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    Chapter 2

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    of 15
    / i | 2 The Population Ecology Model Opening up our model of organizations has not meant replacing the Weherian ‘mode! of internal structure with someting ese, but rather placing it in its proper context, The bureaueratic model remains paramount as sn account of how be havior in organizations is coordinated, but theorists now recognize eter bases of coordination, such as relying upon selfreguletion by members selected through tough entrance requirements or commitment 19 & participatory ideology (Rothschild Whit, 1976). Similarly, examples presented in the previous caper show how the elements in the definition of an organization (goals, boundaries, and technologies) may vary with changing envizonmental conditions, The change in emphasis from a more closed or rational system model to an open of natural system model brought confusion into theorizing about organizational change, as sociological developments in the study of social change filed to difse into the study of organizational change. Evoiutionary theories of social change depend heavily upon the natural selection mode! borrowed from biological and human | ecologists, although the model has not yet achieved complete acceptance (Nis: | be, 1969; Lensk, 1976). We cannot review the history ofsociology's somewhat | fickle romance with evolutionary theory—altermating enthusiasm and disilla | sioninent—but itis useful to review afew snes that hampered acceptance ofthe | theory, after presenting an overview ofthe theory its. ‘The population ecology model represents an attempt to explain the process 6 ‘The Population Bcology Model 27 underlying change, It differs from “evolutionary approaches” that simply clas- sify societies or organizations on the basis of unilinear schemes, such 28 from least to most developed. The model rejects the telcological implications inherent in theories of societal or organizational development, ust as reform Darwinists ‘ejected the notion of a final, perfect society. A focus on procest and a willing ‘ess to leave open the ultimate course of organizational change makes the natural selection model perfectly compatible with the open or natural systems view of organizational structure described in the last chapter. In calling ita natural selec- tion er ecological mode!, I wish to emphasize that the process of organizational ‘change, while controlled by the environment, does not necessarily mean progress to higher forms of social organization orto better organizations. ‘The process of iatural selection means organizations are moving toward a better fit withthe en ‘vironment, nothing more. It also refers to the process of environments changing and thereby inducing change in their organizationat populations, such 8 o°= ‘curred in the United States during the period of rapid industrialization from 1860-1910. Mansgcrial staffs proliferated, hierarchies of authority lengthened, cost accounting became common, and labor became @ “problem.” Whether these changes represented bettor oF worse forms of organization is a moot point {rom the perspective of the population ecology model, forthe relevant question is ‘whether we can explain why such changes spread through almost all of the or: ganizations in that evolving enviroament. In its original form, the model is applicable to the population level of organi ‘zations, rather than at the level of individual units. However, following Hannan and Freeman (1977), I will argue that the model can be successfully applied to studies of single organizations, with litle loss of generality. The model is not intended to account for short-run changes, which are temporary responses to focal conditions, but rather for long-run transformations in the form of social or gnnization. The ability to make short-term changes in response to kocal condi tions is, of course, itself @ result of long-term changes brought about through natural selection, Organizational forms are typically identified through empi cally derived taxonomies, such as mechanistic-organic or bureaucratic professional groups, but such typologies are not usually developed rigorously enough to permit a very comprehensive ecological analysis (McKelvey, 1975) Earlier attempts at constructing typologies focused on goals (Etzioni, 1961; Blau and Scott, 1962), but recent efforts have focused on activity systems, especially ‘on technology and types of control and communication systems (Perro, 1967; Woodward, 1965; Pugh, Hickson, Hinings, and Tumer, 1968). AN OVERVIEW OF THE POPULATION ECOLOGY MODEL ‘The population ecology model, based on the natural election model of biological ecology, explains organizational change by examining the nature and distibution ‘of resources in organizations’ environments. Envitonmental pressures. make 28 The Population Bevlogy Mods! ‘competition for resources the central force in organizational ectivities, and the | resource dependence perspective focuses on tactics and strategies used by au- | thorities in seeking to manage their environments as well as their organizations. ‘The three stages of variation, selection, and retention constitu a general model ‘of organizational chasge, which explains how organizational forms ere created, survive of fail, and ac diffused throughout a population. Although the general tive i labelled the "population ecology model,” the term “natural selec- used occasionally to emphasize the perspective's intellectual heritage. Organizational forns—specitic configurations of goals, boundaries, and se- tivities are the elements selected by environmental criteria, and change may ‘occur either through new forms eliminating old ones or through the modification of existing forms. Environmental niches are distinct combinations of resources and other constraints that are sufficient to support an organization form, Organi- zational forms, then, are organized activity systems oriented toward exploiting the resources within aniche. Selection pressures may favor or eliminate entire groups of organizations, such as industries, and the changing population disitibution of exganizations ina society reflects the eperation of such selection pressures. Organizations ere loosely coupled systems, and so itis possible for them to change at the level of specific activities or components. These specific activities or components include the number of departnents, various decision-making styles, or types of control srvctures. The three elements of the definition of organization given in the fist chapter are clues to how organizational forms may differ from one another. Examples presented throughout this book will indicate just how dificult it i t9 ‘unambiguously identity a unique “organizational form. Variation Variation within and tetween o-ganizations isthe first requirement for organiza- tional change, and there must also be variation across environments if externally directed change is to occur. Some variations arise through members’ active a tempts to generate altematives and scek solutions to problems, and the rational selection model of traltional organizational theory focuses on such planned var- jations. Te population ecology model, however, is indifferent to the ultimate source of