" The growth of a large business is merely the survival of the fittest : it is merely the working out of a law of nature" John D Rockefeller
Population ecology is a perspective that seeks to explain the factors that affect the life cycles of organizations. It also suggests why some organizations survive for longer than the others. Earlier theories such a the such as the strategic choice theory argued that organizations try to adapt to changing environments and the ones that do it successfully survive. The population ecology perspective states that it is the environment that selects organizations that will survive over time and organizations have no say in this matter.
It draws from the Darwinian theory of natural selection that sates that organisms with favorable traits are more likely to survive . Alchian in 1950 pointed out the process of natural selection which the environment imposes on firms and the relevance of organizational adaptation as guarantee for survival . A number of researchers such as Hannan ,Freeman ,Carroll , Van De Ven have worked on this topic.
Population ecology is a theory about "Darwinian selection" in populations of organizations ( Carroll and Hannan) . A. The fundamental unit of analysis in this theory is the population. population consists of organizations of similar forms i.e. organizations that draw from the same resource pool . Now some of the questions this theory seeks to answer are
a>Why are there so many kinds of organizations?
b>What explains the diversity of organizations?
c>Why some organizations survive longer than the others?
d>What factors affect the life cycle of organizations?
Three central features of this perspective are
a>The role of structural inertia in constraining adaptation b>The classification of organizational species.
c>The salience of environment in determining organizational survival.
The conditions that create an environment conducive to selection hence to application of the population ecology model.
a>High rate of variation among organizational forms
b>High organizational mortality rates should be evident
c>Competition in the industry should be intense
d>Resources should not be relatively abundant.
This theory provides potentially powerful explanation of organizational birth mortality and evolution . This is because of it's close analogy to the theory of natural selection. Explanation of the central concepts
a>Structural Inertia (Hannan and Freeman, 1984; Hannan and Carroll, 1995) Structural inertia is an organizational tendency to maintain its internal structure regardless of other factors or concerns. It denotes the inability of an organization to adapt to its environment; basically, the stronger the pressures of structural inertia, the lower the organization's flexibility. Population ecologists also argue that there is a positive relationship between inertia and organizational maturity (Hannan and Freeman, 1977). Change causes internal reorganization and external legitimacy problems. Inertia can be classified into two forms
1>Internal Inertia This refers to the core of the organization i.e. it's goals , policies, sunk costs communication strategies etc . 2>External Inertia This occurs due to entry and exit barriers, bounded rationality and societal legitimacy In order to change the core, one needs to first change the peripheral characteristics.It is structural inertia that makes the concept of selection prevail over adaptation. The stronger the organizational inertia the lower the organizations adaptability to change and the model of environment selection becomes more appropriate.
b> Organizational Species One of the strengths of the population ecology model is that identifies populations within species as an important unit of analysis. This being analogous to the biological classification of...