Initial architectural change in organizations often induces other subsequent changes, generating lengthy cascades of changes in subordinate units. This article extends a formal model of cascading ...organizational change by examining the implications for organizational change of the limited foresight of those who initiate such change about unit interconnections (structural opacity) and the normative restrictiveness imposed on architectural features by organizational culture (cultural asperity). Opacity leads actors to underestimate the lengths of periods of reorganization and the associated costs of change, thereby prompting them unwittingly to undertake changes with adverse consequences. Increased opacity and asperity lengthen the total time that the organization spends reorganizing and the associated opportunity costs; and the expected effect of an architectural change on mortality hazards increases with the intricacy of the organizational design, structural opacity, and the asperity of organizational culture. We illustrate the theory with an interpretation of the 1995 collapse of Baring Brothers Bank.
Although the niche figures prominently in contemporary theories of organization, analysts often fail to tie micro processes within the niche to long-term changes in the broader environment. In this ...paper, we advance arguments about the relationship between an organization's niche and evolution in the structure of its organizational population over time. We focus on the technological niche and processes of positioning and crowding among firms in the niche space, relating them to the level of concentration among all firms in the market. Building on previous empirical studies in organizational ecology, we study the evolution of concentration in the American automobile industry from 1885 to 1981 and estimate models of the hazard of exit of individual producers from the market. The findings show that niche and concentration interact in complex ways, yielding a more unified depiction of organizational evolution than typically described or reported.
This article examines the classic question of how religious diversity in a community affects church membership in a period of high growth and social change. Using panel data on local U.S. communities ...from 1890 to 1926, the authors estimate models specified to overcome likely artifactual problems, deal with unobserved community‐specific heterogeneity, and model state dependence. In general, the findings support the plausibility of mechanisms based on pluralistic deobjectivation and identity activation; they do not support predictions from mechanisms based on organization‐environment matching and interdenominational competition. The findings also show that the overall effect of urbanization on church participation was positive in all but the most religiously diverse communities.
Resource-partitioning theory is used to explain generalist concentration through the distribution of environmental resources. It is argued that the higher the homogeneity and concentration of ...relevant environmental resources, the higher the concentration of large generalist organizations competing on the basis of scale.
We review studies of organizational demography that show empirical relationships between the length of service (tenure) distribution and organizational outcomes. Our theoretical reformulation of the ...typical explanation offered for these relationships posits a link between heterogeneity in the length of service distribution and heterogeneity in organizational culture. We examine the plausibility of this explanation using a computer simulation of a mathematical model. The model implies that the tenure-culture link is usually positive, as assumed by organizational demographers, but that the strength of this link varies by context. The modeling effort also uncovered several limitations of the conventional research framework. These include (1) the plausibility of simple alternative explanations based on unobserved heterogeneity; (2) the inability to distinguish disruption effects caused by individual entry and exit from diversity effects based on internal social processes; and (3) the conflation of several different hypothesized processes into a single variable measuring tenure heterogeneity. We develop and evaluate three alternative measures, each linked to a different social process.
In some organizational applications, the principle of allocation (PoA) and scale advantage (SA) oppose each other. While PoA implies that organizations with wide niches get punished, SA holds that ...large organizations gain an advantage because of scale efficiencies. The opposition occurs because many large organizations also possess wide niches. However, analyzing these theoretical mechanisms implies a possible trade-off between niche width and size: if both PoA and SA are strong, then organizations must be either focused or large to survive, resulting in a dual market structure, as proposed by the theory of resource partitioning. This article develops a computational model used to study this trade-off, and investigates the properties of organizational populations with low/high SA and low/high PoA. The model generates three expected core “corner” solutions: (1) the dominance of large organizations in the strong SA setting; (2) the proliferation of narrow-niche organizations in the strong PoA setting; and (3) a bifurcated or dual market structure if both SA and PoA are present. The model also allows us to identify circumstances under which narrow-niche (specialists) or wide-niche (generalists) organizations thrive. We also use the model to examine the claim that concentrated resource distributions are more likely to generate partitioned or bifurcated populations. We also investigate the consequences of environments comprised of ordered versus unordered positions.
Organizational change can be usefully conceptualized in terms of both its process and its content. Process refers to how change occurs. Content describes what actually changes in the organization. ...Theories and analyses of organizational change seek to explain why organizations change as well as what the consequences are of change. Empirical evidence on both questions is fragmentary and occasionally contradictory. Models that consider both process and content show the greatest potential for resolving this situation. Such models can be used to test social science theories as well as to evaluate programs of organizational change promulgated by consultants and practitioners. Basic organizational theory would be enhanced by greater attention to organizational change.
Many organizational populations display increasing variation over time in characteristics thought to be central to survival, as we show here for hard disk drive producers. We develop a simple model ...that might account for this pattern. In it, technological advance follows a trajectory consistent with a proportionate random process (akin to a Gibrat process) that favors technology leaders but only stochastically. We demonstrate through computer simulations that evolution in an organizational population with selection favoring a characteristic evolving as a proportionate random process can, under plausible conditions, generate increased variation over time.
Despite the centrality of products in many strategic and managerial theoretical frameworks, little is known systematically about how and why specific products come and go from markets. We argue that ...narrowing this gap will likely enhance management theory, and we propose that research on product demography -- the social lives of products -- is a promising way to proceed. For organizing various theoretical ideas used in prior studies, we offer a classification framework. It defines four broad theoretical perspectives on product demography: market rationality, firm rationality, organizational bounded rationality, and institutional rationality. We also outline an approach to product demography that studies empirically the rates of product launch, growth, and withdrawal using stochastic models and data on all products ever appearing in bounded industrial domains. Finally, we discuss the challenges presented by such a fragmented approach to research on product demography and propose a generic research program intended to avoid stagnation. PUBLICATION ABSTRACT
Although the 1997 handover of Hong Kong from the United Kingdom to China was a major political transformation, its impact on new business formation has not been fully scrutinized. Theory suggests ...contradictory forces may operate before, during, and after such a transformation: either a decline due to uncertainty or an increase due to opportunities created. To determine which force dominated, we first decomposed the analysis by the size of major affected social groups, then analyzed the expected impact. This led us to predict an aggregate depression of business formation, although this effect likely showed great variation and attenuated over time. Our empirical assessment relied on detailed monthly records of business registrations from 1975 to 2013, using GARCH time series modeling to analyze total registrations as well as the proportions for local and non-local businesses. Controlling for macro socioeconomic conditions, we find the registration rate dropped significantly throughout the post-handover era, implying a dominance of uncertainty. Further, new registrations displayed higher volatility following the 1984 announcement of the handover, reflecting shifting public sentiment in the interim about Hong Kong's economic prospects. We also find a post-handover preference for forming non-local firms with higher asset mobility; this preference diminishes with time.
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