variation, as planned and unplanned variation both provice raw’ mate- rial from which selestion can be made. I review arguments for the strategic choice position and nete that, while there are some occasions on which “strategic choice” may be exercised, there are usually severe limits to decision-maker au- ‘onomy. Many oppomunities are closed to organizations because of econo nd legal barriers to their entry, most organizations are not powerful enough to luence their environments, and perceptual distortions and illusions bias most cisions. Error, chaace, luck, and conflict are more Likely sources of variation, although they are devlishly difficult to theorize about. ‘The Population Ecology Mods! 29 ‘Two types of variation create the possibility of extemal selection pressures affecting the direction of organizational change. First, there are variations be- ‘seen organizations in their overall form_—between industries, within industries, ‘seross the public and private sectors, and across local communities. Such varia: tion is likely to be introduced ito the organizational population whenever new ‘organizations are created. Increasing exposure to ideas from other societies or regions, the spread of a secular world view and faith in science, improved com | mumication and transportation technology, and immigrant status in a foreign land ‘ae conditions promoting the creation of new organizations. Changing selection criteria and the breakdown of existing retention mechanisms may make the fo: ‘mation of new organizations easier, and certain periods in history are associated with revolutions in organizational forms. The late nineteenth century witnessed the emergence of giant corporations resulting from horizontal mergers, and con- glomerates appeared en masse afier World War I ‘Second, variation within organizations opens them to the potential for change or transformation. Growih is a common source of within orgenization variation, as increasing complexity and control problems lead to fundamental changes in organizational practices. As growth is inevitably tied to increasing environmental ‘munifcence, changes in environmental richness or in technologies penniting greater exploitation of environments are typically associated with orgenizationsl change. Turover in members and leaders, seasonal variations in procedures, and random deviations from standard practices—whether intentional or acciden- {al—agive environments an opportunity to produce internal organizational change and wansformation. Selection According tothe population ecology model, selection of new or changed organi- zational forms occurs as a result of environmental constraints. Organizations fixing environmental criteria are positively selected and survive, while others either fail or change fo match environmental requizements, If selection criteria favor administrative rationality and formalized control structures, for example, bureaucratically structured organizations will be chosen at the expense of not bureaucratic organizations. Environments are described in terms of either the resources ot the information they make available to organizations. The information approach relies heavily on theories of perception, cognition, and decision making, with organizational ‘members acting on the information they glean from typically incomplete searches of their environments. A major factor explaining organizational change is this variation in information, as filtered through members” perceptions of their envi- ‘ronments. Changes in communication technology, improvements in methods of reoording and storing information, the breakdown of barriers to information ‘iow, and innovations that entiance people’s understanding of their environments 30 The Population Ecology Modet are aspects of social change that increase the likelihood of changes in orga ‘ional forms. ‘The resource appreach teats environments as consisting of resources for ‘which organizations compete, highlighting the amount of resousces and the terms ‘on which they are mace available. Selection occurs through relative rather than absolute superiority in acquiring resources, and an effective organization is one that hus achieved a selatively better position in an environment it shares with ‘others, rather than the hypothetical “best” position. Resources can be ranked in tecms of why they are sought: liquidity, stability, universality, and lack of alte: natives, Each distinct combination of resources and other constraints that support ‘an organization form constitutes a niche, defined in ecological terms as “any vio ble made of living,” ‘Six dimensions are used to characterize the way in which envitoments hake resources available to organizations, and may eventually allow us to deductively identify niches, even when they are not occupied. These dimensions are: en- vironmental capacity, homogeneity-heterogeaeity, stability-instbility, concen- tration-dispersion, demain consensus-dissensus, and degree of turbulence. They affect the distribution ef resources in envioaments, and together could be used as, an accounting scheme for describing social change in terms of is relevance to organizational change. Just as organizational complexity is sustained in part by consistent environmertal pressures, so population complexity is maintained by similar wide-ranging extemal pressures. Changes that add or remove constsints and resources from environments wil affect organizational population diversity, irecting our attention to such societal changes as the increasing importance of ational markets and the growing role of national government local communities. Retention Retention of organizational forms in a population or of specific stuctures and activities within an organization is affected by environmental and organizational characteristics, Knowledge of previously successful forms is institutionalized in the socialization apparatus of societies—schools, families, churches, public agencies —and in cultaral beliefs and values defended by dominant organizations and institutions. With industrialization there has been a trend toward the exter- alization and rationalization of culture, and oral traditions are now less impor fant than the material artifcts ofa society: written records, machinery, the phys- ical and material components of communities, and general capital improvements Technological change. especially inthe form of electronic information transmit tal and retrieval systems, has vastly simplified the task of preserving valuable formation. Social stability and its effects are seen most clearly in the major role the state ‘The Popsiation cology Model 31 plays in the creation and maintenance of organizations. As the major const ‘on otganizational formation and persistence, the state's role appears in many {oises: Political stability and ideological legitimation, educational systems, im- provements in transportation and communication networks, national economic planning, and other state investments affect the terms on which resourees are made available to organizational entrepreneurs. Institutions such as calculable law and an independent judictary, and state-supported tanks and corporations, atfect the probsbilty that organizational forms will persist if successful and that unimaginative entrepreneurs will beable