1. Ecologists and Institutionalist: Friends or Foes
MGT Advanced Organizational Theory

2. Authors: Heather A. Haveman and Robert J. David
Professor at Haas Business School
Research interests – organizational theory (ecology & institutionalism), economic sociology, social movements, social history, entrepreneurship, organizational demography, gender, careers, social mobility
Robert J. David
Associate Professor at McGill University
Research interests - evolution of practices, organizations, and industries from an institutional perspective

3. Organizational Ecology
Seeks to understand the distribution of organizations across different environments
Core assumption – understanding organizational diversity requires ‘population thinking’
Populations – aggregates of organizations that share a common dependence on material and cultural environments
Empirically, populations are sets of organizations that produce similar goods or services, use similar resources, and have similar identities

4. Ecology – Main Assumptions
Density dependence
Resource portioning
Inertia
Organizational form as identity

5. Density Dependence
Organization founding and failure depend on population density
When density is low, increasing density increases legitimacy
At higher levels, more organizations compete for resources
As density increases, competition begins to overwhelm legitimacy as the primary mechanism driving vital rates
Density –dependence models can be applied to subpopulations and to compare organizational similarities and differences
Are there times when this model does not apply?

6. Resource Partitioning
Focuses on competition and mutualism between organizations that serve a wide range of clients with a diverse array of products (generalists) and organizations that focus on a limited clientele, offering a narrower set of products (specialists)
When there are economies of scale and a resource distribution with a single rich centre and poor peripheral region, the resource ‘space’ becomes partitioned with generalist occupying the centre and specialist occupying the periphery
Increased competition between generalists leads to higher failure rates for generalist and lower failure rates for specialists
The general knowledge of this principle among practitioners have changed behavior of many generalists. Are scholars examining the move of organizations between generalists and specialists focuses?

7. Inertia
Organization ecology assumes that the core features of an organization change slowly, if at all
8 constraints on adaption
Investment in plant, equipment, and specialized personnel
Limits on the internal information received by decision-makers
Vested interests
Organizational history
Legal and economic barriers to entry and exit
Constraints on external information gathered by decision-makers
Legitimacy considerations
Problem of collective rationality and the general equilibrium
These constraints favor inert organizations
When organizations change, resources are diverted from operating to reorganizing, reducing effectiveness and increasing the likelihood of failing
Though change can be detrimental, organizations can learn to change
General consensus is that failure rates generally decline with size and increase with age. Is this still true in the current economy?

8. Organizational Form As Identity
Analyzes organizational forms as identities or social codes, which are recognizable patterns that take on rule-like standing and get by social agents
Rules of conduct provide guidelines for members of a population by delimiting what they should and should not be and do
Signals generate a cognitive understanding about the populations because they define what observers understand the members of an organizational population are and what they do
Works in tandem with other strands of organizational ecology

9. Big OT questions: Why do organizations exist?
Why are firms the same/different?
What causes changes in organizations?
Why do some firms survive and others don’t?
Emerging issue?

10. Institutionalism
3 of the most important subjects in organizational institutionalism are
Legitimation and institutionalization
Isomorphism and diffusion
Strategic action

11. Legitimation and Institutionalization
Organizations are legitimate with they are comprehensible and taken for granted as the natural way to achieve some collective goal, when they are justified and explained on the basis of prevailing values, role models, and cultural agents, when they are sanctioned or mandated by authorized actors, and when those involved cannot conceive other alternatives
Legitimacy can rest of any of 3 foundations
Regulative
Normative
Cognitive
Legitimacy improves access to resources and acceptance from customers, thereby contributes to organization’s ability to persist
Deinstitutionalization and delegitimation
Is deinstitutionalization inevitable?

12. Isomorphism and Diffusion
Study of why organizations are similar
The more prevalent an organizational structure, practice, or tactic, the more legitimate it is
3 processes driving isomorphism
Coercive pressures – based on regulatory legitimacy
Normative pressures – based on normative legitimacy
Mimetic pressures – based on cognitive legitimacy

13. Strategic Action
Based on premise that organizations are often proactive and control their environments, so institutionalist place conformity on a continuum of responses to the environment
Compromise
Avoidance
Defiance
Manipulation
Examples?

14. Big OT questions: Why do organizations exist?
Why are firms the same/different?
What causes changes in organizations?
Why do some firms survive and others don’t?
Emerging issue?

15. Points of Similarity
Developed as corrections to rationalist and adaptationalist theories
Both theories contend that organizations could not be adapted to external conditions in a technically rational way
Concerned about the variety or lack of variety of organizations
Study similar phenomena
Legitimacy
Organizational form
Emergence and spread of new organizational forms and features
Organizational change
Organizational survival

16. Points of Difference Ecologist Institutionalist Scope
Parsimony & generality
Richness & contextual specificity
Ontological Stance
Empirical realists
Social constructivists
Theory development
Collection of overlapping theories that build upon each other
More emergent and diffuse research agenda
Definition of legitimacy
The degree to which an organizational form is taken for granted
Legitimacy encompasses cognitive, normative, and regulative dimensions