Ecological Approaches to Organizations

Introduction: What Organizational Ecology is and Isn't

Until the mid-1970s, the prominent approach in organization and management theory emphasized adaptive change in organizations. In this view, as environments change, leaders or dominant coalitions in organizations alter appropriate organizational features to realign their fit to environmental demands (e.g. Lawrence and Lorsch 1967; Thompson 1967; Child 1972; Chandler 1977; Pfeffer and Salancik 1978; Porter 1980; Rumelt 1986). Since then, an approach to studying organizational change that places more emphasis on environmental selection processes, introduced at about that time (Aldrich and Pfeffer 1976; Hannan and Freeman 1977; Aldrich 1979; McKelvey 1982), has become increasingly influential. The stream of research on ecological perspectives of organizational change has generated tremendous excitement, controversy and debate in the community of organization and management theory scholars.

Inspired by the question, Why are there so many kinds of organizations? (Hannan and Freeman 1977: 936), organizational ecologists seek to explain how social, economic and political conditions affect the relative abundance and diversity of organizations and attempt to account for their changing composition over time. Organizational ecologists are very empirically oriented - that is, driven by the cumulative research findings of an international community of scholars that attempts to replicate and extend empirical generalizations derived from theoretical expectations. Although differences exist among individual investigators, ecological research typically begins with three basic observations: (1) diversity is a property of aggregates of organizations that has no analogue at the level of the individual organization, (2) organizations often have difficulty devising and executing changes fast enough to meet the demands of uncertain, changing environments, and (3) the community of organizations is rarely stable - organizations arise and disappear continually. Given these observations, organizational ecologists pursue explanations for the diversity of organizations at higher levels of analysis of the organizational population and community and focus on rates of organizational founding and failure and rates of creation and death of organizational populations as sources of increasing and decreasing diversity.

Organizations, populations and communities of organizations constitute the basic elements of an ecological analysis of organizations (Hannan and Freeman 1977; 1989). A set of organizations engaged in similar activities and with similar patterns of resource utilization constitutes a population (Hannan and Freeman 1977; 1989). Populations form as a result of processes that isolate or segregate one set of organizations from another, including technological incompatibilities, institutional actions such as government regulations and imprinting effects (Stinchcombe 1965; McKelvey 1982; Hannan and Freeman 1989; Baum and Singh 1994a). Populations themselves develop relationships with other populations engaged in other activities that bind them into organizational communities (Astley 1985; Fombrun 1986; Hannan and Freeman 1989). Organizational communities are functionally integrated systems of interacting populations. In an organizational community, the outcomes for organizations in any one population are fundamentally intertwined with those of organizations in other populations that belong to the same community system.

Although organizational ecology has been a prominent subfield in organization studies for nearly three decades, numerous critics and skeptics remain. Why? The debate centres primarily on assumptions about the relative influences of organizational [Page 56]history, environment and strategic choice on patterns of organizational change advanced by structural inertia theory (Hannan and Freeman 1977; 1984). Structural inertia theory asserts that existing organizations frequently have difficulty changing strategy and structure quickly enough to keep pace with the demands of uncertain, changing environments and emphasizes that major organizational innovations often occur early in the life-histories of organizations and populations. Organizational change and variability are thus regarded to reflect primarily relatively inert (i.e. inflexible) organizations replacing each other over time. To organizational ecology's critics and skeptics this means environmental determinism and loss of human agency (e.g. Astley and Van de Ven 1983; Perrow 1986).

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