to copy them. ‘Stability in the structure and activities of individual organizations is a central focus of traditional organizational analyses, and mostof the characteristics of the ideal-typical bureaucracy conteibute to the retention of a specific organizational form. Documents and files are the material embodiment of past practices and are handy references for persons socking appropriate procedures to follow. Speciali= tation and standardization of roles limit members’ diseretion and protect organi zations against unauthorized variation from offcial policies, although loose cou- pling within organizations cteates opportunites for deviance that are hard to root ‘it. Centraliation of euthority and formalization of duties also limit role discre~ tion, channeling members” activities in ways that make them accountable to higher authorities. Bureaucratic structures and procedures thes help preserve existing organizational forms, provided environmental selection criteria are met. ‘Variation, selection, and retention thus constitute the three stages of the _gmnizational change process. Veriton generates the raw materials from which selection, by environmental ot internal criteria, is made; retention meckanisms preserve the selected form, The model can be applied to the selective retention oF elimination of entire organizations or their components. EVOLUTIONARY THEORY: PRELIMINARY CONSIDERATIONS ‘The evolutionary model has been objected to on political and methodological grounds, Politically, evolutionary theory is often condemned as legitimation for conservative politcal ideology regarding the worst injustices of industrial soci- ety. Methodologically, evolutionary theory is often rejected as unscientific be- ‘cause, while itcan explain change ex post facto, it cannot predict change ex ante, ‘The political objection will be discussed below, with the methodotogical issue taken up after the popalation ecotogy model is presente. ‘Some people react negatively to the idea of applying evolutionary theory to the study of social organization hecause of a misunderstanding of modem ‘evolutionary concepts (Hofstadter, 1945). Charles Darwin's writings on the ori gin of biological species spawned an interest in evolutionary social theory in the 32 The Population Ecology Medel late nineteenth centruy, but there are two rather different interpretations of its application to societal evolution. The two interpretations have been labelled “Conservative” versus "Reform" Conservative Darwinism ‘The original “social Da-winists”—B. A. Ross and Herbert Spencer—helped generate a world-view that laid the groundwork for a science of society. They also espoused a socio-political ideology thet offends the moral sensibilities-of ‘wentieth-century social theorists, The major contribution of conservative Dar- Wwinists was their insistence thatthe human isa part of the natural world, and as such can be studied like any other part of nature. Nothing is saceligious about studying norms, customs, of societal institutions if social organization is ‘examined withthe same methods of investigation that are applied to other biolog- ical communities, Conservative Darwinists went a step further than this, how: ‘ever, and derived a political message ftom their efforts: They argued that social ‘change should occur naterally, rather than being forced by the interventions of social “do-gooders. ‘The key concept of conservative social Darwinism was the “struggle for exis- ‘ence. Following their image of nature as being in a perpetual state ef feree and relentless competition, they argued that only the strongest survive. By definition the survival of the fitest was nature's way of culling the weak from the strong, with those who survive being the fittest. Survivors fiom this social struggle, ‘which was taking place ir all societies, exemplified the wisdom of nature's sclee- tion process, and collectively they contibuted tothe development of civilization, Pursued to a logical conclusion, the political implication of this position was that it is improper to use social agencies to intervene in the social struggle. The division “between employers and their men was held to illustrate the survival of the fitest and most virtuous, since the one possessed the power to originate and ‘conduct great enterprises and the other ‘obviously" did not" (Bendix, 1956, p. 259), Intervention was unnecessary, as “hardships can't be eradicated by trying {© make things easier for anyone.”” ‘Another key concept of conservative social Darwinism was “progress.” Evolution was not a hazhazard process; conservative Darwinists believed in progress because they be ieved in purpose. They departed from 2 strict Darwin. jan view, which avokls an assessment of the ultimate state toward which @ species is evolving. Purpasive, rather than natural, selection guided the course of social evolution. Theirs was an Aristotelian world-view: They believed that all reality moves toward an immanent perfect state, and this conflicts sharply with the neutrality of a pare Darwinian view. Reform Darwinism Reform Darwinists broke with the conservatives by distinguishing between pre: ‘human and human phases of evolution, and they argued for a discontinuity inthe ‘The Popilation Ecology Model 33 cvolutionary process between human society and previous Ievels of organic evolution, They noted that humans would use thier superior mental capabilites t ‘oppose and reverse some “natural” changes, such a8 intervening to affect the causes of human mortality and fertility. Natural selectin included constructing social institutions fo change people's life chances, and selection need not be only accidental. This is purposive selection, but it deals with the level of specific be haviors and institutions, aad it s earied out by men, not some higher purpose, Reform Darwinists criticized the uncritical use of the concept of a “struggle for existence,” pointing out that nature is not always in a tate of flee and unre- Fenting competition. Examination of food chains and the “web of life” by biolog ical ecologists reveals many instances of symbiotic relationships between species, with hierarchies of dominance limiting all-out war between the species (Hawley, 1950), “Fitness” nood not mean simply being the strongest and most brotal, but rather a species (or, in human society, humans) who were best adapted to existing conditions. Defining fitness in relative terms undercuts the moral fervor of the conservative Darwinist notion of fitness Zechariah (1971) concluded that reform Darwinists brought the concept of “progress” under the control of people, giving ita relaive rather then absolute frame of reference. A social definition of progress may depend, for example, on reducing or eliminating competition, as in the control of warfare. Not only indi- Viduals, but agaregates of individuals could engage in purposeful activity to ad vance their own interests. Consider, for example, unions championing the interests of workers against management, a development that was anathema to sonservative social Darwinists. This view legitimated the evolution of the state info te tole of an intervening agent “Modern evolutionary theory is distinctly “reform-oriented,” and is indifferent ‘0 whether selection is contreied by market Forces or by the state. As will be aoted shorty, this isnot the same as asserting that humans contol theit destiny. for the natural selection model emphasizes sources of change that ate rather i. tnectable to human manipulation. Nevertheless, current evolutionary theory is a vastly different enterprise than the one which enrolled Herbert Spencer, William Graham Sumner, A. G. Keller, and others in a celebration of the “survival ofthe fitest” a the tum of the century. ‘THE THREE STAGE PROCESS: VARIATION, SELECTION, RETENTION ‘The natural selection model identifies three states inthe process of change in liv- ing systems. Campbell (1969) outlined the three stage process and insightfally pointed out the relevance of the natural selection model for the study of social ‘organization. The following discussion depends heavily on his analysis, as well ‘that of Buckley (1967) and Hawley (1950). 