Information Storage Industry Center

David G. McKendrick
Information Storage Industry Center
University of California at San Diego
La Jolla, CA 92093-0519
dmckendrick@ucsd.edu

Jonathan Jaffee
University of California
Berkeley,CA 94720
jjaffee@haas.berkeley.edu

Glenn R. Carroll
Stanford University
Stanford, CA 94305
caroll_glenn@gsb.stanford.edu

Olga M. Khessina
University of California
Berkeley,CA 94720
khessina@haas.berkeley.edu

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Report 2000-04
July, 2000
Revised April, 2003

David G. McKendrick, Jonathan Jaffee, Glenn R. Carroll, and Olga M. Khessina

When and where will a new organizational form emerge? Recent theory says that as the number of organizations using a particular external identity code first increases beyond a critical minimal level, the code becomes an organizational form. But how is an external identity code established? We assume that the identity code derives from the aggregated identities of individual organizations. Our core argument holds that when the identities of individual organizations are perceptually focused, they will more readily cohere into a distinct collective identity. We develop ideas about how two observable aspects of organizations might generate perceptually focused identities in a common market: (1) de novo entry and (2) agglomeration in a geographic place with a related identity. Using comprehensive data from the market for disk drive arrays, we analyze these ideas and an alternative by estimating effects of different specifications of organizational and product densities on rates of entry and exit for array producers. The findings show that the density of de novo firms affects all (de alio as well as de novo) disk array producers in form-establishing ways: de novo density significantly increases all firm entry and significantly reduces all firm exit. Analyzing densities of certain geographic areas, we also find evidence of faster form development in a place with a related identity and a geographic agglomeration of disk array producers. Finally, we find that joint operation of the two processes, geographic agglomeration of de novo producers in a place with a related identity, serves to enhance form emergence even faster. Overall, the analysis supports the notion that firms with perceptually focused identities aid in establishing an organizational form. It does not show empirical support for a common sense alternative interpretation based on product proliferation. Click here to download the paper (PDF format)

*This research was conducted as a project of the Information Storage Industry Center, University of California at San Diego. We appreciate the research support of the Alfred P. Sloan Foundation. We have benefited from conversations with Michael T. Hannan on aspects of the design and execution of this research. For comments on this project, we are grateful to William Barnett, James Baron, Roger Bohn, Stanislav Dobrev, Michael Hannan, Heather Haveman, László Pólos, Jesper Sørensen, Anand Swaminathan, and Ezra Zuckerman.