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An Evolutionary Model of Organizational Performance
Author(s) -
Barnett William P.,
Greve Henrich R.,
Park Douglas Y.
Publication year - 1994
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250150903
Subject(s) - forbearance , competition (biology) , selection (genetic algorithm) , industrial organization , position (finance) , competitive advantage , business , marketing , organizational unit , unit (ring theory) , microeconomics , knowledge management , economics , computer science , artificial intelligence , psychology , finance , ecology , mathematics education , computer security , biology
Abstract Organizations vary in how well they perform. This can be due to differences in their strategic positions and to differences in their competitive abilities. We propose an evolutionary model in which there is a trade‐off between these two sources of advantage. In a naive evolutionary model, competition triggers both selection and learning–leaving organizations with the capabilities to perform better. However, managers often buffer their organizations from the disciplining forces of selection by seeking out positional advantages in the market. We argue that when this is done using multiunit structures, market position improves but organizational learning is retarded. Consistent with this view, we find that after controlling for selection, single‐unit organizations benefit today from being exposed historically to competition–evidence of learning–while large, multiunit organizations do not. Multiunit organizations instead benefit from mutual forbearance, a positional advantage. The findings come from a dynamic analysis of takeovers and performance among retail banks in Illinois. Implications for the study of strategic evolution are discussed.