ORGANISATION ECOLOGY

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Change Management MGMT625

LESSON # 19

ORGANISATION ECOLOGY

Leading proponents organization ecology school of thought are Glenn and Carroll, and Hannan and

Freeman. In this theory population of organization is taken as a unit of analysis rather than single

organization. The dominant theme of population ecology is that effects of organization's environment is

critical in organization's survival and (performance) believe that forces internal to the organization are

less important. Principally, population ecologist think that organization do not change and adapt; and

consider that each time a new organization is born after a significant level of change. Pfeffer and

Salancik published their work as "The external control of organizations". This has led to the analogy of

natural selection processes as determining some aspects of organization. Miller and Mintzberg referred

to "the survival of organizational forms as being encouraged by Darwinian forces" (e.g. Weberian of

organization-dominance-of functional structure). Three issues are considered central in population

ecology model of change management:

1. Role of structural inertia in constraining adaptation

2. The classification of organizational species

3. The salience of the environment in determining organizational survival

1. Structural Inertia

Population ecology models of organization-environment relationship are considered alternative to the

dominant adaptation perspective. Though there are a variety of ecological perspectives yet they all focus

on selection phenomenon. The attribute patterns in nature to the action processes. Astley and Van de

Ven highlighted this adaptation versus selection as central debate in organization theory (OT). Selection

of new or changed organization forms occurs as a result of environmental constraints and inertia is

referred as an explanation for the lack of adaptive change. Therefore structural inertia limits the ability

of organization to change. Hanna and Freeman identified a number of processes that generate inertial

pressures both from internal structural arrangements and from environmental constraints.

A. Internal Structural Arrangements

One of the biggest inhibiting factors for organizational change is sunk cost. Sunk cost of the firm which

means broadly any amount of time, money and efforts (plant & equipment or cost of R&D and trained

personnel) develops a restraining force within an entity to freely look for alternative options. Structural

arrangements refer to the rules and resources which an organization deploys manifesting its

commitment levels. A communication structure in organization like barriers misperception amongst

various players at vertical and horizontal levels also facilitates inertial process. Internal politics for

vested interests amongst organizational members act as restraining force. The existing institutional

norms rules and regulations remain status quo oriented to inhibit organizational change

B. External Factors

Not only internal factor inhibit change but at times external factors like government and industry creates

barriers in smooth and consistent change management process. For instance there may be a very high

cost associated with a firm's decision to enter or exit any particular industry or market. Bounded

rationality, a concept given by Herbert Simon means managers are rationalizing not rational, meaning

thereby that decisions on the part of managers are always bounded by constraints like time, space, cost

and information. Therefore the choice of decision makers to go for alternative options is extremely

limited. Another relevant concept is of social legitimacy which imposes restriction in the decision

outcome for change or status quo. Managers will go for such decisions which are considered legitimate

and acceptable by society or by the members of the organization socially. Most of the time society is

slow to recognize and accept change, and more often it is conservative to accept change. So what

happens practically is that organization try to initiate change but then do not intend to go for complete

transformation. Miller and Freisen identified this kind of response to environmental changes as sluggish

Change Management MGMT625

adaptation. Miller also used the term adaptive rigidities caused by the avoidance of uncertainties, and

the fragmentation of the political coalition and its goals cushion organizations from the need for

adaptation. All these issues of structural inertia (and in a way with organization adaptation phenomenon

as well) explain the relative superiority of natural selection process over adaptation in the survival of

organization.

Therefore, population ecologists believe that environmental selection replaces adaptation as the vehicle

of change. Hannan and Freeman formulated theory well supported by empirical evidence that "stronger

the inertial pressures lower the adaptive flexibility and the more likely that the logic of environmental

selection is appropriate". Hence the proposition is the survival of organizations is determined by

environmental variations

By implications, we see population ecologists maintain lesser role for management, wise governance,

organization structure and bench marked managerial practices. There is paradox in this thinking. The

paradox with population ecology is that methodologically, the study deals with small organizations with

simple organization structure which were free from issues of sunk cost & politics (non-chain small

restaurant in 18 cities of California State). External constraints were not strong either. The paradox is

that inertia is, somewhat, largely a phenomenon associated with the complex department structures of

large organization.

To Astley and van de Ven, "Natural selection model fits small, powerless organizations operating in

environment with dispersed resources better than large well connected organizations operating in

environment with concentrated resources". For Aldrich, the structural inertia depends on the size of

organizations. The larger an organization, the greater the structural inertia and the more control the

organization can exercise over the environment (in-real life large organizations seem quite powerful to

shape or influence environment). Another scholar empirically says "the few organizations that survive

infancy owe their above average longevity to wise governance"

Therefore ecologist claim that inertia restricts adaptation and consequently enables selection forces to

dominate over adaptive strategy of the organization somewhat holds less ground. Going by this concern

that small organizations lack inertia and should have better adaptability to environmental changes. The

question then is whether this so in real life? How these dynamics are going to be in developing

countries.

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