Joel A. C. Baum

"This study examined the impact of institutional linkages on the failure of child care service organizations in Metropolitan Toronto, Canada, between 1971 and 1987. A dynamic analysis shows that organizations with institutional linkages exhibited a significant survival advantage that increased with the intensity of competition. The effectiveness of institutional linkages in contributing to survival also depended on the characteristics of organizations that established ties and the external legitimacy of the ties themselves. Institutional linkages also had a significant moderating influence on the relationship between organizational transformation and the risk of failure. The findings of this study suggest that efforts to establish the prepotency of institutional versus ecological explanations of organizational survival should not preclude inquiry into the causal consistencies and interactions between these theories' predictions."

"Until the mid-1970s, the prominent approach in organization and management theory emphasized adaptive change in organizations. In this view, as environments change, leaders or dominant coalitions in organizations alter appropriate organizational features to realign their fit to environmental demands (e.g. Lawrence and Lorsch 1967; Thompson 1967; Child 1972; Chandler 1977; Pfeffer and Salancik 1978; Porter 1980; Rumelt 1986). Since then, an approach to studying organizational change that places more emphasis on environmental selection processes, introduced at about that time (Aldrich and Pfeffer 1976; Hannan and Freeman 1977; Aldrich 1979; McKelvey 1982), has become increasingly influential. The stream of research on ecological perspectives of organizational change has generated tremendous excitement, controversy and debate in the community of organization and management theory scholars. Inspired by the question, Why are there so many kinds of organizations?"

"Strategy and organizations scholars have long noted that young firms have higher failure rates than established firms. In his seminal paper, Stinchcombe (1965) proposed that this propensity to fail exists because young firms have not established effective work roles and relationships and because they lack a track record with outside buyers and suppliers. While there has been much debate (for a review see Baum, 1996) concerning the underlying source of the hazards facing new firms—whether a liability of newness or a liability of smallness—most of the research in this debate implicitly assumes that new entrants are typified by a lack of stable relationships and sufficient resources."