An Ecology of Agency Arrangements: Mortality of Savings and Loan Associations, 1960-1987

By Rao, Hayagreeva; Nielsen, Eric H. | Administrative Science Quarterly, September 1992 | Go to article overview
Save to active project

An Ecology of Agency Arrangements: Mortality of Savings and Loan Associations, 1960-1987

Rao, Hayagreeva, Nielsen, Eric H., Administrative Science Quarterly


Hannan, Michael T., and John Freeman 1977 "The population ecology of organizations." American Journal of Sociology, 82: 929-964.

1989 Organizational Ecology. Cambridge, MA: Belknap Press of Harvard University.

Haveman, Heather 1992 "Between a rock and a hard place: Organizational change and performance under conditions of fundamental environmental Economic activity is characterized by a multitude of agency relationships: Individuals and organizations known as principals delegate resources and tasks to other individuals and organizations known as agents, since they themselves lack time and expertise (Jensen and Meckling, 1976; Shapiro, 1987), as for example, when individuals delegate to their accountants the task of filing tax returns. Agency arrangements enhance role specialization in a society, connect actors across group boundaries and physical distances, and improve collective action by principals (Luhman, 1979; Zucker, 1986).

Agency relationships may also be collectivized: Anonymous principals can reduce their risks by banding together and entrusting authority to agents who accomplish the tasks delegated to them (Mitnick, 1984). For example, stockholders of a joint-stock company collectively entrust their capital to be deployed efficiently by the managers of the company. Other examples of collectivized agencies include commercial banks, savings and loan associations, mutual savings banks, credit unions, and mutual funds. To assure themselves of reliable performance by agents, principals use diverse ownership arrangements, monitoring systems, and incentives; thus, collectivized agency relationships can take on a wide variety of organizational forms (Jensen and Meckling, 1976; Fama, 1980). In this paper we ask whether organizations with different ways of organizing collectivized agency relationships encounter different survival prospects.

The paper is motivated by three considerations. First, studies of the differential survival of collectivized agency relationships extend the ecological perspective on organizational diversity. Ecological theory frames organizational change as a population-level process consisting of the replacement of existing organizations by new organizations and depicts selection as the mechanism that regulates organizational diversity (Hannan and Freeman, 1977, 1989; Aldrich, 1979; McKelvey, 1982). Despite a vigorously expanding body of research, ecological research on diversity has been criticized for emphasizing issues of specialism-generalism and for failing to examine differences in the survival of different ownership structures (Aldrich and Marsden, 1988: 58; Meyer and Zucker, 1989: 71). Two studies, by Barnett and Carroll (1987)and Barnett (1990), examined the survival of mutual and commercial telephone companies; however, they ascribed the survival of these ownership arrangements to their specialized roles in a technical system. By contrast, we seek to trace the survival of different ownership structures to differences in their governance systems and capital structures.

Second, attempts to connect the survival of agency arrangements to differences in their governance arrangements and capital structures provide an opportunity to link ecological theory with organizational economics. Transaction cost economics, property rights theory, and agency theory also hold that selection processes shape the survival of organizational forms. However, all three perspectives emphasize efficient monitoring and incentives as central to the survival of organizations (Alchian and Demsetz, 1972; Fama and Jenson, 1983a; Williamson, 1975). By contrast, ecological theory holds that although efficiency issues affect organizational change, their impact is constrained by institutional processes such as legitimacy (Hannan and Carroll. 1992). Nonetheless, studies of how population-level change is jointly shaped by efficiency considerations and institutional processes are absent in the literature and sorely needed (Hannan and Freeman, 1989: 339).

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

An Ecology of Agency Arrangements: Mortality of Savings and Loan Associations, 1960-1987


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?