The evolutionary and ecological perspectives on organizational form, strategy and performance: evidence from privatized firms in China

Abstract

Purpose This study aims to examine how evolutionary and ecological forces shape the market strategy and performance of firms after their organizational form was changed by exogenous shock. Design/methodology/approach Hypotheses are developed based on both evolutionary and ecological perspectives and tested using fixed effect logistics models and a sample of 3,110 firms that were privatized during 1998–2007. Findings I find that once the organizational form of firms is changed, the market strategy of organizations is shaped by the population density of their old and new organizational forms in their existing market. Moreover, such a market strategy enhances the survival chance of firms. Originality/value This study contributes to organizational evolution literature by unpacking the evolution process when exogeneous shock to organizational form takes place. It advances both evolutionary economics and organization ecology theory through integrating them to understand the evolution process of organizations. This study also contributes to the privatization literature through examining the ecological forces that shape the restructuring strategy of firms after privatization and the performance implications of such restructuring.