Sociology 110, Fall 1998, Prof. Aldrich and Ms. Davis
November 24th 1998 Summary
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Review of Legitimacy |
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New Populations are less common than one might expect. |
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This is because new populations have many problems: gaining resources, learning quickly, competing with established populations AND difficulty in establishing legitimacy. |
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Industries that are very good ideas will not succeed if they cannot establish legitimacy. |
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In Europe, any industry that deals with the environment will encounter serious regulatory legitimacy issues. |
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Review of Internet Activity |
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Web Designers make conscious effort to convince customers that conducting business over the internet is legitimate and safe. |
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Is legitimacy a big issue for Internet–based companies? |
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Even if the technology is safe and effective, cognitive legitimacy problems can exist if the technology is poorly understood. Cognitive legitimacy problems are due to uncertainty and people not understanding the basis of the new population (problem f or potential nascents as well as customers/clients). |
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Regulatory Legitimacy: Attempts to impose sales taxes on web-based commerce. Individual firms cannot deal with these regulatory issues effectively. Question: what conditions affect the ability of a new population to organize collectively? Individual firms in new populations can either organize and impose self-regulation OR have state regulation imposed on them. |
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Process of Reproduction |
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Question: Why is it important to understanding founding and disbanding rates? (See answer in the book!) |
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Foundings and disbandings in populations: Question: what is the "normal" rate of foundings & disbandings. |
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Why should we care about founding and disbanding rates? |
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If there were no foundings, all populations would eventually shrink because organizations are mortal (they have a shorter life span than people). |
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Practical: Potential investors or entrepreneurs need to know what populations are growing and what populations are declining. |
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What are the typical founding and disbanding rates? TEN PERCENT |
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Terms to Know (find them in the book) |
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Density: a count, the number of organizations in a population. In theory, you compare the number to resources available. |
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K or carrying capacity: the number of organizations that are supported at a time in a population. The amount of space in a population. There is a limited amount of customers and resources. |
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Population Mass: the number of organizations weighted by revenues or sales. |
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Density Dependence: some processes (like competition) are dependent on size of the population. |
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Density Delay: |
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r or intrinsic rates of measure |
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r- versus k strategy |
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Specialists versus Generalists |
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Resource partitioning (key term -- know it and be able to apply it) |
How do you make a space for a new population? Carve out a space.
In the early stages of a new population, nobody knows how big the carrying capacity is. Investors do not always pick the right industries.
Competition increases with population size.
When an industry is young, enthusiasm, creativity, and flexibility are successful strategies. They are the pioneers. r-strategy r for rapid.
Example: Personal Computer Industry
Many companies that were pioneers in this industry do not exist today. They were creative but inefficient. The demand was so high and the competition is so low that efficiency does not matter.
Once routines and competencies are established, firms focus on efficiency. Firms that enter later and focus on efficiency are very effective at when they deal in high volumes. K-strategy, the more conservative strategy.
Specialists versus Generalists
Example of the concepts applied to your personal experience. You can take courses in many different disciplines or in just one discipline. What are the tradeoffs? Specialists are experts in one area and generalists have knowledge in many areas.
Organizations have limited resources, and they have to decide whether to be specialists or generalists. They have only limited administrative competence. Question: how much does flexibility depend on an organization's community of practice?
Who wins when specialists and generalists compete? It depends on the environment
If the environment changes, generalists are more successful (within limits -- see book).
If the environment is stable, specialists are more successful. Or, environment might be changing in very predictable ways. Example:
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Mountain Lodge |
Ski Lodge |
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Operates year-round. Has camping facilities, ski facilities, and a pool. |
Seasonal business. Only operates 3 months out of the year but is very busy during operation. |
Firms have a limited amount of resources and competencies. Success depends on the environment.
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Specialists |
Generalists |
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r-strategy |
r-specialists |
r-generalists (empty set) |
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K-strategy |
K-specialists |
K-generalists |
r-strategies are only present in new populations
How can Specialists and Generalists coexist?
Example from reading: mass production brewers versus microbreweries and Brewpubs
Generalists cannot be all things to all people. They do not have the resources to provide for specialized demographics.
Generalists legitimate specialists: Large newspapers legitimate newsstands that aid in the distribution of specialized newspapers.
Class Exercise: Come up with TWO examples of current generalists and specialists that co-exist in the same industry.