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Organizational Ecology and Survival Published: Monday, October 26, 1998 By: Dr. Manuel Angel Morales

Organizational ecology studies populations of organizations, with the individual organization as the unit of observation. Because inertia (inability for organizations to change as rapidly as the environment) is seen as a prominent feature of organizations that changes in organizational populations arise largely through the process of organizational birth and death as contrasted with the adaptation and survival of individual organizations. Organization ecology investigates the antecedents, performance and consequences of an environmental selection processes.

Although the ability to reproduce (birth) and to survive (the opposite of mortality) may not be finely variegated measures of organizational performance or the performance of various types of organizations, these issues are clearly consequential outcomes. Organizational ecology does have something important to say about organizational performance. There is, however, one important caveat to keep in mind in thinking about the connection between ecology and the understanding of organizational performance: organizational mortality is not always a bad thing. Some organizational mortality reflects bankruptcy and the disappearance of the entity. Other is the result of poor performance, condition that compels a merger or buy-out. Yet other is the consequence of being successful and represents selling out as a way of cashing out.

The basic ecological argument is that organizational forms that are comparatively more suited to the environment or niche within which they are operating will do far better, that is, they will tend to exhibit a higher founding rate and a lower mortality rate. It is important to note the operative phrase is comparatively more fit, for unlike economics, the ecology predicament makes no claim about optimality or even long-range progress. If a better form is not present in the population, for whatever reason, it cannot triumph in the selection process, which means that there is no assurance that the organizational design that seem to be competitive are optional. In the land of the blind the one-eyed is a king. Because survival depends on the fit or match between the characteristics of organizations and their environments (which constantly change), what is a better or worse design obviously changes also. Thus, the need for flexibility, agility and adaptability, which is an amoeba-contingent design. There is never a best way to organize, only a way that has outperformed the competition in the past, given the conditions of the environment that prevailed at the time.

The empirical evidence suggests that there is a liability in newness, in that new organizations tend to fail at a higher rate than older ones. This is an interesting and nontrivial prediction, when considering the fact that older organizations are likely to have greater inertia and to be more difficult to change. A prediction founded just on considerations of adaptability, then, would anticipate higher failure rate for older organizations, particularly in more rapidly changing environments that would require more transformation. This age dependence of organizational mortality holds even when size is controlled. It is not the case that age dependence occurs simply because new organizations tend to be smaller and smaller organizations disappear more frequently, although there is a liability of smallness. Smaller organizations have more difficult raising capital, face diseconomics of scale in dealing with government regulations, and face problems in attracting labor in competition with larger organizations.

There are many other empirical propositions and design rules coming from the population ecology study field, that permits knowledge to be translated into management action and brings lights to the challenge of organizational performance.

 


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