Systems Thinking and Population Ecology

bubble-19329_1920[We’re pleased to welcome authors Karen Macmillan and Jennifer Komar of Wilfrid Laurier University. They recently published an article in the Journal of Management Education entitled “Population Ecology (Organizational Ecology): An Experiential Exercise Demonstrating How Organizations in an Industry Are Born, Change, and Die,” which is currently free to read for a limited time. Below, Macmillan speaks about population (organizational ecology) and its applications:]

 

 

Organizations are embedded within complex, interdependent networks.  Yet it can be challenging for business students to conceptualize how organizations interact with others on a broad scale. This type of systems thinking does not come naturally. Most individuals tend to have difficulty understanding non-linear, interdependent connections when the relationships are distant in time and space.

One line of management study that takes a systems view is population (or organizational) ecology.  Rather than observing how an individual company evolves over a brief period, population ecologists look at all of the organizations within an industry and examine how certain characteristics (e.g., size), the environment, and random chance affect organizational outcomes. Population ecologists identify how industries change over many years, often finding patterns across industries in how organizations are born, change, and die.  This approach differs from traditional management theory in two key ways.  First, all members of a targeted population are included in the analysis. The premise is that to focus only on the most successful organizations (e.g., the Fortune 500) leads to an understanding of only a small portion of the total range of organizations. It can be useful to examine not only the winners, but also the losers, and even the runners-up. Second, population ecologists examine how processes evolve over relatively long periods of time. This can lead to different insights than a cross-sectional approach.

In order to help students develop systems thinking through a consideration of population ecology, we have developed an in-class exercise that allows participants to see first-hand in one class how all of the organizations within an industry interact over a long period. Full details are included so instructors can easily integrate this activity into the classroom. This process makes the theory come alive by asking students to put themselves directly into the role of an organizational decision maker in an evolving industry.

The exercise dramatically highlights how an organization affects, and is affected by, its context, and will help to prepare students to operate effectively within a multi-faceted business environment. This activity could fit within discussions on organizational design, organizational structure, organizational change, or inter-organizational relationships, and it complements instruction on more micro organizational behavior topics, or more linear or analytical approaches to management.  It challenges the idea that management is solely about control, and helps students see that each internal decision influences how the organization fits within a broader system, and affects, ultimately, its ability to survive.

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Thinking photo attributed to PublicDomainPictures. (CC)

Follow the leader?

entrepreneur-593358__340.jpgWe’ve all heard about them – huge successes and failures that undoubtedly color impressions of entrepreneurial risk and those involved. How do significant events change the subsequent threshold for organizations seeking to become market entries? Who fares better in this type of environment – consensus or non-consensus entrepreneurs?   In a recent article in Administrative Science Quarterly authors Elizabeth G. Pontikes and William P. Barnett look at this less-heralded area of entrepreneurship in “The Non-consensus Entrepreneur: Organizational Responses to Vital Events.”

The abstract for the article:

Salient successes and failures, such as spectacular venture capital investments or agonizing bankruptcies, affect collective beliefs about the viability of particular markets. Using data on software start-ups from 1990 to 2002, we show that collective sense-making in the wake of such vital events can result in consensus behavior among entrepreneurs. Market search is a critical part of the entrepreneurial process, as entrepreneurs frequently enter new markets to find high-growth areas. When spectacular financings result in a collective overstatement of the attractiveness of a market, a consensus emerges that the market is resource-rich, and the path is cleared for many entries, including those that do not have a clear fit. When notorious failures render a market unpopular, only the most viable entrants will overcome exaggerated skepticism and enter, taking the non-consensus route. Venture capitalists likewise exhibit herding behavior, following other VCs into hot markets. We theorize that vital events effectively change the selection threshold for market entries, which changes the average viability of new entrants. We find that consensus entrants are less viable, while non-consensus entrants are more likely to prosper. Non-consensus entrepreneurs who buck the trends are most likely to stay in the market, receive funding, and ultimately go public.

You can read “The Non-consensus Entrepreneur: Organizational Responses to Vital Events” from Administrative Science Quarterly free for the next Current Issue Covertwo weeks by clicking here.

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Listen to the radio interview with author Elizabeth Pontikes on WGN‘s “The Opening Bell” here.

Wide Research, Narrow Effects: Why Interdisciplinary Research – and Innovation – is Hard

[This blog post was originally featured on Organizational Musings, written by Administrative Science Quarterly‘s Editor, Henrich R. Greve. Click here to view the original post.]

Interdisciplinary research is seen as very valuable for society and economy. Some of that could be hype, but there are some good examples of what it can do. You have probably noticed that oil is no longer 100 dollar per barrel, and the US is no longer a big importer. This is a result of fracking, a result of interdisciplinary research. And if you don’t like fracking, a good alternative is photovoltaic energy, which comes from the sun, and from interdisciplinary research.

So some interdisciplinary research has been good for society. Is it also good for the scientists who are supposed to do it? The answer to this question is very interesting, and is reported in an article in Administrative Science Quarterly by Erin Leahey, Christine Beckman, and Taryn Stanko. The start is easy to explain: interdisciplinary research is less productive, but it gets more attention. The answer got more complicated, and more interesting, when they started looking at why that happened.

Current Issue CoverThe first step was to look at whether interdisciplinary research is more difficult to do, or whether it is because it is harder for it to gain acceptance and get published. The answer is clear: it is not harder to gain acceptance, but it is harder to do, especially early on. The second step was to look at why this research got more attention. Here many factors played a role, but one stood out to me: Actually what increases especially much is the variation in how much attention interdisciplinary research gets, and that helps explain the increased average. So interdisciplinary research is related to fracking in one more way – few reap the awards from it.

This paper doesn’t really result in career advice for scientists, because everyone will be interested in different kinds of research, and have different ideas on how much risk to take on. But has important insights on how innovations are made. Building on closely related ideas is much easier to do, so no wonder much of what scientists – and companies – do is incremental. And this is true even though we often tell stories of the great successes of interdisciplinary research and integrative innovations, while forgetting all those who tried and didn’t succeed. Whether that means we cross-fertilize knowledge too little, too much, or just enough is hard to tell.

You can read the article, “Prominent but Less Productive: The Impact of Interdisciplinarity on Scientists’ Research” from Administrative Science Quarterly free for the next two weeks by clicking here. Want to stay up to date on all of the latest research from Administrative Science QuarterlyClick here to sign up for e-alerts!