1 will present organizational examples inthe next section, after the process itself is explained. 1M ‘The Popwlaion cology Medel The Ocourrence of Variations “The Sst stage nthe natura selection process isthe occmence of waitons ‘planned, unplanned, baphazard, systematic, random, Precio rasecrerogencous varios in sme aciviy, Behavior or truce, YT ore ore raw material fom which the selection proces culls those Seta0% vrais that are most suitable, given the selection enteion. 1 Orea or chaign, variations oceur through the fandom process of Fenetic mu ce leaming processes of individual organisins, variation eco avratry responses made to stil. A aby babbling in its erb =n example of haphazardly generated variation. whatever reason: Consistent Selection Cattoria “The second stage is the operation of consistent selection cries that differentially re eer ectvelyclinanate certain types of variations. In organic evo' icy see oe cet survival of cercn mutant forms that are beter able vo exp Pe a are in tei nvonmet reflects the operation of resource-based see toon Sita. In he learning proces, there i ferential enforcement of Pe ve oxploatory responses by animals, Differential reinforcenest of certain ve sentece gradually chanzes the production of a baby's sounds toward those, common in the baby's calture. ‘A Retention Mechanism “The tied stage ofthe natral selection process involves the operation of 9+ vi imachantam forthe sletive retention of the positively selected varianone von sn occurs when selected variations are preserved, duplicate, oF 1, see produced sot: the selected behaviors repexted on furs oneas ot OF aaa oer stactee appears aga in futere generations, In organic evelm the eee mechani ib te chromosome-gene system, which ensues Sie “pletion of selected structures in the sacceeding goncrations of pins and septs Positively selected variations survive and repeeguce others of tet OE et elearning process, the memory system ensucs tht pesiively S16 vaetnset ean be recall for fue use. & baby's speech peters Dee and res peehibe io others in the sane entre because they ave sine in the baby’s memory “Tae pana selection model is perfectly general and may be appliod © an) es eetfore the tee stages ae present. Te three sige mode} comp ares wal and ext Iearing, organic evolution, and, aT call ago er ofthis chapter, socio-cultural and crgasizationsl evolution. When seme ons of te model ae set, "an evolution in the dizetion of betes ‘The Population Ecology Medel 35 to the selective system ” tote selective system bsomes invite” (Camptl, 1969.73). A “beter {2 dona mens tha ere only one He—sleion i @ mater of releve ‘THE THREE STAGE M¢ THE THREE STAGE MODEL APPLIED TO “he poplin eco "he pi el ma ey wel pe a opt ny : a facing sociologists is whether we can identify similar < Se eof cept be pes Komori Sante fmt ans in oth of evn oy add nian cg, Te eon estonia ges ey -work for explaining how organizat ras roel ewe res avian changin ways ata Ss; nf event ey tw wing on seh he levee of he allen noel oan theory i sr . and in subsequent chapters I will return to the Span tinh pie hen eee neh nr AS bere ely heavy on Campbell USC) sigh! pesenaion Variation in Organizational Poputations Salon wh tb te. Te get ip he ete pepe imber of variations, the more the opportunities for ‘envtonenl eon ri Tae copie hn inn enter te lations indicate the applicability ofthe vation stage to unceestands ig erm tne: () vito en Orearztons nti veal fa van wine eee oem nd (a in the performance of important orgnzationl activities. between bureaucrat tic versus non-bureaucratc, or caital intensive versus labor serps bi les eae ee aa 236. The Population Ecology Medel tion, communication, and machine technology), firms switching to full-time pro- fessional managers gained a competitive advantage over others (Chandler, 1977), Variation between firms with professional managers and those without provided the opportunity for external selection criteria to operate, Yarlation between organizations. Variation may be introduced into the or- sanizational population by “he creation of neve organizations or the transfer of existing organizations to new owners or sponsors. Economic organizations, for ‘example, ate cteated by entepreneurs who are seeking profit and who are also confronted with the risks of undertaking a new venture. ‘The rate of creation of new business organizations is quite high in the United States. as is the failure rate, as shown in Table 2.1. In 1957, 398,000 new businesses were begun; 376,000 transferred to a new owner; and 335,000 failed outright. Between 1944 tnd 1954, over $4 million aew businesses were established in the United States, riost quite small, and anotter 4.5 million were transferred to new owrers, The rate of new business creation has varied over time, and also varics hy industry. a8 shown in Table 2.1, Unfortunately, the time series reported in Table 2.1 ends in 1962 and has not been updated. Recent information on business undertakings and failures is available only for corporations, which make up about one-seventh of the business population ‘There ae a large number of voluntary associations and social movements that ‘come and go quite regularly (Hausknecht, 1962; Zaid and Ash, 1966), introdue- ing a great deal of “between-organization™ variation into the organizational population. In one of the few attempts ever made to systematically list a portion ff the non-business organizational population, the Departinent of Commerce in 1949 estimated that there were 4,000 Chambers of Commerce; 70,000 labor un fons; 10,000 women’s organizations; and 15,000 civic service groups, luncheon clubs, and similar organizations of business and professional people. The validity fof these figures cannot be judged, as the Depaitment did not reveal how they were compiled (Smith and Sreedman, 1972). More comprehensive in‘ormation on variation at the level of organizational types is available from stadies of single communities, oF subpopulations of specific organization types. These studies suggest that sociological theories of organizations have severely underestimated the total nomber and variety of or ganizations, An extremely éctailed case study of voluntary associations in Bir ‘mingham, England, (Newon, 1975) uncovered 4,264 organizations, grouped into thirteen rather heterogeneous categories for purposes of analysis (see Table 2.2), Birmingham is England's second largest eity, with