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At its core, this volume tackles the contradictory views of the performance-enhancing effects of organizational flexibility and inertia head on, and in doing so, contributes to the development of theory and empirical evidence at the interface of strategic management and organizational ecology. In addition to the inertia–flexibility nexus, the volume explores a wide range of additional connections between these two perspectives across nine topical areas that both ecological and strategic management researchers have examined: (1) Entrepreneurship, (2) Top Management Teams, (3) Organizational Change, (4) Organizational Learning, (5) Technology Strategy, (6) Competitive Strategy, (7) Cooperative Strategy, (8) Scale and Scope, and (9) Industry Evolution.

This paper extends organizational ecology by making an attempt to disentangle the consequences of scale and scope economies for organizational survival under different product market configurations. We test our hypotheses by analyzing the mortality rates of 643 UK motorcycle producers during the 1899–1993 period. The findings obtained offer two specific contributions. First, by separating the performance impact of scale from scope economies we clarify the complex mechanisms behind the survival consequences of different organizational strategies. Second, we show how the intensity of both scale and scope forces is relative to the aggregate market-level product configuration. The implications of these findings for organizational ecology and strategic management, and their cross-fertilization, are further discussed.

Although studies of “core competence” appear frequently, the concept lacks a clear definition that allows one to operationalize it and use it to develop falsifiable predictions. We propose a definition based on the phenomenon that core competence is typically applied to – adaptations to different external context. Sourcing insight form the paradigm of organizational ecology, we develop arguments rooted in theories of structural inertia and environmental imprinting. Empirical analyses of failure rates of entrants in the Italian automobile industry confirm our propositions that core competence is a source of competitive advantage when industry entry is based on relevant capabilities and a source of inertia and obsolescence when core competences need to be substantially altered. We conclude that whether core competence materializes as a dynamic capability or exposes the firm to liability to selection and obsolescence is a random process. Its outcome hinges on environmental variation and the resulting firm-environment (mis)alignment and is thus largely beyond managerial control.

We investigate the dynamics of competitive repositioning of firms in the deregulated U.S. airline industry (1979–1995) in terms of a firm's target market, strategic posture, and resource endowment relative to other firms in the industry. We suggest that, despite strong inertia in competitive positions, the direction of repositioning responds to external and internal alignment considerations. For external alignment, we examined how firms changed their competitive positioning to mimic the positions of similar, successful firms, and to differentiate themselves when experiencing intense rivalry. For internal alignment, we examined how firms changed their position in each dimension to align with the other dimensions of positioning. This internal alignment led to convergent positioning moves for firms with similar resource endowments and strategic postures, and divergent moves for firms with similar target markets and strategic postures. The evidence suggests that repositioning moves in terms of target markets and resource endowments are more sensitive to external and internal alignment considerations, but that changes in strategic posture are subject to very high inertia and do not appear to respond well to alignment considerations.

This paper explores how two understudied characteristics of a firm's product portfolio, namely, aging of products and (non)innovativeness of products, affect firm survival. The influence of these product portfolio characteristics on organizational mortality can be observed both at the firm and at the industry levels. Paradoxically, the portfolio's influence at the firm and at the industry levels may go in opposite directions. Specifically, I predict that portfolios with aging products make their firms weaker competitors and survivors. However by weakening these firms, “aging” portfolios reduce competitive pressures at the industry level and, therefore, improve firm survival indirectly by changing industry vital rates. In contrast, firms with innovative product portfolios should be stronger survivors. At the same time, they are likely to intensify competition in the industry and, as a result, diminish survival chances of all firms, including those with innovative products. The analyses of all firms’ product portfolios in the worldwide optical disk drive industry, 1983–1999, support these predictions.

Learning theory explains how organizations change as a result of experience, and can be used to predict the competitive strength of individual organizations and competitive pressures in organizational populations. We review extant learning theoretical propositions on how competitive strength is affected by experienced competition, founding conditions, and observed failures of other organizations. In addition, we propose that niche changes are an important source of learning. We test these propositions on data from the Norwegian general insurance industry. We find that historical density increases failure rates, contrary to some earlier findings, and also that the effect of founding density supports the density delay rather than trial-by-fire hypothesis. We find that failures of others before and during the lifetime of the organization reduce failure rates, and niche changes reduce failure rates for joint-stock companies but not for mutual firms. Overall the findings suggest that organizations learn more cheaply from the failures of others than from their own experiences, and that the stresses of competition can overwhelm the learning effects of competition.

Interorganizational partner selection decisions are plagued with uncertainty. When making partnering decisions, firms strive to answer two questions: does the prospective partner have resources which can be used to generate value in the relationship; and will the partner be willing to actively share these resources and cooperate in good faith? Answers to these questions help reduce three types of uncertainty – partner capability uncertainty, partner competitiveness uncertainty and partner reliability uncertainty. For a relationship to benefit both partners, they have to possess complimentary resources of comparable quality, avoid explicit competition as well as be willing to engage in the cooperative behaviors within the confines of their relationship. In this paper, we examine the importance of prospective partners’ characteristics (differences in size, status and specialization) as well as their network characteristics (existence of a common partner and membership in the same clique) to the formation and longevity of their social relationships, as these characteristics reduce firms’ value generation and partner reliability uncertainty.

A recent stream of research in strategy has demonstrated the effect of boundary of the firm decisions on firm performance by integrating concepts and methods from organizational ecology with predictions from transaction cost economics (e.g. Silverman et al., 1997; Bigelow, 1999; Nickerson & Silverman, 2003; Argyres & Bigelow, 2005). This work has confirmed that managing organizational boundary choices (or governance structures) efficiently has ramifications for firms’ survival chances. But further questions delineating the conditions under which governance structure alignment has a greater or lesser effect on firm survival remain. In this paper, we consider how selection pressures may differ according to a firm's adoption of either a mature or an evolving technology. Using ecological insights regarding competitive intensity and sub-population density, we test for the evidence of the role of sub-population organizational (governance) structure within a technology class. We present preliminary results using an 18-year panel of the population of U.S. automobile manufacturers from 1916 to 1934.

The primary preliminary findings: Within a population, individual misalignment diminishes survival. However, the aggregate governance structure of firms within a technology sub-population has a greater effect on the survival of a focal firm than the governance choice of the individual firm. These findings suggest that governance choices in aggregate within technologically localized sub-populations may influence firm survival. Further, this paper adds to a body of work that utilizes ecological concepts to extend organizational theory.

In this paper, we explore the conditions under which organizations that compete in both market and non-market domains might engage in collective strategy. We study low-power FM radio activists in the U.S., who employed a collective strategy both within and across geographic communities to gain the right to broadcast in low-power broadcast spectra. By comparing and contrasting two stages of the micro-radio movement, we argue that, under certain conditions, for collective strategy to be viable, organizations competing on the dimensions of both ideology and resources must recognize themselves as members of an identity group, based on their common struggle against a stronger, more salient enemy. We highlight the role of collective strategies in the processes of organizational ecology, and discuss the generalizability of our argument.