The Dynamics of Competitive Intensity

Organizations have different competitive abilities. Theory predicts that this variation will follow a general pattern: whether through learning or selection, older organizations — on average — will have greater competitive strength. Furthermore, it is predicted that organizations inherit the competitive strengths of their ancestors. The density-dependent model of population development is generalized to include these effects, and the theory is supported by estimates of the rates of organizational founding and failure for populations of breweries and telephone companies. The results show that intensity of competition generated by organizations follows a predictable pattern, increasing with an organization’s experience as well as the experience of its ancestors. Implications are discussed, including that the theory accounts for the persistent tendency of organizational populations to become concentrated late in their histories.