Organizational Mortality in European and American Automobile Industries Part I: Revisiting the Effects of Age and Size

Abstract

Recent research on organizational mortality controls for the effect of age-varying organizational size and yields divergent results. Some studies find that ageing lowers mortality rates; others find the opposite pattern. We argue that this divergence reflects partly an overly simple specification of the effects of age and size. We argue that the effects of size on mortality rates differ by age group. Using complete data on organizational populations of automobile manufacturers in Britain, France, Germany, and the United States, we find that specifications with such age-variation improve over the usual specifications. The results for the American, French, and German populations indicate that age dependence is negative for the largest organizations and positive for small ones. The pattern is the reverse in the British population.

Shifting Gears, Shifting Niches: Organizational Inertia and Change in the Evolution of the U.S. Automobile Industry, 1885–1981

“…Ecological theory posits that an organization's ability to change is limited by the structural conditions-both internal and external-in which it is embedded (Hannan and Freeman 1984). The argument runs counter to traditional perceptions about organizations as adaptive to environmental shifts and able to implement change from within (Pennings 1975).…”

“…Changes affecting the noncore or periphery structure do not produce the same outcome; they might even lead to a lower risk of mortality. Hannan and Freeman's (1984) original definition of the organizational core gives a hierarchical list of four core features, including an organization's mission, its authority structure, its technology, and its marketing strategy. Empirical applications of the inertia theory using this definition of organizational core are not unequivocal in their interpretations of core structures, though most do find support for the prediction that core change elevates mortality (see Carroll and Hannan 2000 for review) and at least temporarily adversely affects performance (Audia et al 2000, Greve 1999, Miller and Chen 1994.…”

“…Recent elaboration of the inertia story claims that the deleterious process effects result from the length of time necessary to replace structural and cultural codes governing blueprints for conducting transactions (Hannan et al 2001). The time to complete such replacements depends on the centrality and connectedness of these units in the overall organizational structure (Barnett and Freeman 2001).…”

“…Most studies of inertia resolve the location-ofchange issue by applying the core-periphery framework (Hannan and Freeman 1984) for analyzing structural change in organizations. A typical research design of this sort usually begins by defining what organizational features constitute the core, and then formulates predictions about transformations in those features.…”

“…Theoretically, we build on ecological insights about structural inertia (Hannan and Freeman 1984) and experiential learning (Levitt and March 1988). We attempt to explain, first, auto firms' propensity to shift niches and, secondly, their likelihood of surviving such shifts.…”