The Dynamics of Competitive Intensity

This paper examines the question of whether the strongest organizations survive, distinguishing between two aspects of organizational strength. An organization can be strong, as measured by its survival chances. Or an organization can be ecologically strong, as measured by its competitive effects on the birth and survival of other organizations. I develop a model that empirically distinguishes these effects and discuss how these strengths are likely to develop as organizations age and grow. I predict that the strongest competitors are more likely to survive when organizations are small but that viability and competitive strength diverge when organizations are large, leading to the survival of weak competitors. The model is estimated using data on foundings and failures among breweries in the U.S. and telephone companies in Pennsylvania. The results are as predicted and can account for the persistent tendency of organizational populations to become concentrated. The results also imply that as concentration increases, so does the competitive weakness of surviving organizations, setting the stage for the resurgence of organizing characteristic of industrial renewal. Overall, the results indicate that so-called adaptive mechanisms used by individual organizations, when seen in evolutionary perspective, in fact may lead to the survival of weak competitors?