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Density delay in the evolution of organizational populations: a model and five empirical tests
Administrative Science Quarterly, Sept, 1989 by Glenn R. Carroll, Michael T. Hannan
Density Delay in the Evolution of Organizational Populations: A Model and Five Empirical Tests
This paper claims that density at time of founding has a persisting positive effect on organizational mortality rates, net of the effects of contemporaneous density. High density at time of founding results in a liability of resource scarcity for new entrants that hampers organization building. Niches are tightly packed, and entrants must exploit marginal resources. This claim is tested using data on American labor unions (1836-1985), Argentinean newspapers (1800-1900), Irish newspapers (1800-1970), newspaper publishers in the San Francisco region (1840-1975), and American brewers (1633-1988). As predicted, density at time of founding has a positive and significant effect on mortality
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rates in all five populations. This finding has potential implications for explaining the fact that the size of organizational populations commonly declines after reaching a peak.(*) Recent research has found that density (the number of organizations in a population) affects rates of organizational founding and mortality. This research has concentrated on the contemporaneous effects of density, how density at particular historical times affects the vital rates at those times. We seek to broaden the issues by proposing that density might also have a delayed effect on mortality rates. In particular, we suggest that density at time of founding affects the life chances of organizations, that organizations founded during periods of high density have persistently higher age-specific rates of mortality. We pursue the issue of density delay for two reasons. First, distinguishing between contemporaneous and delayed effects of density helps clarify the processes by which density affects the evolution of organizational populations. Second, exploring this issue may also help to explain a puzzling feature of growth trajectories of diverse organizational populations: The number of organizations in a population typically grows slowly initially, then increases rapidly to a peak. Once the peak is reached, there is usually a sharp decline and sometimes stabilization. We are concerned here with the decline from the peak rather than with the stability of density beyond the peak. Recent theory and research in organizational ecology can account for the shape of the growth path to a peak (Hannan and Freeman, 1989). However, a general explanation for the decline from the peak has yet to appear. Processes involving density delay have promise for explaining such patterns. If density at founding has a positive effect on mortality rates, then mortality rates are especially high just after a population has reached its peak, and density declines from the peak. In fact, such a process may engender cyclic variations dampening to an equilibrium. This paper proposes a specific model of density delay in organizational mortality. It tests the implications of the model using data on five populations of organizations. These are American labor unions (1836-1985), Argentinean newspapers (1800-1900), Irish newspapers (1800-1970), newspaper publishers in the San Francisco region (1840-1975), and American breweries (1633-1988). These populations are especially useful for this analysis because data are available over long historical periods and because the set possesses diversity in terms of type of organization and national context. Thus these five populations provide an opportunity to evaluate whether the proposed effect is a general one. The model proposed here builds on an existing model of density dependence in vital rates of organizational populations. We merely sketch the model here because it has been discussed at length elsewhere (Hannan and Freeman, 1988b, 1989).
DENSITY DEPENDENCE IN ORGANIZATIONAL POPULATIONS
Density Dependence
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