michael T. Hannan, Laszlo Polos, and Glenn Carroll (2007), provide the most comprehensive overview of the various theories and methods in organizational ecology. == Key concerns ==

Organizational ecology focuses on how social (community) forces affect: • rates of creation of new organizational forms • rates of demise of organizations and organizational forms • the rates of change in organizational forms. Organizational mortality Organizational ecology is concerned with the capacity of the environment to support organizations and the rate of growth and decline of organizations within the environment. Each of these forces is a part of what is called Organizational Mortality. Niche theory 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. Niche theory shows that specialization is generally favored 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". 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". 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. 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 inefficiencies arising from the aging of the organization) or a liability of obsolescence (a growing external mismatch with the environment). == Evolutionary approaches to organizations ==

Organizational ecology can be usefully compared with evolutionary theories in economics (e.g. Nelson & Winter, 1982). Hannan and Freeman also note the influences of biological ecology and economic evolution on their population ecology model (specifically Elton, 1927; Durkheim, 1947; Hawley, 1950; and Hutchison, 1959). Main similarities between these strands of literature are: (1) the emphasis on organizational routines and the limits to organizational adaptability, (2) the population or system level of analysis and (3) the importance of environmental selection. Organizational ecology's perspective is more Darwinistic (see Hannan & Freeman, 1989, pp 20–22), while Nelson & Winter (1982, p. 11) provide a more Lamarckian perspective. Another important difference concerns the question: What is selected by the environment-- 'organizational forms', as in organizational ecology, or 'routines' as in the evolutionary economics literature? Authors like Joel Baum and Arjen van Witteloostuijn have argued for the potential of cross-fertilization between these two research strands. == See also ==