Organizational Ecology

Core Concepts

A population is a set of organizations of the same form within a given social boundary. Populations are often operationalized as industries or industry segments in empirical studies. It is the common identity of organizations that constitutes their organizational form. Identity determines to a great extent what the organization is supposed to be and what it is expected, and not expected, to do. The form's identity is externally constructed: Its perceived violation involves a sharp decrease in the organizational form's valuation by relevant environmental actors such as clients, employees, shareholders, suppliers, and voters.

The resource environment provides the inputs that organizations need for subsistence. The focal scarce resource is the clientele's demand for organizational services. The purchasing power of customers for firms, membership for nonprofit organizations, and electoral support for political parties exemplify organizational resources. The distribution of resources in an organizational population is given by the distribution of people, the carriers of demand, along their social or taste descriptors. The characteristics that describe demand define a multidimensional resource space.

Organizations address domains in the resource space, groups of people of given characteristics, with their offerings. Organizational engagement in these domains makes the offering known and appealing for the target audience so that some parts of this audience will take the offering. The zone of engagement in the resource space defines the fundamental niche of the organization. Resource competition comes as overlap between the fundamental niches emerges. The realized niche derives from the fundamental niche via competitive or mutualistic interaction. Competition normally makes the realized niche a proper subset of the fundamental niche.

Core Theories

The inertia theory of OE claims that—under certain conditions—organizational inertia tends to be associated with successful, long-surviving organizations. Since inertia blocks or hinders adaptation, inertia theory has a legitimizing role for OE's selection-based approach. The inertia argument lessens the importance of managerial activities and as such has induced strong commotion among organizational scholars. But critics often overlook the constraining clause “under certain conditions” in the inertia argument. Which circumstances favor organizational inertia? First, staying idle can be the best strategy when future environmental conditions are unpredictable. Then, organizations that take an adaptive path will have the same chance of achieving a fit to future conditions as those organizations that do nothing. Reorganizations are costly, though. There is usually a broad variety of organizations around in the same industry or market. A lucky group of organizations that stay still will happen to fit the new environmental conditions by chance, thus benefiting from the best of both worlds: the absence of reorganization process costs and the presence of environmental fit. So this fraction of the nonreorganizing—and supposedly inert—organizations is expected to be overrepresented among survivors.

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