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Asymmetric selection among organizations

Author

Listed:
  • William P. Barnett
  • Aimee-Noelle Swanson
  • Olav Sorenson

Abstract

We discuss the creation of organizations and their survival as distinct selection processes, and consider the significance of their divergence. In particular, to understand the implications of entrepreneurial booms, we propose the possibility of asymmetric selection, where entry selection and exit selection differ from each other in strength. An observed increase in founding rates hence may reveal a decline in the selection threshold for entry--implying lower average fitness among boom-time entrants. When such an expansion occurs, organizations born during these periods of heightened entry should suffer higher failure rates if the fitness threshold required for survival remains stable or becomes more stringent. We also discuss other processes that might educe founding waves, and explain the different implications of these accounts for our empirical model. Estimates of the model support our theory of asymmetric selection in two out of three markets using a comprehensive dataset describing organizations in the US computer industry. Copyright 2003, Oxford University Press.

Suggested Citation

  • William P. Barnett & Aimee-Noelle Swanson & Olav Sorenson, 2003. "Asymmetric selection among organizations," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(4), pages 673-695, August.
    • Handle: RePEc:oup:indcch:v:12:y:2003:i:4:p:673-695
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    Citations

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    Cited by:

    1. Dongyoub Shin & Sunhyuk Kim & Kiwon Jung, 2016. "Intended rationality in exit decisions: The organizational field of rivals as a source of signal in segment exit decisions by Korean SI ventures, 2000–2006," Australian Journal of Management, Australian School of Business, vol. 41(2), pages 398-421, May.
    2. Erik Stam & Roy Thurik & Peter van der Zwan, 2010. "Entrepreneurial exit in real and imagined markets," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(4), pages 1109-1139, August.
    3. Jerker Denrell & Chengwei Liu & Gaël Mens, 2017. "When More Selection Is Worse," Strategy Science, INFORMS, vol. 2(1), pages 39-63, March.
    4. Keun-Seob Choi & Jeong-Dong Lee & Chulwoo Baek, 2016. "Growth of De Alio and De Novo firms in the new and renewable energy industry," Industry and Innovation, Taylor & Francis Journals, vol. 23(4), pages 295-312, May.
    5. Elizabeth G. Pontikes & William P. Barnett, 2015. "The Persistence of Lenient Market Categories," Organization Science, INFORMS, vol. 26(5), pages 1415-1431, October.
    6. Olga M. Khessina & Glenn R. Carroll, 2008. "Product Demography of De Novo and De Alio Firms in the Optical Disk Drive Industry, 1983--1999," Organization Science, INFORMS, vol. 19(1), pages 25-38, February.
    7. Richard A. Hunt & Bret R. Fund, 2016. "Intergenerational Fairness and the Crowding Out Effects of Well-Intended Environmental Policies," Journal of Management Studies, Wiley Blackwell, vol. 53(5), pages 878-910, July.
    8. Delmar, Frédéric & Wallin, Jonas & Nofal, Ahmed Maged, 2022. "Modeling new-firm growth and survival with panel data using event magnitude regression," Journal of Business Venturing, Elsevier, vol. 37(5).
    9. Rui Baptista & Murat Karaöz & Joana Mendonça, 2014. "The impact of human capital on the early success of necessity versus opportunity-based entrepreneurs," Small Business Economics, Springer, vol. 42(4), pages 831-847, April.
    10. William P. Barnett & Elizabeth G. Pontikes, 2008. "The Red Queen, Success Bias, and Organizational Inertia," Management Science, INFORMS, vol. 54(7), pages 1237-1251, July.

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