Models of growth in organizational ecology: a simulation assessment

Organizational ecologists investigate the dynamics of organizational populations. Ecological analysis has focused explicitly on organizational founding and mortality processes in these populations with notable success, but has lagged behind in its understanding of organizational growth, which plays an important role in ecological processes. Using computer simulation analysis, this paper examines four models for organizational growth: Gibrat's law, a proportional growth model; an extension of Gibrat's law that includes density and age effects on growth; a Schumpeterian growth model based on R&D investment; and a demographic growth model based on Poisson processes for the arrival and departure of individuals. The simulation findings are compared with empirical observations, and the implications of the findings for modeling organizational growth are discussed. In particular, I argue that it is unlikely that 'one growth model fits all', and suggest that separate growth models need to be developed for different industrial and organizational contexts. Copyright 2004, Oxford University Press.