Population ecology theory postulates and lessons for strategic management
The diversity of organizations in society depends on the both the number of organizational forms and the distribution of organizations over forms". This is a dynamic process, with new forms being created, some orgs changing into other forms, and some forms going away. Organizations are created and disbanded or merged. organization that cannot change strategy and structure as quickly as their environments can change.
Published on: Mar 4, 2016
Transcripts - Population ecology theory postulates and lessons for strategic management
Where it started
What the Theories Suggest
Ecology involves interactions of living organisms and their
environments. Life sets ecology apart from the inanimate
Population ecology is the discipline in ecology that deals with
the structure and dynamics (e.g. growth and decline) of
biological populations. The focus may be on a single population
in isolation, or one of a few interacting species.
According to Hannan and Freeman (1977) a population of
organizations is defined as "all the organizations within a
particular boundary that have a common form". Industry is the
closest counterpart in economics and strategy management
In the late 1700s, Reverend Thomas Malthus’ in An Essay on
the Principle of Population argued that population increases
exponentially if unchecked whilst the food supply grows
only arithmetically; hence inevitable limitations of vital
resources would have demographic implications, leading to a
"struggle for existence".
Adam Smith, an 18th century political economist, in his The
Wealth of Nations, identified a regulating mechanism in free
markets, which he referred to as the "invisible hand", which
suggests that supplies and demand are the key determinants
of prices .
Charles Darwin was influenced by both Smith and Malthus,
and thus Darwin ‘continued the conversation’ on the
"struggle for existence" in nature. Darwin determined that as
population outgrew resources, "favorable variations would
tend to be preserved and unfavorable ones to be destroyed.
The principle of geometric growth:
In general exponential growth can apply to population ecology. The law is
The Malthusian law
Exponential Growth-this model :
Predicts the rate of growth, or decay, of any population where the per capita
rates of growth and death are constant over time.
*Births, deaths, emigration and immigration take place continuously
*For the growth of most biological populations
*Human populations grow exponentially when resources are
The principle of cooperation:
Arises from the basic ecological premise that individuals can receive
increasing benefits, in terms of higher reproduction and/or survival (or
higher R), from increases in population density (Berryman 1999). For
example, a higher probability of finding a mate, obtaining food (group
hunting), or escaping enemies (group defense)
The principle of limiting factors:
populations can be affected by many feedback loops involving
many different species and physical factors. If all these
potential feedback processes were to operate
simultaneously, then the dynamics would usually be
extremely complex, or even chaotic
The principle of interacting species:
inter-specific interactions between predators and their prey can
create negative feedback between the two species, in the
sense that increases in prey numbers results in higher
predator numbers (through increased reproduction) and
this feeds back to reduce prey numbers (through increased
The principle of competition:
It arises from the basic ecological premise that organisms have
problems acquiring resources, or become more vulnerable to
natural enemies, as their populations become larger, and
these results in lowered reproduction and/or survival.
Inertia and Change: It implies that organizations that are both reliable
and accountable are those that can survive (favored by “natural
selection”). A negative by-product, however, of the need for reliability
and accountability is a high degree of inertia and a resistance to change.
Niche Theory: It distinguishes broadly between two types of
organizations: generalists and specialists. specialist organizations
maximize their exploitation of the environment and accept the risk of
experiencing a change in that environment, while generalist organizations
accept a lower level of exploitation in return for greater security.
Resource Partitioning: It develops the relationship between
generalists and specialist organizations. This model includes predictions
about the founding and mortality rates of both specialists and generalists
as a function of market concentration.
Density Dependence: It predicts that the rates of founding and the
rates of mortality are dependent on the number of organizations (density)
in the market. This density dependency sub-theory seemed rather
intuitive and related to Smith concepts of “supply and demand”.
Liability of newness. Here, the risk of failure is high initially but
declines as the organization ages environmental change
experienced by an organization, and if the risk of failure increases
with the cumulative environmental change, then the probability of
failure will increase with age if environmental change is
Liability of adolescence. The risk of mortality will be low at first as
the organization is buffered from failure due to support by
external constituents and initial endowments. But when these
initial resources become depleted, the mortality hazard shoots up
and then declines following the liability of newness pattern
Liability of aging. Here, the risk of failure increases with
organizational age. This could be due to a liability of obsolescence (a
growing external mismatch with the environment).
Structural inertia model advanced by Hannan and Freeman
This theory agrees that an organization’s strategy is the “core competence” of
the organization, an enterprise’s internal pressure tends to prevent sharp
changes of present strategy, once the strategy is established,organizational
leaders would not like to deviate from it since it may destroy the original
organization system, disturb the connections of former interest-related
parties, and decrease the efficiency and effect of the organization.
