The Changing Basis of Competition in Organizational Populations: The Manhattan Hotel Industry, 1898-1990

Abstract

Density-dependence theory cannot account for the widely observed pattern of proliferation and concentration in organizational populations. Although density dependence provides an explanation for initial proliferation, it cannot explain subsequent concentration because it does not allow some organizations to become dominant competitors. To address this basic limitation, I combine density dependence with three ecological models that permit size-based competitive asymmetries among a population's members and let the intensity of competitive processes vary over time. My analysis shows that Manhattan hotels of different sizes generate and experience different strengths of competition and that size-based competitive processes increase in strength over time, contrbuting to industry concentration. Separating empirically the effects of low-density conditions that occur early and late in a population's history also clarifies tests of density dependence in populations that have evolved beyond their peak density. The evolutionary trajectories of diverse organizational populations appear to follow a common path. The number of organizations grows slowly initially, then increases rapidly to a peak. Once the maximum is reached, the number of organizations declines as one or a few large organizations come to dominate a much larger number of small organizations. Populations of newspaper publishers, labor unions, breweries, and banks, to list only a few, follow this basic pattern (Hannan & Carroll 1992). The application of ecological models of competition to explain this pattern has been a frequent topic in recent research in organizational sociology. An impressive array of evidence has been assem