The Organizational Ecology of Investment Firms in Egypt: Organizational Founding

Abstract

The present study uses organizational ecology theory to explore the dynamics of a population of firms regulated by Egyptian Investment Law. Hypotheses are tested with event history data of 1,040 firms across five industries (industrial, financial, construction, service, and agricultural) during the period 1974 to 1989. The Cox proportional hazards model is used to estimate the effect of ecological and environmental variables on organizational founding rates. Results generally showed that the organizational founding rate depends on two sets of variables. The first set includes variables that describe ecological settings: population density, prior foundings, and inter-population relationships. The second set includes the governmental policies that apply to foreign trade, cabinet changes, and regulation changes that govern investment firms. Finally, there is evidence for both competitive and mutual relationships among different organizational populations. Theoretical and practical implications of these findings are provided.