runk: Can you help me find my keys? Passerby: Sure, where exactly did you drop them? Drunk: Way over there by the trash can. Passerby: Then why are you searching over here? Drunk: The light’s much better under the lamppost. —Milton Friedman (Economics 331, 1967) The class laughed after hearing this joke, not yet realizing how well it described the profession for which they were preparing. Even those present who cannot carry memory of a joke home from the barbershop still remember the day they first heard that little joke. The thesis of this article is that the economics profession has spent years looking for technological progress under the familiar lamppost of research and development (R&D) by incumbent firms aimed at improvement in existing commodities or productive methods. Such perfective progress (as we call it) is amenable to hedonic measurement and analysis of firm behavior and market equilibrium in terms of return on investment,

Is it more difficult to start a new business in an emerging industry or in a mature one? The density dependent model of organizational ecology argues that the age of the industry itself is irrelevant. The number of firms currently occupying the market niche determines the competitive structure of the industry. Nevertheless, population-level learning predicts historical asymmetry in barriers to entry. Over time, the average fitness of the surviving members of the population increases, which tends to make the market more difficult to enter. At the same time, surviving organizations become increasingly spread out across the resource space, providing niches that new firms can profitably exploit. Thus, industry-level evolution systematically alters the environment that both existing organizations and new firms face. I offer a new specification for the founding rate model based on the synthesis of ecological and evolutionary perspectives. Tests of this model in the American automobile industry support the merit of this specification. Is it harder to enter an emerging market or an established one? The answer seems obvious at first; certainly it would be more difficult to start a new automobile manufacturer now than it would have been 100 years ago. Nonetheless, the literature on industry evolution does not support such a definite conclusion. For example, resource mobilization might be easier in established industries. Stinchcombe (1965) emphasized the liability of newness that organizations face when they enter a new field of production. New organizations must develop new roles and trust, both internally among employees and externally with customers and suppliers. While entrepreneurs in mature industries can draw on institutional norms and existing modes of organization (Meyer and Rowan, 1977), the lack of

The implications of several strands of the spatial geography literature suggest that firms incur substantial costs when they implement geographically distant acquisitions, where implementation costs arise both from searching for potential targets and from undertaking post-acquisition integration. In turn, the prescriptive literature on acquisitions strategy often suggests that firms should seek geographically proximate targets, especially while they gain acquisition experience, in order to limit implementation costs that have the potential to crowd out gains from acquisitions. To date, however, we lack systematic research examining whether expected implementation costs lead acquirers to prefer nearby targets and, if so, how acquisition experience or other factors may reinforce or reduce any such tendency. Indeed, there is no assurance that desirable targets will be located near acquirers, while anecdotal evidence suggests that some firms, at least, undertake distant acquisitions, even early in their acquisition experience. This study examines how the distance between acquiring and target firms influences target selection, exploring conditions under which acquirers exhibit a greater preference for geographically proximate targets and when they seek more distant targets. The study examines 2,070 domestic U.S. acquisitions from 1980 to 2004 by 767 US chemical manufacturing firms founded after 1979. The core conclusion of the study is that distance has a strong and persistent effect on target selection

Despite much research, debate continues about the impact of risk taking on a firm’s future performance. Unlike prior studies, we propose that risk-return relationships evolve as firms age and learn, particularly in high-velocity settings where accumulated knowledge affects how firms respond to technological change. Discerning this requires three things absent from prior analyses: (1) studying an entire population; (2) modeling evolutionary processes; and (3) using separate models to capture how a firm’s gains and losses (i.e., its strong and weak performances) unfold across time. Using this framework, we found that (a) risk-return relationships generally evolved from positive to negative as firms aged; because (b) firms learned to avoid large losses at younger ages than they learned to sustain large gains; yet (c) the risk taking that followed below-aspiration performance moderated those effects such that major setbacks prompted large future gains and large future losses among older firms and downward spirals among younger ones. 1 Relationships between risk and return are central to our lives. In the hope of emotional or monetary rewards, some people take risks by climbing mountains, changing employers, or switching careers. Some executives take risks in pursuit of better pay and enhanced reputations, and some firms pursue risky strategies in a quest for higher sales and profits.

The authors are grateful to Joel Baum for his valuable support on this research project. The authors wish to thank Judith Blau for access to the New York City newspaper database. The authors also wish to thank

Over the last twenty-five years, research in organizational ecology has given rise to a proliferation of mechanisms that seek to explain processes of decline and resurgence in mature industries. In this paper, I consider four of these mechanisms – including arguments concerning competitive intensity, temporal heterogeneity, population inertia, and community ecology – and apply them to explain the evolution of U.S. medical schools between 1765 and 1999. For this population, mechanisms relying on organizational variation in competitive intensity – especially, mass dependence accounts – perform poorly in terms of theoretical and empirical adequacy. Models that incorporate temporal heterogeneity in industrial competition and legitimation explain more variation in patterns of growth and decline, but are sensitive to right-censoring and model specification. Ecological mechanisms that explicitly analyze population inertia or community ecology seem to be the most promising in terms of theoretical and empirical consistency. Ironically, these findings appear to vindicate the model of population growth advanced in Hannan and Freeman's seminal (1977) paper, which has sometimes been discounted as failing to represent the evolution of mature industries in a realistic manner. 2

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In organizational ecology, we find the analysis of the impact exerted by competition between populations on vital ratios to be relatively under-developed. This paper intends to address this issue by developing new competition measurements whose common denominator is to give importance to organizational size. The application of these measurements in the case of competition between organizational forms in a population and their impact on mortality rates, demonstrates the usefulness of modelling competition on them. More specifically, results show how competition levels between firms in a population can be more adequately estimated when rival population mass is used (that is, the aggregate size of the organizations of which it is made up).

From institutional, resource dependence and organizational ecology perspectives, there are two initial requirements for organizational survival: 1) there are sufficient resources in the niche, and 2) the organization can obtain these resources. A new concept, saturation, is created to measure the scarcity of resources by analyzing its influence on survival. However, organizational success also depends on organizational characteristics, which can hinder the securing of the resources necessary for survival. This article researches ownership structure as an organizational characteristic. These influences are tested utilizing data from a population of 1298 Spanish olive oil mills.

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