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Organizational Ecology (Also Organizational Demography and Population Ecology) is a theoretical and practical approach to studying institutions in the behavioural sciences, and is especially used in organizational studies. Organizational Ecology uses a biological analogy and statistical analysis to try and understand the conditions under which organizations grow and die.
Introduction to Organizational Ecology
First fully developed by Hannan & Freeman in 1989 in their book Organizational Ecology, organizational ecology examines an environment in which organizations compete and a process like natural selection occurs. This theory looks at the death of firms (firm mortality) and the founding of new firms (firm founding).
The theory holds that reliability and accountability within organizations allow them to survive. Early in the creation of a new market, organizations with different forms compete for resources, creating a high firm mortality rate. Later, organizations with the forms that best assure reliability and accountability survive, creating a stable environment and low mortality. As particular forms become favored, competition rises again, causing mortality to increase.
Similarly, in a new market few firms are founded because risk is high. As time goes on, standard ways of doing business evolve and firm founding increases. Later, as competition grows, firm founding drops off again.
This balance between firm formation and firm mortality is the carrying capacity of a particular market niche, and is the focus of the field. Although it is a credible way of analyzing organizations, the empirical worth of organizational ecology is still somewhat inconclusive.
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