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 5: Mimicry and the Market: Adoption of a New Organizational Form

Johannes M. Pennings and Filippo Carlo Wezel


INTRODUCTION Why are organizations, occupying the same environmental niche or ‘organizational field’, similar in structure? Two streams of research have sought to answer this question. Population ecologists (for example, Hannan and Freeman, 1989) suggest that the environment selects firms with structural elements that provide the highest fitness value. The competitive process to which firms are exposed winnows out those that lack an adequate structural template (Hannan and Freeman, 1977, 1984). In contrast, institutional scholars have argued that firms adaptively adopt a certain structure to enhance their legitimacy, thus converging towards a common template in their so-called ‘organizational field’ or market (for example, DiMaggio and Powell, 1983; Meyer and Rowan, 1977). The institutional process has been sharply distinguished from the competitive process as shown by earlier institutional studies which sought to explain structural changes and innovation (for example, DiMaggio and Powell, 1983; Meyer and Rowan, 1977). More recently, however, several institutional writers have acknowledged that competitive and institutional processes interact with each other in producing convergence in structure (for example, Powell, 1988, 1991; Scott, 1987; Scott and Meyer, 1991). While conceding the interaction of the two processes in producing institutional changes, those authors did not clarify the nature of the interaction. The present study proposes hypotheses on that interaction by combining tenets of population ecology and institutional theory. We then test those hypotheses with the partner–associate structure adoption in a population of Dutch accounting firms from 1925 to 1990. When firms vary in their structural arrangements, their selection environment favors...

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