Density Delay in the Evolution of Organizational Populations: A Model and Five Empirical Tests

Abstract

This research was supported by National Science Foundation grant SES-8809006 and by the Institute of Industrial Relations, University of California, Berkeley. An earlier version was presented at the Wharton Conference on Organizational Evolution, December 1988. We appreciate the research assistance of Anand Swaminathan and the comments of John Freeman, Dan Levinthal, and three ASq referees. This paper claims that density at time of founding has a persisting positive effect on organizational mortality rates, net of the effects of contemporaneous density. High density at time of founding results in a liability of resource scarcity for new entrants that hampers organization building. Niches are tightly packed, and entrants must exploit marginal resources. This claim is tested using data on American labor unions (1836-1985), Argentinean newspapers (1800-1900), Irish newspapers (1800-1970), newspaper publishers in the San Francisco region (18401975), and American brewers (1633-1988). As predicted, density at time of founding has a positive and significant effect on mortality rates in all five populations. This finding has potential implications for explaining the fact that the size of organizational populations commonly declines after reaching a peak.'

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