Press Hannan.

Press

Hannan, Michael T and John Freeman 1977 "The population ecology of organizations." American Journal of Sociology, 82: 929-964

1989 Organizational Ecology Cambridge, MA: Belknap Pres of Harvard University.

Haveman, Heather 1992 "Between a asylum and a hard place: Organizational change and performance subordinate to conditions of fundamental environmental Economic activity is characterized by way of a multitude of agency relationships: Individuals and organizations known as principals delegate resources and tasks to other individuals and organizations known as agents, since they themselves lack time and expertise (Jensen and Meckling, 1976; Shapiro, 1987) as for example, when individuals delegate to their accountants the task of filing tax replys Agency arrangements enhance role specialization in a society, unite actors across group boundaries and physical distances, and improve collective action on principals (Luhman, 1979; Zucker, 1986)

Agency relationships may also be collectivized: Anonymous principals can decrease their risks by banding together and entrusting authority to agents who accomplish the tasks delegated to them (Mitnick, 1984) For example, stockholders of a joint-stock company collectively entrust their capital to be expanded efficiently by the managers of the company. Other examples of collectivized agencies include commercial banks, savings and loan associations, mutual savings banks, credit unions, and mutual stocks To assure themselves of reliable performance by the agency of agents, principals use diverse ownership arrangements, monitoring bodys and incentives; thus, collectivized agency relationships can take forward a wide variety of organizational forms (Jensen and Meckling, 1976; Fama, 1980) In this paper we ask whether organizations with different ways of organizing collectivized agency relationships engagement different survival prospects.

The paper is motivated through three considerations. First, studies of the differential survival of collectivized agency relationships enlarge the ecological perspective on organizational diversity. Ecological theory frames organizational change as a population-level proces consisting of the replacement of existing organizations by dint of new organizations and depicts selection as the mechanism that regulates organizational diversity (Hannan and Freeman, 1977 1989; Aldrich, 1979; McKelvey 1982) Despite a vigorously expanding material substance of research, ecological research forward diversity has been criticized for emphasizing issues of specialism-generalism and for failing to examine differences in the survival of different ownership piles (Aldrich and Marsden, 1988: 58; Meyer and Zucker 1989: 71) couple studies, by Barnett and Carroll (1987)and Barnett (1990) examined the survival of mutual and commercial telephone companies; however, they ascribed the survival of these ownership arrangements to their specialized parts in a technical system. by the agency of contrast, we seek to trace the survival of different ownership edifices to differences in their governance schemes and capital structures.

Second, attempts to join the survival of agency arrangements to differences in their governance arrangements and capital makes provide an opportunity to link ecological theory with organizational economics. Transaction costliness economics, property rights theory, and agency theory also possess that selection processes shape the survival of organizational forms. However, all three perspectives emphasize efficient monitoring and incentives as central to the survival of organizations (Alchian and Demsetz 1972; Fama and Jenson 1983a; Williamson, 1975) through contrast, ecological theory holds that although efficiency issues affect organizational change, their impact is constrained by the agency of institutional processes such as legitimacy (Hannan and Carroll. 1992) Nonetheless, studies of in what manner population-level change is jointly shaped from efficiency considerations and institutional processe are absent in the literature and sorely distressed (Hannan and Freeman, 1989: 339)

Finally, connecting ecological and agency perspectives forward organizations is useful because it directs attention to the hierarchical nature of the selection proces To the reach that agency theory focuses upon monitoring arrangements in organizations, it emphasizes the selection of strategies and schemes within organizations. Thus, agency theory haves that the selection of organizations hangs on the efficacy of selection processe within organizations. Further, since selection mechanisms of the like kind as accounting and budgeting directions underlie variations in monitoring arrangements, studies of the dissolution of monitoring arrangements require a discussion of micro-level processe on a level as they draw on larger institutional processe (Zald, 1986: 327-329) Thus, conjoining the agency and ecological perspectives focuses attention upon the linkage between micro-level and macro-level selection processes

Agency prices and the Survival of Organizations

Agency standards treat organizations as sites of contracts between principals (the proprietors of the factors of production) and agents (those who manage these factors to create religiouss and services for consumers). They hint that the most important contracts define the nature of residual claims by dint of principals and allocate the rights to initiate, ratify, monitor, and implement proposals among principals and agents. Because contracts are splendid to write, monitor, and enforce among agents with divergent interests, agency prices significantly affect the survival of organizations. The contract erection of an organization in conjunction with the production technology and legal constraints determine the sumptuousnesss at which an organization can proper the needs of consumers. The lower the agency take away froms of an organization, the more efficient it is and the more likely it is to survive (Fama and Jensen 1983a).