Academic journal article Administrative Science Quarterly

Localized Competition and Organizational Failure in the Manhattan Hotel Industry, 1898-1990

Academic journal article Administrative Science Quarterly

Localized Competition and Organizational Failure in the Manhattan Hotel Industry, 1898-1990

Article excerpt

Park, CA: Sage.

Amburgey, Terry L., Tina Dacin, and Dawn Kelly 1993 "Disruptive selection and population segmentation: Inter-population competition as a segregating process." In Joel A.C. Baum and Jitendra V. Singh (eds.), Evolutionary Dynamics of Organizations. New York: Oxford University Press (forthcoming).

Bain, Joe S. 1956 Barriers to New Competition. Cambridge, MA: Harvard University Press. INTRODUCTION

Investigations of density dependence in founding and failure rates have devoted primary attention to populations and less to exploring differences among organizations within populations (Barnett and Carroll, 1987; Hannan and Freeman, 1989; Hannan and Carroll, 1992). This has led some critics to charge that the model treats all members of a population as more or less equivalent, with each member assumed to compete for the same scarce resources and to contribute to and experience competition equally (Winter, 1990: 286). Although existing research demonstrates that the assumption of equivalence may be a reasonable starting approximation, studies of population and industry substructures (Hatten and Schendel, 1977; Ulrich and McKelvey, 1990), strategic groups (McGee and Thomas, 1986; Docker, 1991), geographically segmented environments (Carroll and Wade, 1991), and organizational size distributions (Hannan, Ranger-Moore, and Banaszak-Holl, 1990) suggest that all organizations in a population may not compete for the same scarce resources or contribute to and experience competition equally. If all organizations in a population are not equal competitors then population density, a count of the number of organizations, may not provide the most precise measure of the competition faced by different organizations in a population. Considering organizational differences more explicitly may therefore facilitate understanding the competitive dynamics within organizational populations.

Investigating localized competitive processes within organizational populations may provide a useful point of departure for the development of an ecological approach to competitive dynamics that is sensitive to differences among individual organizations. In addition, this approach has the potential to provide a point of contact between researchers in organizational ecology and those in strategy and organization interested primarily in the organization level. In the study of localized competition, organizational differences are quantified and organizations allowed to compete at different levels of intensity according to the extent of their differences. Attending to organizational variation in this way builds on existing density-based approaches to competitive dynamics by incorporating differences among individual organizations directly into measures of competition. Understanding the role of variation among organizations within populations is central to an ecological-evolutionary theory of organizations. Differences in the adaptive capacities of organizations within a population provide the basis for competitive selection processes and population change. As a result, research on localized competitive processes in organizational populations may help clarify how the characteristics of organizations interact with the characteristics of populations in shaping the competitive dynamics and evolution of organizational populations.

Localized Competition

In organizational ecology, the intensity of competition among organizations is predicted to be mostly a function of the similarity in organizational resource requirements: the more similar the resource requirements, the greater the potential for intense competition (Hannan and Freeman, 1977, 1989). At one extreme, organizations with identical resource requirements are perfect competitors. At the other, organizations with distinct resource requirements do not compete. More formally, the potential intensity of competition between organizations is proportional to the overlap or intersection of their resource requirements. …

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