slightly more than one rnlion inhabitants, and thus there are roughly 4 voluntary associations for every 1,000 people. If Birminghm is representative, this implies the existence of sev cral hundred thousend voluntary associations in the whole of England W, Lloyd Warner's studies of American communities provide additional in- formation on voluntary associations” diversity. In the 1930s, a New England TABLE 21 Number of now, dsconinued, and transferred businesses, by majrinisry ‘roup! 1940 to 1952, (house) al Comiract Whokane Reval a Year tndnaries Contraction Mj, ‘Trade Trade Service Other New Businesses W020 o sw et Wo 8 6 nM m 8 a ist a ee) % isto @ 8 4 ~ a 3% si sm ou 1m So 8 ie 33 6 5 15 re) ie GIT Tt Wess 5 ‘ 0% po BE n &® oD 8 Discontined Business a 38) ws x» de se 0 57 2 Ws 8S 7 1 3S no & a 1 * 26 “ B 3 a an % » 8 x 8 2% a & xe 2" 35 0 10 s a » ro 138 u “rsd Busneses yr ate sR ae ise ML 8 a o7 ws noo8 oe Bt 388 % ou so so Boo 3 er ny & m » 330 0 7 7” ® 2 i 6 sw ‘Now businesses iele ony ars newly sbi, Dionne bwin iene css of ine without erence to te fesen fo" gpg eof busiest. A fm which 3 cited 3 8 ‘snes ey ut ubdergoes chung ef onerhip i cotted m= randferred Buses, Dt 368 icontinnce Source: US. Bare of te Census, Minvice Statics of the US, Colonial Times 01970, Bice end Eaion, Poe 2, 1975, p93 vis! Sous: U.S, Boreas of enaomle Anshsis, Survey of Get Bosnes. Osa fom ‘den sppid by Bora of Ol Age and Survive: Isaac a he TRS. town of 17,000 inhabitants had approximately eight hundred adult voluntary as ‘sociation (Warner, 1953, p. 192). Inthe 1940s, an illinois town of about 6,000 inhabitants contained 133 voluntary associations (Wamer ef l., 1949). These figures show that there were between 25 and 50 volustary associations per 1,004) people in these smaller communities, again implying hat there is a great deal of| diversity within the population of Amverican voluntary associ 0 ‘TABLE 22 _\oluntary associations in Bimingham, England: Population statstes. Tape of Organization emer in City of Tat Spons and hice 2a 0 Soci welfee ee 6 Court a8 ° ‘Trae ssocations m6 t Professions, 16s 4 Social a CChurshes and iio 38 3 ‘me forces ne eter 2 3 ‘ea 6 2 “Technet and setemine 7% a Eaves 6 2 “eae as 5 i Healt 3 1 Tor 4264 ‘0 Kenseth Newion, “Voluntary Onzaization i a Brish City: Te Poli! sod Organizational ‘Charsceiicn of 8,264 Volertary Aniociatns in Birighim Jou. Yu detion Res. 4 Oa Apsi 19754 43, Variation within organizations, A second type of variation affecting orgeniza- tional change is variation within differentiated organizations, such as in indi vidual abilities to fill particular roles. Following suggestions made by Buckley (1967) and Hannan and Freeman (1977), Twill apply the natural selection model not just to the survival or felure of entire organizations, but also to the partial ‘modification of structure anf activites falling short of the elimination of the total ‘organization. This modification of the biological model takes into account the ‘capacity of social organizations to change through structural alteration, a process ‘qualitatively different from limited shor-run homeostatic changes made by indi- vidual biological organisms. Organic evolution proceeds by 2 process of cifferen- tial survival of entice unis, whereas the changing of social organization can also ‘occur through adgpiations in one area of structure or activities while the rest of| the organization remains inact. ‘Modifying the natural selection model in ths fashion complicates an ecologi- cea analysis, since the criterion for successful adaptation to the environment is changed from the easier-to.bserve survival or failure to structural stability ot change. Characteristics of a population of organizations may change, not only because of differential morality, but also because surviving organizations have undergone significant internal transformations. The more internal variation within organizations, the greater the likelihood that adaptive variations will be produced. ‘Tumover in members ani especially leadership oles is an example of internal variation that may lead to survival with structural modifications. Voluntary a8- sociations typically select new slates of officers once a year, and the mote open the process, the greater the ikelihood that the organization will presenta set of| 38 ‘The Population Ecology Model 89 sctivilies to the environment slightly different from the preceding year. New officers have different priorities, possess diferent skills, and make new kinds of stakes. Some large business enterprises, in recogrition of the potential sdap- advantages in personnel movement through various roles, make a policy of shifting as much as one-quarter of their managerial evel sia to new respon: sibilities each year. Variation over time. A third source of variation in organizational populations atises from variations overtime in carrying out important activites. In all ba the ‘most tightly controlled organizations, we can expect that no task is ever per- formed exactly the same way twice. Consider the many ways of interviewing @ client, preparing a meal, or making @ sale. In some instances, especially in or senizations with unstandardized procedures and low formalization of rules and regulations, differences overtime may be very large indeed. The cvmulation of ranciom errs in the performance of duties allows organizations to drift intone chartered regions and, possibly, into deteiotation or adventageous innovation (Hirschman, 1970), Innovating organizations may introduce variation into @ population by dei ‘emely varying from customary forms of behavior. innovation, however, need note a consciously planned strategy and may bea result of imperfect attempts to imitate other organizations perceived as successful (Alchian, 1950). Prevailing beliefs in most Western societies discourage people from interpreting the advan: tages that come their way as products of “luck” or “chance,” and atlemps to do 50 are often taken as a subtle form of boasting. Social scientists are not immune from the pervesive need to find structure in the worid, as shown by the hostility {at greeted the attempt by Jencks and his colleagues (1972) to explain a great deal of socioeconomic achievement as the result of idiosyncratic (“chance”) events ‘A oy differoce between the natural selection model and tational theories of organizational change ties in the assignment of the source of variation Planned variation—strategy and choive—is one seuree of variation, but any Variation wil do, Hence, the natural selection model emphasizes chance events, ‘error, and tuck. Given the rational model bias of traditional organizational and ‘economic research, there have been few attempts totes the hypothesis that un- planned variations play an important part in change The Selection Process Applied to Social Organization A critical difference between the natural selection medel and other models of or ‘ganizational change lies inthe relative importance of environmental selection as ‘opposed (0 intraganizational factors. If environmental selection criteria are to have an effect, two conditions must be present (Campbell, 1969): (1) there must bea high rate of variation; and, (2) there must be a fisly high mortality rate for 40. The Population Ecology Mode! he activities, structures, oF