Human Capital, Inter-firm Mobility and Organizational Evolution
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Human Capital, Inter-firm Mobility and Organizational Evolution

Johannes M. Pennings and Filippo Carlo Wezel

The authors of this fascinating and original work contend that by analysing the conduct of organization members, a great deal can be learnt about firm behaviour and about the cooperative and competitive forces that underlie industry evolution.
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Chapter 1: The Role of Individual Conduct in Macro-organizational Theory

Johannes M. Pennings and Filippo Carlo Wezel


INTRODUCTION The main idea of this book centers on the relationship between sets of organizations and their members. The intuition behind it is simple: organizational evolutionary processes take place simultaneously at multiple ‘Russian-doll-like’ hierarchical levels of analysis (Campbell, 1974). Industries are composed by organizations, which are composed by groups of people. The elements of these hierarchies interact, influencing organizational evolution. Such mutualistic and competitive interactions take place both within and across levels of analysis. Literature on strategic management, for instance, studies the competitive interactions among the firms that compose a sector. Yet, the interactions within one level provide a limited view of the evolutionary process under investigation. Cross-level interactions influence organizational evolution as well. Consider, for instance, the role of managers in shaping organizational outcomes. As individual members are essential components of organizations, their decisions and actions (notwithstanding inertia) affect organizational behavior, which in turn conditions the interactions among the firms in a sector. While there is a relative autonomy within each evolutionary level, cross-level interactions may well be responsible for processes of upward and downward causation (Singh and Lumsden, 1990). Hierarchical thinking has a long history in organizational studies (March and Simon, 1958; Thompson, 1967). However, in much of the existing macro-organizational literature, the individual level is often disregarded (at least when formulating empirical predictions) with the result that firms are treated as black boxes. This approach remains rooted in sociological principles that assume organizations to be ‘imperatively coordinated associations’ (Weber, 1947) and relatively independent from...

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