Conventions and Structures in Economic Organization

Conventions and Structures in Economic Organization

Markets, Networks and Hierarchies

New Horizons in Institutional and Evolutionary Economics series

Edited by Olivier Favereau and Emmanuel Lazega

This book contributes to the current rapprochement between economics and sociology. It examines the fact that individuals use rules and interdependencies to forward their own interests, while living in social environments where everyone does the same. The authors argue that to construct durable organizations and viable markets, they need to be able to handle both. However, thus far, economists and sociologists have not been able to reconcile the relationship between these two types of constraints on economic activity.

Chapter 5: Organizational ecology

David N. Barron

Subjects: economics and finance, economic psychology, history of economic thought, institutional economics, methodology of economics


David N. Barron INTRODUCTION Reviews of organizational ecology usually start by making reference to Hannan and Freeman’s (1977) now famous article.1 Along with work published around the same time by authors such as Aldrich (1979) and McKelvey (1982), this article was the foundation for the large body of research that has developed over the past 20 years or so. The central question posed by Hannan and Freeman (1977) was ‘Why are there so many kinds of organizations?’ Although little, if any, empirical research has sought to answer this question directly, ecologists are always concerned with explaining how ‘social, economic, and political conditions affect the relative abundance and diversity of organizations and attempt to account for their changing composition over time’ (Baum, 1996, p.77). To this end, most empirical research in this tradition has concentrated on explaining the rates at which new organizations are founded and/or the rate at which existing organizations disband, a sub-branch of organizational ecology that is sometimes called organizational demography (Carroll and Hannan, 2000). The other main subbranch of the field has been concerned with changes in individual organizations. This sub-branch has developed out of the work of another American sociologist, Miller McPherson (1983). Recently, a few scholars have been attempting to combine some of the features of these two sub-branches of ecological research. The encapsulation of the concerns of ecological researchers quoted above summarizes some of the key characteristics of ecological research. First, it is concerned with the effect of the environment on organizations. In...

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