organizations involved. Variation provides the raw ‘material forthe selection process, and a high mortality rate for individual organi- zations inereases the possibility of environmentally-relevant selective survival ‘Three examples of selectcn, matching the previous examples of sources of varia tion, will be presented: (1) selective survival or elimination of whole oxganiza- tions; (2) selective diffusion or imitation of successful innovations of partial organization structures of activities; and, (3) selective retention of successful activities resulting from variations in behavior overtime. Selective survival. The fist and parest form of environmental selection isthe selective survival or elimination of entire organizations—organizations eithet ‘ue fit for their environment, or they fail. If selection criteria favor administrative rationality in organizational control structures, then we might observe that non Dbureaucratically structured organizations fail, leaving only bureaucracies, Or- ganizational forms survive or fail depending upon their ftness for a particular ceavironmental niche, A niche is created by the intersection of resource con- sirainis—an abstract resource space consisting of a unique combination of ze sources (information, access to materials, customers, and so on) that could pet- tit 2 form survive there. Forms thus take advantage of a niche’s resource: space, A small neighborhood grocery store occupies a niche defined in ‘economic, geographic, and cultural space: a specific location provides access to a population of potential customers with need for food products, petaps with cul- tual tastes for a paticula line of products, and a value orientation toward sup. porting local merchents. Variations in the organizational forms exploiting this niche include whether a grocery store employs only family labor (thus lowering costs), is autonomous of part of a chain (hus gaining the benefits of subsidized advertising), and makes cnly cash sales or offers enedit (thus creating the possi- bility of Tosses due te bad debts). ‘Most organizations are small nd are in that segment of the population poten tially subject selective elimination, The only s¥stematic information available ‘on otgenizational failures covers just the business sector, and as the figures in Table 2.1 show, the business failure rate in the United States is quite high. Most businesses are operated on a small seale, making ther highly vulnerable to ‘aire ‘Two-thirds of all businesses take in less than $25,000 in receipts per year, and nearly three-fifths ofall corporations have less than $100,000 in asses. In the relail trade and service secors, a substantsl proportion ofall businesses have na ppaid employees, as shown in Table 2.3. Except for manufacturing establish- ‘meats, most employees work at sites employing less than one hundred people, Ia the five industry sectors portrayed in Table 2.3—manufacturing, construction, retail rade, merchant wholesalers, and service businesses—90 percent of all es- tablishments employ less than 100 poople, and the majority of all establishments ‘employ less than 10 people. (Note that since some organizations operate at more TABLE 23. Sizeof establishment by industry: 1972 (ncudes ony establishments apeceted ttraughout the etre yes) lary Merchant Sige class je. Consrasion—Retil— Wheerter— Serves eects with rn pid erpoyaes Nay NAY a) 560 Cunuarive Peron of Eeoblnense O10 Serves os m3 m9 ma ae Oto Sempiyees me 4 a7 OA O18 81699 empiyeet ok wD on employees working incetbihmen th 1 ‘ot more employes B20 Ws 23 Sey: (A) nates the infomation st sabe Scones U.S, Bureau ofthe Census, Consus of Manteca, 1972, Subic Series: General Siar, MCP I}, Tbe 198. U.S. Buren ofthe Ces, Consus of Whcesle Trae, 1972. Sujet Series: Esalshinent Size nd Fim See, W721, Te TD, U.S, Boren ofthe Cents, Censos of Consroction Indts, 1972 ren Seve, United Sites Summary, CC72A-10, Table 3 US. Burs ofthe Consus, Coats of Resa Tra, 1912, Sb Serie: Easier’ and Flom Sice ROTI, Tae 1 U.S. Baru of be Census, Census of Selected Serie Indus, 1972.8, Sammy and Sub et Suvi, Tale 1B. than on se, the infomation in Table 2.3 undesates somewhat te sae of tmpoyng organ) "Tao caters of idol cits iit he apply of ts prs form of election oa ara sobs ofthe ta nina papain, Fis the poputon of avs oxganisins iid ita smal pment of vor tage eganictins with fora file Seco, he grate pb seior of indi sokies ha cated governments sl evel comma ‘ein, and national) to appropiate and velo betwean tiie ao this atonal income, witha high propria of thse ands ed ose po plc sector ornizations Each charters desenes Ita eae ta Within se busines sete, he bifurcation ofthe population ina segments i fetenally vulnerable 1 fale hat been accelted by two tends Pet busses ave ineeaingly oped compre for of eal esl 42. The Population Keotogy Model saining status as an entity with limited liability under the law. Corporations are still outnumbered by sole propritorships (operated by an individual as more or less an extension of his or her personal economic alfairs) and partnerships (like proprietorships, but with more than one owner), constituting about one-seventh ‘of the business population. However, corporations account for the bulk of busi ress receipts in the United States, as shown in Table 2.4, taking about 85 percem fall eceipts in 1972. Proptietorships are the dominant legal form, but most are Quite small: about 77 pervent of them took in less than $25,000 in receipts in 1972, and 95 percent of all proprietorships took in Jess than $100,000. ‘Another trend evident among both incorporated and non-incorporated businesses is the increasing concentration of wealth in the hands of the very largest organizations, which are a tiny minority of the population, As shown in Table 2.4, in 1972 only 1.7 percent of all businesses took in more then {$1,000,000 in receipts, but they accounted for 76.3 percent of all receipts. ‘Dominance by the very largest organizations is especially evident within the cor porate sector, as showa ia Table 2-5, which gives information on the asset size of all corporations in 1955, 1965, and 1972. Most corporations have less than $100,000 in assets, but they account for less than 2 percent of all corporate assets. At the other extreme, 6.6 percent have $51,000,000 or more in assets, and atthe very top of the corporate pinnacle, 0.1 percent have $25,000,000 or more in assets This one-tenth of one percent of all ‘osporations with a quarer-bilfon dollars or more in assets accounted in 1972 for 60.8 percent ofall corporate assets. Seventeen years before, in 1955, the top 0.1 ‘TABLE 2.4 Proprinorships. partnerships, end corporations: Number end ‘usinase receipts, 1972 SEEESEE EFF EE tte ee ue ere EEE Teta umber (thousands) Recep in tons) ‘Sige Class Numer Receiprs offerte ioudends) (in tons) Prep. Part. Corp. Prop. Part. Corp Tal 8 Fars 2760 1043 2 Percent Disribuon Ue $25 000° a7 a2 e):«SS SATO OS OD $09.99 wos 20 ia7 192 100 49 43 03 550-99,999 83000 RL 7a BS B22 83 OR 100-199 998 36 13, a9 BE Be S2-49,999 oo ws 78 SSF te sb 500.999 999 1687) OS 19 86 70 eas Soopers 17 SOS O86 OA BT tstues fms Soutce: U.S. Bureau of the Consus, Stata! Abarat ofthe US. 1975, Table 83, p49 ABLE 25. Active corporations, by asset size. (Figures are esimates, based on sampes ‘of acve comorations fing income tx eur Naber of deve Cop. Tot ase. (thwarts) (inbition) ese Si oF TT Cass DSS 168 TOSS 8S I9TD “ea omer Co a ee Proven bition ‘Under 100.000 vss ke 100995,99 Mes 83 60 $,c00000-10,000,000 34153 120 RZ t,o, 000-28,000.000 os sr 6733 525,000,000 30,000. D362 8750 $0,000, 00-10,000,000| o1 65 5183 5100, 00,000250,00,600 O13 36 as $25t}000000 sad over oi} 8a st 608 Toa too 1m 1091009 Souce: U.S. Buon of tbe Cen, Stanicol Abstract ofthe US, 1978, Tale 816, . 