Inertia,Density and the Structure of Organizational Populations: Entries in European Automobile Industries,1886-1981

Existing theories of density dependence in organizational evolution treat the key processes as timeless functions of density. This paper revises the theory by specifying that the effects of density on legitimation and competition change systematically as organizational populations age. It argues that these changes in effects reflect population-level inertia due to institutionalization and the development of various forms of population structure. The proposed model of these processes implies a set of complex interactions between density and population age in effecting vital rates in organizational populations. These hypotheses are tested with data on entries of firms into the automobile indus tries of Belgium, Britain, France, Germany, and Italy during 1886-1981. These tests generally support the revised model. The pattern continues to hold when entry rates in each country are allowed to depend upon density in the whole set of countries, following Hannan et al. (1995).