Industrial and Corporate Change, Volume 13, Number 1, pp. 61-89
Industrial and Corporate Change 13/1 © ICC Association 2004; all rights reserved.
For whom the bell tolls: ecological perspectives on industrial decline and resurgence
Correspondence: Martin Ruef, Graduate School of Business, Stanford University, Stanford, CA 94305-5015, USA. Email: ruef_martin{at}gsb.stanford.edu
Abstract
Over the last twenty-five years, research in organizational ecology has given rise to a proliferation of mechanisms that seek to explain processes of decline and resurgence in mature industries. In this article, I consider four of these mechanisms—including arguments concerning competitive intensity, temporal heterogeneity, population inertia, and community ecology—and apply them to explain the evolution of US medical schools between 1765 and 1999. For this population, mechanisms relying on organizational variation in competitive intensity—especially, mass dependence accounts—perform poorly in terms of theoretical and empirical adequacy. Models that incorporate temporal heterogeneity in industrial competition and legitimation explain more variation in patterns of growth and decline, but are sensitive to right-censoring and model specification. Ecological mechanisms that explicitly analyze population inertia or community ecology seem to be the most promising in terms of theoretical and empirical consistency. Ironically, this finding seems to vindicate the model of population growth advanced in Hannan and Freeman's seminal article, which has sometimes been discounted as failing to represent the evolution of mature industries in a realistic manner.