47 Ofisinal Sour: U.S. IR, Saisie of come, Corporate Income Tax Rees percent accounted for 43.4 percent of all assets. Clearly, businesses with millions ‘of dollars in assets are substantially protected from the threat of direct elimination by failure, Large businesses rarely disappear, and when they do itis almost al ways because of mergers oF sequisitions, as will be examined in a subsequent chapte. ‘The second characteristic of industrial societies that limits the appl of the pure form of the natural selection mode! is related to the expanding role of government, Organizations that come under the prowzction of various national, regional, ot local governments have very low feilure rates, such as public hospi- tals, social service agencies, schools, and various nationalized industries. ‘A large proportion of governmental income is allocated to the support of pub- tie sector organizations, which are consequently protected against the possibility of failure, National foundations and nonprofit trusts support other organizations, ‘which are therefore also insulated from the prospect of rapid demise. Public sec- tor agencies and other protected organizations may sill undergo structural mad- ification, but they will not, mestly likely, face total elimination. National gov- ‘emments have come to the aid of privately-owned businesses (especially large firms such as Lockheed Aireraft Corporation in the United States, or the Chrysler Corporation in England), further reducing mortality rates in that sector. In some instances government aid has led to the nationalization of industries, such as the railroads inthe United States and Wester Europe, and alttines ia Western Europe 8 44, The Population Ecology Model and most other industrialized nations. Thus a successful form of adaptation might ‘Consist of an organization managing to have itself (or the class of organizations it Tepreseats) classified among those receiving government subsidies. Similarly, a ‘Sal fim acquired in a take-over action by a lagge corporation finds is survival ‘assured and petbaps its owrers handsomely compensated. Of course, the take ver may also mean the loss ofthe frm’s Kenity and the indiseriminate dsmis- sal of employees. “fhe importance of national governmental intervention in the economy should pot be minimized, even in such avowedly private enterprise systems as we find in the United Staes, In 1973, 13,742,000 persons were employed by governments in the United States, 2,663,000 by the federal government and 11,079,000 by state and loca) governments, Public sector employrneat was about one-fifth the ‘ize of employment in the private sector. Moreover, in recent years government has taken the lead in the creation of new jobs. Between 1973 and 1976, about 700,000 new jobs were ercated inthe private sector and 1,300,000 inthe public sector. The piteromenon of bursts of activity in the creation of organizations, he considered in a subsequent chapter, is especialy noticeable in the public sec- tor, In 1980 thete were 641 public institutions of higher education in the United States, and still only 701 in 1960. Over 300 new institutions were created in the decade of the 1960s, and by 1974 there were 1,200 publicly supported institu: tions of higher education ir the United States, an increase of 69 percent in four teen years, compared to less than 10 percent increase inthe decade preceding 190. Environmental selection of entice organizations, then, occurs mast often with sinall businesses (which are far more numerous than large businesses, although rot nearly a significant economically), organizations not subsidized by govern- news, and voluntary associations. Less complete forms of selection, however, nist for all organizations; particular structures or activities may be eliotinated, ‘aided, of modified withour the destruction of the existing form, AS is the ease in ‘rgmnic evolution, selectioa among organizations ison the basis of relative rather than absolute advantage, except for absolutely nonviable forms Selective diffusion. A second type of environmental selection is selective difit- tion or imitation of successful innovations in structure oF activities Wcr088 OF ‘ganizations in a population, Io the traditional model of orgatizational change, Atiffusion and borrowing ae a result of strategic choices made by leaders or man. agers. To apply the natural selection model, however, we can disregard the 10- tives for choice and assume only that organizations adopting the innovations of felatively successful organizations will have at Jeast a short-run advantage over ‘hers. Detroit auto manucacturers (and their employers) resisted the adoption of fn sssembly-ine production system until Henry Ford installed one and began to frodace ears at such volame and Tow cost that their markets were threatened "The Population Ecology Model 4 ann, 7. ines Me oi in in poe Iara Rows ely Ovoughout x popula, te selective dision of inmate can bam npn wcton mechani fo huge ha J a cee citi ore van, Oia mee yan ingore feping fuori nord of we’ evelopment be [iy Scere retain vec (Wis, BO, isin and borrowing ne mats of exterallecton Rene oh med fra coin dope of ompatibiy totem te stu nd ees ote sora at ting oration. Cong between two erases itis put of th selective rer, Selene difhabn aad trong wil oer sot ny when vganztns ae telly saranda ee oe tun oncommuniton, thw allowing be fe ow of norton (teh cone, 195) "Coe con beeps info ont selon mo ating opportinits for borrowing re open vo may pot egiiaions etn the conptity saute bth the to owing meee a Atay coe y the bower, Selective retention of sucestlaetiiies. A hind typeof selection is that of whem mieten ne hain inher performance over tine. Vttions in tak performance tat prove so cect wl be selected i they occur frequently enough and thete exist a mechani fr ening he ces Sch slcton vl be ited eee sons inthe organization with th capability of renembring the acces a= {ny orth orguntzaton’s fs permit ean review of past actone. The pos. ets of election of varisions sero ocasons mt) acu incl th he Scktve promotion lafenhip roles of prion Wiese pst betavoe hs been most alapive and sucessful inven envzenmeat (Capel, 196) Slee tmrostl tei gt inet fe ronson ie el we mai scone ointment ed Having reviewed sre exanpls ofthe atura leton proces, we can re turto te qustion of hele thee ar any penerel pices elp wo en ‘en selection is occuring. Camphall (969, p75) noted a major difeenes between research ino organic veres socal evolution, Bilgis and sigs fave given usa good understanding ofthe selection system operating on plant sn aia spe “we th pes of ah ch ving, swimming, and seeing ceatues must coaforn,” We need much bet Inowisgeof organizational! ypes end propia environment bole We cat dos Welln undersaningorfnzational henge. We bnve