BUCKINGHAM PLC

Buckingham plc

Buckingham plc

Introduction

The evolutionary trajectories of diverse organizational populations appear to follow a common path. The number of organizations grows slowly initially, and then increases rapidly to a peak. Once the maximum is reached, the number of organizations declines as one or a few large organizations come to dominate a much larger number of small organizations. Populations of newspaper publishers, labor unions, breweries, and banks, to list only a few follow this basic pattern.

The application of ecological models of competition to explain this pattern has been a frequent topic in recent research in organizational sociology. An impressive array of evidence has been assembled linking the evolutionary trajectories of organizational populations to four ecological models of competition: density dependence, mass dependence, size-localized competition, and resource partitioning.

Among these models, density dependence is used most frequently in empirical research. This model focuses on population density, the number of organizations in a population, to explain the dynamics of mutualism (i.e., organizations enhancing each other's fates) and competition (i.e., organizations diminishing each other's fates) that underlie the growth trajectories of organizational populations. Although some researchers provide empirical support for the density-dependence model in a variety of organizational populations, density dependence provides an explanation only for the shape of the growth trajectory of organizational populations to their peak size, not for their subsequent domination by a few large organizations, i.e., concentration.

Density- dependence theory and research treat competition as a property of populations and assume that all of a population's members contribute to and experience competition equally. This assumption ignores the asymmetries in competitive relationships that occur in most competitive situations. Since no organization or small group of organizations can dominate competition, the density-dependence model predicts logistic growth to an equilibrium level, but not the concentration that characterizes older populations. The tendency of organizational populations to become concentrated is of substantive interest, however, because it has implications for the structure of the distribution of power in organizational populations and communities (Butler 1990).

Notably, although density-dependence theory predicts logistic growth of populations only to their peak size, it is commonly tested in populations that have evolved well beyond their peak density. This complicates density-dependence interpretations in two ways. One is that the meaning of population density varies greatly between early and later periods of a population's history. In early low-density conditions no organization or small group of organizations dominates and new entrants are typically similar to established organizations. By comparison, in late low-density conditions, one or a few large organizations often dominate substantial portions of the market, and organizations tend to differ considerably in size and strategy. Thus, increasing concentration diminishes the adequacy of population density as a proxy for the aggregate effects of a population on competition over the population's history.

The other is that, when density is equally low early and late in a population's history, the legitimacy interpretation of the coefficient for the linear density term is unclear: Although early low density has a specific meaning in density-dependence theory ...