Evolution of Organizational Forms: It holds the idea that 'long-run
changes in organizational diversity reflect the accumulated effects of
short-run differences in net mortality rates of populations facing limited
resource environments, Evolutionary theory means three things.
1. Organizations have descended from past organizations .
2. Big differences seen now have arisen gradually.
3. The processes of change are still around us and can be
Dynamic and Comparative Analysis: "The diversity of
organizations in society depends on the both the number of organizational
forms and the distribution of organizations over forms".
This is a dynamic process, with new forms being created, some orgs
changing into other forms, and some forms going away. Organizations are
created and disbanded or merged. organization that cannot change
strategy and structure as quickly as their environments can change.
The Demography and Ecology of Organizations: is appropriate when
organizations are subject to strong inertial pressures and face changeable,
uncertain environments." membership, capital, and legitimacy.
1. demography of organizations, concerns the variations in vital rates
for organizational populations (founding rates, merger rates,
disbanding rates, etc.)
2. population ecology of organizations, tries to show how the vital
rates of one population are affected by other organizational
3. community ecology of organizations. This looks as interacting
communities of populations (like firms, labor unions, and
An organization can form an inherent institution and tradition in a longterm management and build a stable relationship with interest-related
parties. Aged” organizations will face more pressures as they change
the original strategies. So, they prefer to adjust their strategies
continuously in order to adapt to the changeable environment needs .
Ecological density as important factors influencing strategy change. They
think that the high-density industry can worsen the competition and
the fierce competition will enhance all enterprises’ strategy
differentiation (Hannan and Freeman, 1989).
a) Darwin’s evolutionism regards natural selection as the only engine
for biological evolution, neglecting the possibility of complex
system generating orders spontaneously. The evolvement of an
organization and its operational model is the result of natural
selection and self-organization (Min Luo, 2006). An introduction
of the complexity theory to complement the organizational
ecology-based strategy change theory is necessary.
Under this circumstance, strategy change behavior includes not
only transformation of enterprise’s resource capabilities but also
changes of organizational learning (Ancheng Pan, 2007)
b) The so-called “self-organize” refers to a process in which things
become organized or ordered spontaneously. In other words, the
self-organized system organizes, survives, evolves, innovates, and
develops by itself without depending on external orders. It is a
process from disorder to order.
c) Macintosh and Maclean use the complexity theory to re-explain
the motives for corporate strategy change. Therefore, to introduce
the complexity theory into the research on strategy change theory
is a right theoretical complement.
The concept of fitness is not clearly defined by the theory, its
insufficient to state that only organizations that the environment
determines as fit survive. A more meaningful and causal pattern
must be presented for a theory to be acceptable
Most theoretical and empirical work in population ecology has
focused on explaining the striking similarity of the growth
trajectories of very different organizational populations, varying from
banks and breweries to labor unions and voluntary social service
organizations. The number of organizations in a population typically
grows slowly initially, and then increases rapidly to a peak. Once the
peak is reached, there is usually a sharp decline and occasionally
Density is a remote measure of the processes of legitimating and
competition. Legitimacy grows with density, at a decreasing rate,
while competition grows at an increasing rate. At low levels of
density, growth in numbers serves primarily to legitimize a
population's goals and chosen form. At high levels of density,
increases in density strengthen competition far more than
legitimation. The net effect shifts from legitimation at low density to
competition at high density. Therefore the relationship between
density and the founding rate has the form of an inverted-U.
Market concentration has critical implications for entry and exit
rates (which are called founding and mortality rates in population
ecology, respectively), as well as profitability. It should be noted
that high market concentration and entry barriers often lead to
low entry rates and high mortality rates for disadvantageous
The debates between selection and adaptation theories are far
from over, although some reconciliation has been made (e.g.,
Baum and Singh, 1993; Usher and Evans, 1996). Debating whether
organizational action is the product of opportunistic choice or
environmental constraint is like debating whether a glass is half
empty or half full (Astley, 1985).
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Astley, W. G. 1985. "The Two Ecologies: Population and Community Perspectives on Organizational Evolution."
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Astley, W.G. & Van de Ven, A.H. 1983. Central Perspectives and Debates in Organization Theory, Administrative Science
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Sociology 100: 346-380.
Baum, Joel A. C. and Stephen J. Mezias. 1992. "Localized Competition and Organizational Failure in the Manhattan hotel
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