two guidelines, mentioned ear, for ientiying where slstive ever could have made a impact on te ever of an rgizatonal frm i= 146 The Population Beclogy Model relatively high variation and mortality rates. Thus, we would expect 1 find ex- tema selection criteria having an impact on organizational survival in the s=2- ‘ment of the population previously identified as small and subject to high «um- ‘over, but not in the segment identified as economically dominant or protected by goverment legislation. However, particular activities or partial structures of ‘economic dominants may be subject to selective criteria, as, for example in the smcans used to acquire new funds for capital expenditures or in methods of exp sion, Alexander (1971) demonstrated that after traditional forms of mergers were Challenged by antitrust authorities in the 1950s, large firms switched to rarely- challenged conglomerate mergers. Internal selection criteria. The focus has been on external selection criteria wo this point; that is, pressures external to organizations. We must be aware that an ‘organization's internal diffusion, initation, and promotion systems may be selec~ tive in ways that are irelevant to environmental fitness. This is especially likely in organizations that have achieved some degrec of insulation from envitonmen- tal pressures, Campbell (1963) has described two types of intemal selectors that are especially interesting, First, there are pressures in organizations that encourage internal stability and compatibility. Frequent interaction between members leads to positive rein forcement of interpersonal behavior, which is rewarding forthe people snd to the elimination of incompatible behavior. Interdepartmental and other in traorganizational activities are influenced similarly towards maintaining consis- tency and a reasonable degree of harmony. “Thus any social organization tends to move in the direction ef internal compatibility, independently of increased ex- ternal wlaptiveness” (Campbell, 1969, p. 76). Organizations that ate protected {rom their environments may even move away from external relevance, as in 30- called “ossfied” organizations. Public bureaucracies are often accused of being non-responsive to their clients because members are too caught up in rules and regulations designed to smooth intemal functioning, Second, there are internal selection criteria that continue 2s vicarious rep- resentatives of past external criteria. Procedures that were once selected because they ft the context an crganization found itself in may be irelevant or even ‘maladaptive to the current situation. The example of ACME vegetable canning company, given inthe lat chapter, is case in which decisions were made on the ‘unstated assumption the: the environment would remain the same. Thus, the decision-making structure led to the commitment of funds to an inappropriate tse. Similarly, the Ametican armed forces continued for some time t0 use a promotion system for officers that rewarded battle experience, rather than re: ‘warding those with the technical sophistication required by a modern weapons system and long-range strategic planning of modern warfare (Janowitz, 1959). Retention Systems in Organizations “The retention stage can be interpreted 3s the stability in organizational forms ot in specific structures ancl activities of individual organizations. Retention in social organization analysis is diferent from that of organic evolution in that social sci- casts have not identified a social analogue to the rigid duplication process of the gene-chromosome system. Nevertheless, thete are some general characteristics of social retention mechanisms that have been identified, and these can be exiended 10 an examination of organizational forms and activites. Retention of successfal adaptations in social systems depends upon the reten- tion and transmission of knowledge from one generation to the next. Using traditional sociological concepts, we say that culture is transmitted via the institwionalication of beliefs and values, thus ensuring retention. In preliterate societies with few writien records, knowledge is passed through the generations by an oral tradition—passed from the elders to the young by word of mouth and there are strong sanctions against innovation of variation in information passed along (Campbell, 1969). Pressures ageinst varying from successful tradi tions result from the extreme vulnerability of societies with few surplus resources to short-run misfortunes. A series of unsuecessful variations may mean not the selective elimination of specific practices but insead failure for the entire soci ‘ty. Tae natural selection model explains sanctions against variation notin teers of deliberate design, but by the fact that societies wishowt such sanctions will be less likely t0 survive. As surplus resources accumulate, variation and innovation ae less threatening and innovators may find a riche in the societal division of labor that is explicitly recognized (Lenski, 1966). ‘As societal forms bave matured, there hes beema tend fowatd the extemnaliza- tion and rationalization of culture. Material eultue rather than the oral tradition now carries societal uaditions and history, and there is less danger of adaptations being lost due to random variations. Written records, machinery, the physical ‘and material components of cities, and the general capitel improvements in a so- ciety represent the extemalization of past successful adaptations to its environ- ‘ment, Lenski documented the long-term trend in the advance of technology. and the inerease in the scale and complexity of social structures (Lenski, 1975), No presumption is made that such trends will continue forever, and it is possible that ‘the depletion of vital resources requited by industrial societies will produce a dif ferent future, It is clear that social retention systems are much more complex in industrial as compared to pre-industrial societies. Retention systems may reside both in a sceial system and its environment, and 1 will point out some inttaorganizational mecsnisms in the next section. A strong argument can be made that very complex structures can only be main. ‘ined by consistent environmental pressures (Campbell, 1969). Without consis- a 48 The Population Ecology Model ‘ent environmental pressure, two Factors combine to diseup: the complexity of a structure. Fitst, the continous occurrence of random or haphazard variation, if unchecked by selective elimination and retention, gradually begins system to a simpler and less organized state, Second, sttong internal selection pressures exist that are biased toward sinplicty and standardization ia the interests of stabilizing ‘organizational activities. Deviance is rooted out and there are strong pressures of outlook among members, These two pressures, if not ‘countered by strong environmental pressures that reward complexity, will ever- tually remove a structure's complexity. In organic systems the simaplification process would take many generations, but in social systems we can envision the process occurring over the life of a single orgenization. This principle helps us understand why some overly-complex structures “degenerate” into simplicity or

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